Budgeted forecasts and business valuation techniques

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Budgeted forecasts and business valuation techniques Powered By Docstoc
					ABC COMPANY LIMITED - BUSINESS VALUATION

BASIC ASSUMPTIONS

-   This worksheet has been developed for financial projections and business valuations.
-   Forecasts have been projected on the basis on variable factors which can be adjusted herewith.
-   Business valuations have been modelled on four different approaches.
-   The worksheet is mainly targeted for manufacturing concerns rather than organisations in the financial sector.

BALANCE SHEET ASSUMPTIONS                                                                        Rate / Factor
- Deferred liabilities are expected to reduce by 10% each year                                        0.9
- Fixed assets schedules have been projected for year                                                 1.2
- Full rate of depreciation is applicable on year of acquisition
- Trade and other payables are expected to increase by 5%                                            1.15
- Current assets are expected to increase by 15%                                                     1.15

PROFIT AND LOSS ACCOUNT ASSUMPTIONS
- Sales are expected to increase by 20% per annum                                                    1.2
- Inflation is expected to increase by 15% per annum                                                 1.15
- Expenses have been projected on the basis sales to expense ratio
- Other income is expected to reduce by 10% per annum                                                0.9
- Taxation rate is expected to be 30% per annum                                                      0.3
- Finance costs are expected to rise by 5% per annum                                                 1.05

CASH FLOW STATEMENT ASSUMPTIONS
- Dividend income is expected to increase by 5%                                                      1.05

NOTE:
Figures in forecasts are linked, changes in links may render data useless.
Balance sheet forecast is self balancing with balancing figure being the unappropriated profits.
Cash flow forecast is self balancing with balancing figure being the dividends paid.
Expenses sheet is self balancing with current, past the future projected profit and loss accounts.

DISCLAIMER:
The data and analysis thereof are purely hypothetical and any resemblence of data with any organisation,
  past or present , is purely coincidental.
ABC Company Limited                                                      (Figures in millions)
Balance Sheet
As at December 31, 2009
                                                         2009                   2008
Current Assets
  Stores and spares                                       2,298,593               2,279,523
  Stock in trade                                                57,611                 69,207
  Trade debts                                             1,800,233               2,343,639
  Advance, deposits, prepayments and other receivables      702,048                 259,926
  Short term investments                                        76,958                 74,913
  Cash and bank balances                                  7,424,725               3,173,303
                                                         12,360,168               8,200,511
Fixed Assets
  Property, plant and equipment                           9,077,422               8,120,885
  Other assets (Intangibles)                              1,281,794                 372,340
                                                         10,359,216               8,493,225
  Long term investments in subsidiaries                   9,615,603               8,056,174
  Other long term investments                               522,365                 603,567
  Long term loans advances                                   10,636                  6,817
                                                         32,867,988             25,360,294


Current Liabilities and Provisions
  Short term finance                                               -                      -
  Trade and other payables                                2,226,699               1,601,510
  Provision for income tax                                  703,482                 308,059
                                                          2,930,181               1,909,569
Non Current Liabilities
  Long term deposits                                        477,042                 471,111
  Deferred liabilities                                    4,090,849               3,266,092
                                                          4,567,891               3,737,203
Share Capital and Reserves
  Issued, subscribed and paid-up capital                  1,971,216               1,971,216
  Revenue reserves
     Unappropriated profit                               23,181,549             17,521,879
     Other reserves                                         200,000                 200,000
                                                         23,381,549             17,721,879
  Fair value gain on available-for-sale investments          17,151                 20,427
                                                         32,867,988             25,360,294
ABC Company Limited                                   (Figures in millions)
Profit and loss account
For the year ended December 31, 2009
                                        2009                  2008


Sales                                   18,245,832           16,331,115

Less: Sales tax                          1,506,371             2,091,695

Net sales                               16,739,461           14,239,420

Operating costs                          7,179,908             6,877,542

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DOCUMENT INFO
Description: The worksheet aids in projecting financial statements over a period of 10 years based on certain assumptions and market conditions. Thereafter, the projected financials have been analysed to estimate return on the running business based on various business valuation models namely: - CAPM (Capital Asset Pricing Model) - Dividend based valuation - Asset based valuation - Modigliani-Miller theorem
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