Exam 18: Financial Modeling and Pro Forma Analysis

Use the table for the question(s)below. Ideko Sales and Operating Cost Assumptions -Based upon Ideko's Sales and Operating Cost Assumptions, what production capacity will Ideko require in 2009?

The percent of sales method relies on the idea that capacity increases are ________ ,even though in practice such increases are ________.

Calgary Doughnuts had sales of $100 million in 2007. Its cost of sales were $70 million. If sales are expected to grow at 20% in 2008, compute the forecasted costs using the percent of sales method.

Why is EBITDA multiple used for valuation rather than sales or earnings?

Long term financial planning allows a financial manager to understand the business by ________ between sales, costs, capital investments and financing.

Internal growth rate indicates whether a planned investment will increase or decrease firm value.

Calgary Doughnuts had sales of $300 million in 2007. Its cost of sales were $200 million. If sales are expected to grow at 15% in 2008, compute the forecasted costs using the percent of sales method.

Use the tables for the question(s)below. Pro Forma Income Statement for Ideko, 2010-2015 Pro Forma Balance Sheet for Ideko, 2010-2015 -The amount of the decrease in net working capital for Ideko in 2011 is closest to ________.

________ is the maximum growth rate a firm can achieve without resorting to external financing.

What is common starting point for forecasting?

Use the tables for the question(s)below. Pro Forma Income Statement for Ideko, 2010-2015 Pro Forma Balance Sheet for Ideko, 2010-2015 -Assuming that Ideko has an EBITDA multiple of 9.4, then the continuation enterprise value of Ideko in 2015 is closest to ________.

Use the tables for the question(s)below. Pro Forma Income Statement for Ideko, 2010-2015 Pro Forma Balance Sheet for Ideko, 2010-2015 -The amount of the increase in net working capital for Ideko in 2012 is closest to ________.

A firm has $20 million in equity and $20 million of debt, it pays dividends of 20% of net income, and has a net income of $5 million. What is the firm's sustainable growth rate?

Total working capital rather than changes in working capital has implications for cash flows.

A firm has interest expense of $2,500 each year for ten years. If the tax rate is 30% and the discount rate is 7%, compute the value of the interest rate tax shield.