From the course: Financial Modeling and Forecasting Financial Statements
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Forecasting sales-based expenses
From the course: Financial Modeling and Forecasting Financial Statements
Forecasting sales-based expenses
- In this exercise we will construct a forecasted income statement and balance sheet for Hahn Company for year two. The year one starting point is the same as with the Darryl Company example that we did earlier. But the initial forecast and preliminary decisions made by Hahn Company's management are a bit different. Those initial assumptions are as follows. Sales are forecasted to increase 50 percent in year two. Net property, plant, and equipment will increase from 300 dollars to 700 dollars. Loans payable will increase from 300 dollars to 400 dollars. Gross profit percentage will increase from 30 percent to 32 percent. Other operating expenses as a percentage of sales will increase from 18.5 percent to 20 percent. The income tax rate will increase from 42.9 percent to 60 percent. And finally dividends will double from 15 dollars to 30 dollars. Remember that these are preliminary forecasted decisions. The point of…
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