Chapter 16. Financial Planning and Forecasting. Financial Forecasting Steps. Forecast Sales Project the Assets Needed to Support Sales Project Internally Generated Funds Project Outside Funds Needed Decide How to Raise Funds See Effects of Plan on Ratios. Our Problem: Zippy Drives, Inc.
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Financial Planning and Forecasting
Known as percentage of sales approach.
Projected 2007 Assets 10,400
Projected 2007 Liab&Eq 9,815
Additional Financing Needed 585
AFN = (A*/S)S - (L*/S)S - M(S1) (RR)
RR = retention ratio = 1 – dividend payout
AFN = ($8,000 / $10,000) ($3,000)
- ($1,500 / $10,000) ($3,000)
- 0.15($13,000) (1- 0.3)
= Current Sales/% of Capacity