Need an integrated financial projection, financial model, read this.
MXI explain how MXI Quantrix Modeller will help with budgeting and modelling your organisations integrated financials or a company you wish to acquire. You will need projected revenues, expenses, costs,debts and taxes driving expected profit. Next you need to make assumption examining the key business drivers on the Balance Sheet, Growth rates, Prices, Creditor - debtor days. And most importantly you need a robust model so that you can produce best and worst case scenarios.
ASSETS
Creditors
Grow with credit sales (net revenues)
Using an IF statement, model should enable users to override with creditor days sales outstanding (DSO) projection, where days sales outstanding (DSO) = (AR / Credit Sales) x days in period.
Stock
Grow with cost of goods sold (COGS) -
Override with inventory turnover (Inventory turnover = COGS / Average stock turn)
Expenses
Grow operating expenses (may include COGS if the prepaids are cycled through COGS)
Other Current Assets
Grow with revenues (presumably these are tied to operations and grow as the business grows)
If reason to believe that they are not tied to operations, straight-line projections.
Capital Assets, Plant Etc
PP&E - beginning of period (Opening)
Capital expenditures (grow historicals with sales or use mgmt or analyst guidance)
-Depreciation (function of depreciable plant & equipment opening balance by life expectancy)
- Assets sales (use historical sales as guide)
PP&E - end of period (Closing).
Intangibles
Intangibles - Opening
Purchases (when disclosed, grow historicals with sales or use mgmt or analyst guidance)
Amortisation (when disclosed, amortizable intangibles BOP divided by useful life)
Intangibles - Closing
Simple alternative is to just straight-line or grow entire balance with sales
Goodwill & Other Assets
Straight-line
LIABILITIES
Accounts payable
Grow with COGS
Override with payables payment period assumption
Accrued Expenses
Grow with operating expenses
Taxes Payable
Grow with the growth rate in tax expense on income statement
Other current liabilities
Grow with revenues
If reason to believe that they are not tied to operations, straight-line projections.
Using MXI Quantrix with a little effort in modelling the plan this can achieved in 1-2 days and create a model the entire business can use. Built with budgeting and forecasting software that will generate a real finanical model which the company can link to the ledger for rolling forecasts into the future.