Financial Projection

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financial projection essential element of planning that is the basis for budgeting activities and estimating future financing needs of a firm. Financial projections (forecasts) begin with forecasting sales and their related expenses. The basic steps in financial forecasting are: (1) project the firm's sales; (2) project variables such as expenses and assets; (3) estimate the level of investment in current and fixed assets that is required to support the projected sales; and (4) calculate the firm's financing needs. The basic tools for financial forecasting include the percent-of-sales-method, regression analysis , and financial modeling. Financial Forecasting Financial Forecasting describes the process by which firms think about and…show more content…
and Owners' Equity | 2000 | | | Income Statement ($ in Millions) | | 1999 | % | Sales | 1200 | | Cost of Goods Sold | 900 | 75% | Taxable Income | 300 | 25% | Taxes | 90 | 30%* | Net Income | 210 | 17.5% | Dividends | 70 | 33.33%* | Addition to Retained Earnings | 140 | 66.67%* | | Partial Pro-Forma The next step is to construct the Partial
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