finananial

Project Description:

prepare a financial projection report for the top management of your firm (please show work on excel)
• using a fortune 500 company’s financial statements from 2013 (you may use the same firm from module 1) and the following assumptions, prepare projected income statement and balance sheet for the firm for 2014.

to simplify analysis, assume the following:
1. the firm (i.e., its assets) operates at full capacity.
2. compute annual sales growth rate over the last 3 years.
3. sales for 2014 are expected to grow as the same rate from step 2.
4. all variable expenses (including depreciation expenses) are expected to vary at the same rate as sales. for example, if sales are expected to increase by 8 percent in 2014, variable expenses are also expected to increase by 8 percent in 2014.
5. tax rate (taxes divided by taxable income or before tax income or earnings before taxes for 2013) will remain constant in 2014.
6. interest expenses for 2014 will remain same as 2013.
7. dividend payments in 2014 will be the same as in 2013 (if any).
8. all current assets and long-term assets, notes, payables, and accruals will vary proportionately with projected sales for 2014.

• determine external financing need for your firm for 2014. that is, indicate how much fund your firm needs to raise from external sources in 2014.
• explain what type of external financing (debt or stocks) would you recommend for 2014. please explain your recommendation in relation to market conditions (e.g., high/low interest rates, falling/rising stock prices, p/e ratio) and firm’s current risk (measured by debt ratio, coverage ratios, etc.).

this is macy's report i don't have jc penney's report.

annual financials for macy's inc.
view ratios
fiscal year is february-january. all values usd millions. 2010 2011 2012 2013 2014 5-year trend
sales/revenue 23.49b 25b 26.41b 27.69b 27.93b
sales growth - 6.45% 5.61% 4.85% 0.88%
cost of goods sold (cogs) incl. d&a 15.18b 15.97b 16.82b 17.59b 17.75b
cogs excluding d&a 13.97b 14.82b 15.74b 16.54b 16.73b
depreciation & amortization expense 1.21b 1.15b 1.09b 1.05b 1.02b
depreciation 1.17b 1.11b 1.05b 1.01b 986m
amortization of intangibles 41m 41m 39m 37m 34m
cogs growth - 5.21% 5.31% 4.54% 0.90%
gross income 8.31b 9.03b 9.58b 10.1b 10.19b
gross income growth - 8.70% 6.12% 5.40% 0.86%
gross profit margin - - - - 36.47% na
2010 2011 2012 2013 2014 5-year trend
sg&a expense 6.85b 7.11b 7.2b 7.43b 7.42b
research & development 0 0 0 0 0
other sg&a 6.85b 7.11b 7.2b 7.43b 7.42b
sga growth - 3.77% 1.21% 3.29% -0.17%
other operating expense 0 0 0 0 0
unusual expense 391m 91m 29m 142m 88m
ebit after unusual expense (391m) (91m) (29m) (142m) (88m)
non-operating income/expense 0 0 54m 0 0
non-operating interest income 6m 5m 4m 3m 2m
equity in affiliates (pretax) - - - - -
interest expense 562m 513m 447m 425m 390m
interest expense growth - -8.72% -12.87% -4.92% -8.24%
gross interest expense 567m 518m 455m 440m 401m
interest capitalized 5m 5m 8m 15m 11m
pretax income 507m 1.32b 1.97b 2.1b 2.29b
pretax income growth - 160.36% 49.09% 6.81% 8.94%
pretax margin - - - - 8.20% na
income tax 157m 473m 712m 767m 804m
income tax - current domestic 57m 229m 562m 767m 966m
income tax - current foreign - - - - -
income tax - deferred domestic 100m 244m 150m 0 (162m)
income tax - deferred foreign - - - - -
income tax credits - - - 0 -
equity in affiliates - - - - -
other after tax income (expense) 0 0 0 0 0
consolidated net income 350m 847m 1.26b 1.34b 1.49b
minority interest expense 0 0 0 0 0
net income 350m 847m 1.26b 1.34b 1.49b
net income growth - 142.00% 48.29% 6.29% 11.31%
net margin growth - - - - 5.32% na
extraordinaries & discontinued operations 0 0 0 0 0
extra items & gain/loss sale of assets 0 0 0 0 0
cumulative effect - accounting chg 0 0 0 0 0
discontinued operations 0 0 0 0 0
net income after extraordinaries 350m 847m 1.26b 1.34b 1.49b
preferred dividends 0 0 0 0 0
net income available to common 350m 847m 1.26b 1.34b 1.49b
eps (basic) 0.83 2.00 2.96 3.29 3.93
eps (basic) growth - 140.96% 48.00% 11.15% 19.45%
basic shares outstanding 421.7m 423.3m 424.5m 405.5m 378.3m
eps (diluted) 0.83 1.98 2.92 3.24 3.86
eps (diluted) growth - 138.55% 47.47% 10.96% 19.14%
diluted shares outstanding 423.2m 427.3m 430.4m 412.2m 384.8m
ebitda 2.66b 3.07b 3.47b 3.72b 3.79b
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