Financial Forecasting and Decision Making

Book description

Many companies fail to succeed due to poor planning, which is one reason why accountants are in big demand. Skilled at forecasting, accountants can plan a company's future by determining the maximum sustainable growth and predict its external fund requirements. This book provides you with the basic tools necessary to project the balance sheet and statements of income and cash flow, enabling you to add a unique value to your client(s) work.

This book will prepare you to do the following:

  • Recall the basics of planning and forecasting financial statements
  • Recall considerations related to a basic forecasting model
  • Identify the evidence of growth mismanagement and develop the skills to determine maximum sustainable growth
  • Apply statistical procedures to forecasting
  • Analyze projected or forecasted financial statements

Table of contents

  1. Chapter 1 Forecasting Prerequisites
    1. An Overview of the Forecasting Process
    2. More on the Forecasting Process
    3. Budgets Versus Forecasted Financial Statements
    4. Financial Planning Prerequisites
    5. Corporate Growth
    6. Value of a Company
  2. Chapter 2 Using the Basic Forecasting Model
    1. Making Assumptions
    2. Percent of Sales and Sales Forecasts
    3. The Basic Forecasting Model
    4. Explanation of the Basic Model
    5. Identification of Spontaneous and Quasi-spontaneous Accounts
    6. The Basic Model: An Example
    7. Using the Basic Model for Planning
    8. The Basic Model: Sensitivity Analysis
    9. The Zeta Company Case Study
    10. The Balance Sheet: Percent of Sales Method
    11. Forecasting the Balance Sheet: An Example
    12. Using the Projected Balance Sheet for Decision Making: Capital Structure Decision
    13. Methods of Financing EFN
    14. Using the Projected Balance Sheet for Decision Making: Working Capital Decisions
    15. Using the Projected Balance Sheet for Decision Making: Retention Decisions
    16. Problems and Limitations Associated with the Basic Model
    17. Case Study
  3. Chapter 3 Management Uses of the Forecasting Technique: A Case Analysis on Working Capital Planning
    1. The Davidson Toy Company
  4. Chapter 4 Using Forecasting to Plan the Company's Capital Structure
    1. Value of the Firm
    2. The Effect of Debt on the Cost of Capital
    3. Other Factors: Bankruptcy Costs
    4. Financing the Expected Funds Needed (EFN): Capital Structure Theory
    5. Relation of Cost of Capital and Value to Debt Ratio
    6. Optimal Capital Structure
    7. Factors Influencing Debt Usage
    8. Short Versus Long-Term Debt
    9. Case Studies
  5. Chapter 5 Forecasting the Balance Sheet: Statistical Procedures
    1. Statistical Procedure Regression
    2. Advantages of Regression Analysis
    3. Finding a Trend Line with Two Data Points
    4. Regression Analysis
    5. Using Regression: An Example
    6. Regression and Forecasting the Balance Sheet: An Example
    7. Using Regression to Forecast the Income Statement
  6. Chapter 6 Forecasting the Income Statement
    1. How Expenses Vary with Sales Changes
    2. The Income Statement Percent of Sales Method
    3. Finding Fixed and Variable Expenses Graphically
    4. Using Regression to Determine Fixed and Variable Expenses
    5. Example of Using Regression to Determine Expense Components
    6. Forecasting the Income Statement
    7. Case Study
  7. Chapter 7 Reconciling the Income Statement and Balance Sheet
    1. Why There Must Be a Reconciliation
    2. Reconciliation of the Income Statement and the Balance Sheet
    3. Reconciliation: A Complete Example
    4. Forecasting and Reconciling the Income Statement: An Example
    5. Reconciliation: An Example
    6. Reconciliation: A Second Example
    7. Case Study
  8. Chapter 8 Evidence of Growth Mismanagement
    1. Evidence of Growth Mismanagement
    2. Fixed Assets to Net Worth
    3. Net Sales to Net Worth: The Trading Ratio
    4. The Trading Ratio of Company A: An Example
    5. Other Important Ratios to Monitor During Periods of Growth
    6. Case Study
  9. Chapter 9 Maximum Sustainable Growth
    1. The Basic Model: Maximum Sustainable Growth
    2. The Sustainable Growth Model
    3. Maximum Sustainable Growth: An Example
    4. Maximum Sustainable Growth: A Second Example
    5. Improving Sustainable Growth
    6. Case Study
    7. Sustainable Growth: Available External Equity
    8. Sustainable Growth with Regression
  10. Chapter 10 Forecasting Sales
    1. Forecasting Sales: Sales Goal
    2. The Best Guess Forecast: Bottom-up
    3. Compound Growth: An Example of Forecasting Sales
    4. Fluctuating or Cyclical Sales
    5. Using Regression to Predict Sales
    6. Forecasting Sales: Regression Approach
    7. Quick Mart Lumber Company
    8. Case Study
  11. Chapter 11 Integrating the Percent of Sales with a Shorter-Term Forecast of Cash Needs
    1. Shorter-Term Cash Needs
  12. Appendix A The Basic Forecasting Model
  13. Glossary of Controllership and Financial Management Terms
  14. Solutions
    1. Chapter 1
    2. Chapter 2
    3. Chapter 3
    4. Chapter 4
    5. Chapter 5
    6. Chapter 6
    7. Chapter 7
    8. Chapter 8
    9. Chapter 9
    10. Chapter 10
    11. Chapter 11
  15. EULA

Product information

  • Title: Financial Forecasting and Decision Making
  • Author(s): Wallace Davidson III
  • Release date: May 2018
  • Publisher(s): Wiley
  • ISBN: 9781119514299