There is a slight change since yesterday. I will not fill the Assumption table in yesterday’s post. Instead, I will discuss what each variable means. This way table is more meaningful, rather than mere numbers.
| Variables_Used_for_Assumption | Units_Used | Explanation_of_Variables |
|
Average Monthly Sales |
US $000s |
Here you can enter net sales value. |
|
Desired average finished inventory |
% of Sales |
Does not apply to Service / Distribution business. For Manufacturing business, this variable is % of sales. |
|
Cost of materials/goods |
As % Sales |
This value is set to zero for Service business and for Distribution it refers to the purchases/inventory for resale. |
|
Target materials/goods inventory |
US $000s |
This value is set to zero for Service business and for Distribution it refers to the purchases/inventory for resale. |
|
Average monthly direct costs |
US $000s |
It is set to zero for for Distribution business |
|
Average monthly overhead expenses |
US $000s |
Interest and Depreciation is not included |
|
Opening total cost of fixed assets |
US $000s |
This is cost as on start date of projection |
|
Accumulated opening depreciation |
US $000s |
This is the value on the start date of projections |
|
Average depreciation rate |
% p.a. |
This is approximated weighted average rate of all fixed assets |
|
Planned capital expenditure for year |
US $000s |
Equipment purchases for the year |
|
Interest rate for cash balances |
% p.a. |
This is approximated weighted average rate |
|
Interest rate for all debt/notes |
% p.a. |
This is approximated weighted average rate |
|
Opening cash balance (deficit) |
US $000s |
If business is started with line of credit, then this number is negative |
|
Opening longterm debt/notes |
US $000s |
Total value of all long-term debt/loans/notes |
|
Net change in longterm debt/notes in yr |
US $000s |
Use appropriate sign for increase or decrease in the value |
|
Opening accounts receivable |
US $000s |
As of projection start date. Do not include expected bad debts |
|
Opening accounts payable |
US $000s |
As of projection start date. Also include all other planned payments |
|
Average credit given on sales |
Days Sales |
Use estimates with consideration of cash sales |
|
Average credit taken for materials /goods |
Days Sales |
Estimate should include suppliers who do not give credit |
|
Expected federal/state tax rate |
% |
Use Effective rate |
|
Planned dividend for year |
US $000s |
Include declared dividends only |
|
Opening number of shares |
000s |
Issued shares only |
|
Proceeds of new stock issues |
US $000s |
Proceeds should be net of all fund raising costs |
|
Number of new shares issued |
000s |
Add this number to opening number of shares |
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