Forecast the income statement and balance sheet using the information found in the case and the baseline
Question:
Forecast the income statement and balance sheet using the information found in the case and the baseline assumptions below.
Baseline assumptions Use a 3-year average for forecasting items without specific case information ? Hold cash at $4,180 ? Forecast interest expense using the rate on the debt and the end of year debt value ? Unit sales increase to 2.2 million cubic yards and prices are raised by 7% ? Cost per yard increases by 9% ? CAPEX of $16 million ? Dividend payment of $3 million
Questions to answer with the model: 1) What is the external financing needed under the assumptions above? 2) What is the external financing needed if unit volume remains flat and prices are raised by 4%? 3) How much cash would be on the balance sheet at the end of 2024 if the dividend is not paid under the baseline assumptions (i.e. treat cash as the plug variable and set the dividend = 0)? ? Remember to change your model back to the units and prices from the baseline assumption. 4) What amount of debt is needed under the baseline assumptions above to make the balance sheet "balance" (i.e. treat debt as the plug variable)? 5) What is the EBITDA for the firm in 2023? 6) What is the maximum debt capacity of the firm based on 3x the 2023 EBITDA? 7) Would the firm able to increase their debt outstanding to meet the cash needs of the firm based on #4 & #6 above? I.E. is the debt amount from #4 lower than the debt capacity in #6
Understanding Financial Statements
ISBN: 978-0133874037
11th edition
Authors: Lyn Fraser, Aileen Ormiston