Financial Analysis, Planning and
Forecasting
Theory and Application
Chapter 23
Simultaneous-Equation Models for Financial Planning
By
Alice C. Lee
San Francisco State University
John C. Lee
J.P. Morgan Chase
Cheng F. Lee
Rutgers University
Outline
23.1 Introduction
 23.2 Warren and Shelton model
 23.3 Eastman Kodak as a case study
 23.4 Francis and Rowell (FR) model
 23.5 Summary
 Appendix 23A. Procedure of Using Microsoft
Excel to Run FINPLAN Program
 Appendix 23B. Program of FINPLAN With
An Example

23.1 Introduction
23.2 Warren and Shelton model
23.2 Warren and Shelton model
TABLE 23.1 The Warren and Shelton Model (Cont.)
III. Financing the desired level of assets
(6)CLt  RCLt SALESt
(7) NFt  ( At  CLt  PFDSKt )  ( Lt 1  LRt )  St 1  Rt 1
bt {(1  Tt )[ EBITt  it 1 ( Lt 1  LRt )]  PFDIVt }
(8) NFt  bt (1  Tt )[ite NLt  U t1 NLt ]  NLt  NSt
(9) Lt  Lt 1  LRt  NLt
(10) St  St 1  NSt
(11) Ri  Rt 1  bt {(1  Tt )[ EBITt  it Lt  U t1 NLt ]  PFDIVt }
(12)it  it 1 (
(13)
Lt 1  LRt
NL
)  ite t
Lt
Lt
Lt
 Kt
St  Rt
23.2 Warren and Shelton model
TABLE 23.1 The Warren and Shelton Model (Cont.)
23.2 Warren and Shelton model
23.2 Warren and Shelton model
TABLE 23.2 List of unknowns and list of parameters provided by
management (Cont.)
23.2 Warren and Shelton model
TABLE 23.3 FINPLAN input format (Cont.)
INPUT DATA
Variable * Variable **
Number Number Data***
21
2
11,703.7
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
3
6
7
8
13
14
9
12
15
17
18
5
10
0.0726
0.1368
0.6805
0.1698
0.0
0.0
4,880.6
553.7
716.1
9,006.2
0.6054
0.3524
0.0631
GCALS t
RCA t-1
RFA t-1
RCL t-1
PFDSK t-1
PFDIV t-1
L t-1
LR t-1
S t-1
R t-1
b t-1
T t-1
i t-1
Description
The net sales (revenues) of the firm at the beginning
of the simulation. t-1= 1999
Growth rate in sales during period t .
Expected ratio of current assets (CA) to sales in t.
Expected ratio of fixed assets (FA) to sales in t.
Current Payables as a Percent of Sales
Preferred Stock
Preferred Dividends
Debt in Previous Period
Debt Repayment
Common Stock in Previous Period
Retained Earnings in Previous Period
Retention Rate
Average Tax Rate
Average Interest Rate in Previous Period
11
4
0.0631
0.1967
i et-1
REBIT t-1
Expected Interest Rate on New Debt
Operating Income as a Percentage of Sales
21
0.0631
UL
Underwriting Cost of Debt
0.1016
1.2446
461.1
23.7
E
22
19
16
20
Variable
SALE t-1
U
Kt
NUMCS t-1
mt-1
Underwriting Cost of Equity
Ratio of Debt to Equity
Number of Common Shares Outstanding in Previous Period
Price-Earnings Ratio
* Variable number as defined in Table 23-2.
** Variable number to be inputed in FinPlan computer program .
*** Data obtained from Anheuser-Busch Balance Sheets and Income Statements
Balance Sheet
23.2
Warren
and
Shelton
model
TABLE 23.3
(Cont.)
Historical or
Base-Period
input:
ANHEUSER-BUSCH COS INC
ANNUAL BALANCE SHEET
TICKER:
SIC:
GICS:
($ MILLIONS)
Dec-99
ASSETS
Cash & Equivalents
Net Receivables
Inventories
Prepaid Expenses
Other Current Assets
-----------------Total Current Assets
Dec-98
Dec-97
Dec-96
Dec-95
Dec-94
Dec-93
Dec-92
Dec-91
Dec-90
Dec-89
152.1
224.8
147.3
93.6
93.6
156.4
127.4
215
97.3
95.3
36.4
629
610.1
713.4
632.7
544.3
784.6
751.1
649.8
654.8
562.6
527.8
623.8
623.4
550.2
531.1
582.7
624.8
626.7
660.7
635.6
567.2
531.7
0
0
0
0
0
0
0
0
0
0
0
195.7
182.1
173
208.4
290
295.8
290
290.3
240
201.2
181
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------1,600.60
1,640.40
1,583.90
1,465.80
1,510.60
1,861.60
1,795.20
1,815.80
1,627.70
1,426.30 1,276.90
Gross Plant,Property & Equipment 14,379.60
13,837.70
13,227.60
12,214.70
11,319.70
12,224.10
11,727.10
11,385.10
10,589.60
10,016.70 9,187.90
Accumulated Depreciation
6,415.00
5,988.70
5,477.00
5,006.50
4,556.70
4,676.40
4,230.00
3,861.40
3,393.10
2,952.90 2,516.60
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Net Plant,Property & Equipment
7,964.60
7,849.00
7,750.60
7,208.20
6,763.00
7,547.70
7,497.10
7,523.70
7,196.50
7,063.80 6,671.30
Investments at Equity
Other Investments
Intangibles
Deferred Charges
Other Assets
-----------------TOTAL ASSETS
2,012.50
1,880.60
1,296.80
741.2
178.2
177.5
136.1
171.6
116.9
100.8
87.4
119
116.4
128.1
129.3
618.6
634.9
645.3
164.8
159.9
151.4
141.1
425
442.2
451.9
435.8
443.8
483.4
495.9
505.7
519.9
533.6
536.8
518.7
555.7
515.8
483.3
312.7
340.3
310.7
0
0
0
0
764
0
0
356.3
365.6
358.4
312.2
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------12,640.40
12,484.30
11,727.10
10,463.60
10,590.90
11,045.40
10,880.30
10,537.90
9,986.50
9,634.30 9,025.70
LIABILITIES
Notes Payable
Accounts Payable
Taxes Payable
Accrued Expenses
Other Current Liabilities
-----------------Total Current Liabilities
242.3
0
0
0
0
0
0
0
0
0
0
932.6
905.7
791.8
726.8
682.8
850.9
812.5
737.4
709.8
711.2
608
164.2
193.6
183.9
233
0
0
91
38.8
45.2
79.2
40
263
256.3
224.3
227.6
333.3
448.9
609.7
426.7
392.7
391.1
337.6
385.1
374.7
300.7
243.5
225.9
369.2
302.4
256.9
255.1
230.4
213
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------1,987.20
1,730.30
1,500.70
1,430.90
1,242.00
1,669.00
1,815.60
1,459.80
1,402.80
1,411.90 1,302.60
Long Term Debt
Deferred Taxes
Investment Tax Credit
Minority Interest
Other Liabilities
-----------------TOTAL LIABILITIES
4,880.60
4,718.60
4,365.60
3,270.90
3,270.10
3,078.40
3,031.70
2,642.50
2,644.90
3,147.10 3,307.30
1,344.70
1,303.60
1,293.60
1,208.10
1,132.80
1,258.20
1,170.40
1,276.90
1,500.70
1,396.20 1,315.90
0
0
0
0
0
0
0
0
0
0
0
@IF
@IF
@IF
0
0
0
0
0
0
0
0
506.4
515.8
525.4
524.6
512.1
624.3
607.1
538.3
0
0
0
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------8,718.90
8,268.30
7,685.30
6,434.50
6,157.00
6,629.90
6,624.80
5,917.50
5,548.40
5,955.20 5,925.80
23.2
Warren and Shelton model
TABLE 23.3 (Cont.) Historical or Base-Period input:
Balance Sheet
ANHEUSER-BUSCH COS INC
ANNUAL BALANCE SHEET
TICKER:
SIC:
GICS:
($ MILLIONS)
Dec-99
Dec-98
Dec-97
Dec-96
Dec-95
Dec-94
Dec-93
Dec-92
Dec-91
Dec-90
Dec-89
EQUITY
Preferred Stock - Redeemable
0
0
0
0
0
0
0
0
0
0
0
Preferred Stock - Nonredeemable
0
0
0
0
0
0
0
0
0
0
0
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Total Preferred Stock
0
0
0
0
0
0
0
0
0
0
0
Common Stock
716.1
712.7
709.3
705.8
347.3
343.8
342.5
341.3
338.5
335.7
333.9
Capital Surplus
1,030.50
870.3
734.9
613.8
665.1
479.4
402.2
328.5
193.3
73.9
7.2
Retained Earnings
9,006.20
8,115.10
7,390.90
6,915.70
6,857.50
6,634.90
5,990.40
5,793.50
5,230.50
4,592.60 3,995.60
Less: Treasury Stock
6,831.30
5,482.10
4,793.30
4,206.20
3,436.00
3,042.60
2,479.60
1,842.90
1,324.20
1,323.10 1,236.80
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Common Equity
3,921.50
4,216.00
4,041.80
4,029.10
4,433.90
4,415.50
4,255.50
4,620.40
4,438.10
3,679.10 3,099.90
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------TOTAL EQUITY
3,921.50
4,216.00
4,041.80
4,029.10
4,433.90
4,415.50
4,255.50
4,620.40
4,438.10
3,679.10 3,099.90
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------TOTAL LIABILITIES & EQUITY 12,640.40
12,484.30
11,727.10
10,463.60
10,590.90
11,045.40
10,880.30
10,537.90
9,986.50
9,634.30 9,025.70
COMMON SHARES OUTSTANDING 461.1
476.6
487.02
497.357
507.952
514.58
534.074
556.804
570.104
564.612
565.974
Income Statement
ANHEUSER-BUSCH COS INC
ANNUAL INCOME STATEMENT
23.2
Warren
and
Shelton
model
TABLE 23.3
(Cont.)
Historical
or BasePeriod
input:
($ MILLIONS, EXCEPT PER SHARE)
Dec-99
Dec-98
Dec-97
Dec-96
Dec-95
Dec-94
Dec-93
Dec-92
Dec-91
Dec-90
Dec-89
Sales
11,703.70 11,245.80 11,066.20 10,883.70 10,340.50 12,053.80 11,505.30 11,393.70 10,996.30 10,743.60 9,481.30
Cost of Goods Sold
6,477.40 6,424.10 6,413.20 6,370.70 6,225.40 7,156.90 6,825.60 6,756.30 6,628.80 6,612.00 5,869.40
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Gross Profit
5,226.30 4,821.70 4,653.00 4,513.00 4,115.10 4,896.90 4,679.70 4,637.40 4,367.50 4,131.60 3,611.90
Selling, General, &
Administrative Expense
2,147.00 1,958.00 1,916.30 1,890.00 1,756.60 2,370.30 2,308.70 2,308.90 2,126.10 2,051.10 1,876.80
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Operating Income Before Deprec.
3,079.30 2,863.70 2,736.70 2,623.00 2,358.50 2,526.60 2,371.00 2,328.50 2,241.40 2,080.50 1,735.10
Depreciation, Depletion, &
Amortization
777
738.4
683.7
593.9
565.6
627.5
594.1
552.8
519.9
481.5
406.4
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Operating Profit
2,302.30 2,125.30 2,053.00 2,029.10 1,792.90 1,899.10 1,776.90 1,775.70 1,721.50 1,599.00 1,328.70
Interest Expense
307.8
291.5
261.2
232.8
225.9
221.4
207.8
199.6
238.5
283
177.9
Non-Operating Income/Expense
170.6
103.8
91
41.9
54.7
29.4
46.3
39.1
37.6
36.1
75.9
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Pretax Income
2,165.10 1,937.60 1,882.80 1,892.90 1,461.70 1,707.10 1,050.40 1,615.20 1,520.60 1,352.10 1,226.70
Total Income Taxes
762.9
704.3
703.6
736.8
575.1
675
455.9
621
580.8
509.7
459.5
Minority Interest
@IF
@IF
@IF
0
0
0
0
0
0
0
0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Income Before Extraordinary
Items & Discontinued Operations
1,402.20 1,233.30 1,179.20 1,156.10
886.6 1,032.10
594.5
994.2
939.8
842.4
767.2
Preferred Dividends
0
0
0
0
0
0
0
0
0
0
0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Available for Common
1,402.20 1,233.30 1,179.20 1,156.10
886.6 1,032.10
594.5
994.2
939.8
842.4
767.2
Savings Due to Common
Stock Equivalents
0
0
0
0
0
0
0
0
0
0
0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Adjusted Available for Common
1,402.20 1,233.30 1,179.20 1,156.10
886.6 1,032.10
594.5
994.2
939.8
842.4
767.2
Extraordinary Items
0
0
-10
0
0
0
0
-76.7
0
0
0
Discontinued Operations
0
0
0
33.8
-244.3
0
0
0
0
0
0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Adjusted Net Income
1,402.20 1,233.30 1,169.20 1,189.90
642.3 1,032.10
594.5
917.5
939.8
842.4
767.2
23.2
Warren and Shelton model
TABLE 23.3 (Cont.) Historical or Base-Period input:
Income Statement
ANHEUSER-BUSCH COS INC
ANNUAL INCOME STATEMENT
($ MILLIONS, EXCEPT PER SHARE)
PER SHARE DATA
Earnings Per Share Basic Excluding Extra Items & Disc Op
Dec-99 Dec-98 Dec-97 Dec-96 Dec-95 Dec-94 Dec-93 Dec-92 Dec-91 Dec-90 Dec-89
2.99
2.56
2.39
2.28
1.72
1.96
1.09
1.74
1.63
1.48
1.34
Earnings Per Share Basic Including Extra Items & Disc Op
2.99
2.56
2.37
2.35
1.25
1.96
1.09
1.61
1.63
1.48
1.34
Earnings Per Share DilutedExcluding Extra Items & Disc Op
2.94
2.53
2.36
2.27
1.71
1.94
1.09
1.73
1.63
1.48
1.34
Earning Per Share Diluted Including Extra Items & Disc Op
2.94
2.53
2.34
2.34
1.25
1.94
1.09
1.6
1.63
1.48
1.34
EPS Basic from Operations
2.99
2.57
2.39
2.15
1.91
1.96
1.72
1.74
1.63
1.48
1.34
EPS Diluted from Ops
2.94
2.54
@NA
@NA
@NA
@NA
@NA
@NA
@NA
@NA
@NA
Dividends Per Share
1.16
1.08
1
0.92
0.84
0.76
0.68
0.6
0.53
0.47
0.4
Com Shares for Basic Eps
469.5
482.1
492.6
505.8
515.8
528.2
548.6
571.6
575.8
569.2
572.4
Com Shares for Diluted EPS
476.8
487.5
499.7
510.6
524.4
538
558.6
581.6
585.8
579.4
@NA
Statement of Cash Flows
ANHEUSER-BUSCH COS INC
ANNUAL STATEMENT OF CASH FLOWS
TICKER:
SIC:
GICS:
23.2
Warren
and
Shelton
model
TABLE 23.3
(Cont.)
BUD
2082
30201010
($ MILLIONS)
Dec-99
Dec-98
Dec-97
Dec-96
Dec-95
1,402.20
777
0
40.3
-155.5
1,233.30
738.4
0
34.5
-53.7
1,179.20
683.7
0
91.4
-49.9
1,156.10
593.9
52
93.8
886.6
565.6
-11
51.3
0
38.6
-18.9
-0.4
33.6
-29.4
-3.2
2,084.30
0
-27.1
103.3
-73.2
145.9
9.7
64.9
2,176.00
0
-93.2
-80.7
-19.1
61.7
-49.1
92.6
1,816.60
-33.4
-75.2
-88.4
51.6
24.6
146.7
99.2
2,020.90
0
184.4
54.2
-51.9
-126.2
-138.1
1,414.90
0
0
0
865.3
7
59.6
-812.7
0
0
0
817.5
566.5
0
-1,384.00
0
0
0
1,199.30
683.3
0
-1,882.60
0
0
0
1,084.60
135.7
116.6
-1,103.70
0
0
0
952.5
82.9
0
-1,035.40
129.9
1,349.20
544.7
973.4
553.7
0
-1,344.30
0
107.4
688.8
521
451.5
63.6
0
-714.5
0
95.1
587.1
492.6
1,245.90
141.6
0
119.7
0
113.4
770.2
458.9
773.6
575.1
0
-917.2
0
159
393.4
429.5
597.6
363.6
0
-429.9
0
Cash and Equivalents - Change
-72.7
77.5
53.7
0
-50.4
DIRECT OPERATING ACTIVITIES
Interest Paid - Net
Income Taxes Paid
286.9
706.2
263.3
644.3
205.1
609.5
208
533.6
198
546.6
INDIRECT OPERATING ACTIVITIES
Income Before Extraordinary Items
Depreciation and Amortization
Extraordinary Items and Disc. Operations
Deferred Taxes
Equity in Net Loss (Earnings)
Sale of Property, Plant, and Equipment
and Sale of Investments - Loss (Gain)
Funds from Operations - Other
Receivables - Decrease (Increase)
Inventory - Decrease (Increase)
Accounts Payable and Accrued Liabs - Inc (Dec)
Income Taxes - Accrued - Increase (Decrease)
Other Assets and Liabilities - Net Change
Operating Activities - Net Cash Flow
INVESTING ACTIVITIES
Investments - Increase
Sale of Investments
Short-Term Investments - Change
Capital Expenditures
Acquisitions
Investing Activities - Other
Investing Activities - Net Cash Flow
FINANCING ACTIVITIES
Sale of Common and Preferred Stock
Purchase of Common and Preferred Stock
Cash Dividends
Long-Term Debt - Issuance
Long-Term Debt - Reduction
Financing Activities - Other
Financing Activities - Net Cash Flow
Exchange Rate Effect
Retained Earnings Statement
23.2
Warren
and
Shelton
model
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
Anheuser-Busch Companies and Subsidiaries
YEAR ENDED DECEMBER 31 (in millions, except per share)
1999
COMMON STOCK
Balance, beginning of period
Shares issued under stock plans
Balance, end of period
1998
$712.7
3.4
$716.1
$709.3
3.4
TABLE 23.3
(Cont.)
RETAINED EARNINGS
Balance, beginning of period
Net income
$1,241.0
$1,017.0
100.5
$8,320.7
1,402.2
$9,181.2
$929.2
87.8
$1,117.5
$1,017.0
=============================================
$7,604.9
1,233.3
Common dividend paid (per share: 1999 - $1.16;
1998 - $1.08; 1997 - $1.00)
(544.7)
Shares issued under stock plans
3.0
Balance, end of period
$705.8
3.5
$712.7
$709.3
=============================================
CAPITAL IN EXCESS OF PAR VALUE
Balance, beginning of period
$1,117.5
Shares issued under stock plans
123.5
Balance, end of period
1997
3.0
(521.0)
3.53.5
$6,924.5
1,169.2
(492.6)
3.8 3.8
$8,320.7
$7,604.9
=============================================
Retained Earnings Statement
23.2
Warren
and
Shelton
model
YEAR ENDED DECEMBER 31 (in millions, except per share)
TREASURY STOCK
Balance, beginning of period
Treasuru stock acquired
Balance, end of period
ESOP DEBT GUARANTEE
Balance, beginning of period
Annual debt service
Balance, end of period
TABLE 23.3
(Cont.)
($5,482.1)
1,349.2
TOTAL SHAREHOLDERS EQUITY
COMPREHENSIVE INCOME
Net income
Foreign currency translation adjustment
($4,206.2)
587.1
($6,831.3)
($5,482.1)
($4,793.3)
=====================================================
($247.2)
36.7
($282.1)
34.9
($315.4)
33.3
($210.5)
($247.2)
($282.1)
=====================================================
ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance, beginning of period
($205.6)
Foreign currency translation adjustment
30.6
Balance, end of period
($4,793.3)
688.8
($214.0)
8.4
($8.8)
(205.2)
($175.0)
($205.6)
($214.0)
=====================================================
$3,921.5
$4,216.0
$4,041.8
=====================================================
$1,402.2
30.6
$1,233.3
8.4
$1,169.2
(205.2)
TOTAL COMPREHENSIVE INCOME $1,432.8
$1,241.7
$964.0
=====================================================
The above data of financial statements is downloaded from the COMPUSTAT dataset. @NA represents data is not available.
23.3 Eastman Kodak as a case study
 Data
sources and
parameter estimations
 Procedure
for
calculating WS model
The Data Description
23.3 Eastman
Kodak as a case
study
Variable Description
SALE t-1 Sales in previous period
GCALS t Growth in Sales
RCA t-1
Current Assets as a Percent of Sales
RFA t-1
Fixed Assets as a Percent of Sales
RCL t-1
Current Payables as a Percent of Sales
PFDSKt-1 Preferred Stock
PFDIV t-1 Preferred Dividends
L t-1
Debt in Previous Period
LR t-1
Debt Repayment
S t-1
Common Stock in Previous Period
R t-1
Retained Earnings in Previous Period
b t-1
Retention Rate
T t-1
Average Tax Rate
i t-1
Average Interest Rate in Previous Period
i e t-1
Expected Interest Rate on New Debt
REBIT t-1 Operating Income as a Percentage of Sales
U
1
U
s
t
Underwriting Cost of Debt
t
Underwriting Cost of Equity
Kt
Ratio of Debt to Equity
NUMCS t-1Number of Common Shares Outstanding in Previous Period
m t-1
Price-Earnings Ratio
23.3 Eastman Kodak as a case study
Procedure for Calculating WS Model
By using the data above, we are able to calculate the unknown variables below:
(1) Salest = Salest-1 (1 + GCALSt)
= 11,703.7  1.0726
= 12,553.38
(2) EBITt = REBITt-1  Salest
= 0.1967  12,553.38
= 2,469.25
(3) CAt = RCAt-1  Salest
= 0.1368 12,553.38
= 1,717.30
23.3 Eastman Kodak as a case study
(4) FAt = RFAt-1  Salest
= 0.6805  12,553.38
= 8,542.58
(5) At = CAt + FAt
= 1,717.30 + 8,542.58
= 10,259.88
(6) CLt = RCLt-1  Salest
= 0.1698  12,553.38
= 2,131.56
(7) NFt = (At – CLt – PFDSKt) – (Lt-1 – LRt) – St-1 – Rt-1 – bt{(1 – Tt)[EBITt –
it-1(Lt-1 – LRt)] – PFDIVt}
= (10,259.88 – 2,131.56 – 0) - (4,880.60 – 553.70) – 716.1 – 9,006.20 –
0.6054{(1-0.3524)(2,469.25 - 0.0631(4,880.60 – 553.70) – 0}
= -6,781.92
23.3 Eastman Kodak as a case study
(12) itLt = i0(L0 – LRt) + ietNLt
= 0.0631(4,880.60 – 553.70) + 0.0631NLt
= 273.03 + 0.0631NLt
(8) NFt + bt(1-T)[iNLt + ULtNLt] = NLt + NSt
-6,781.92 + 0.6054(1 - 0.3524)(0.0631NLt + 0.03NLt) = NLt + NSt
-6,781.92 + 0.0365NLt = NLt + NSt
(a) NSt +0.9635NLt = -6,781.92
(9) Lt = Lt-1 – LRt + NLt
(b) Lt = 4,880.60 – 553.70 + NLt
Lt – NLt = 4,326.90
(10) St = St-1 + NSt
(c) -NSt + St = 716.1
(11) Rt = Rt-1 + bt{(1 – Tt)[EBITt – itLt – ULtNLt] – PFDIVt}
= 9,006.20 + 0.6054{0.6476[2,469.25 – itLt - 0.03NLt]}
23.3 Eastman Kodak as a case study
Substitute (12) into (11)
Rt = 9,006.20 + 0.6054{0.6476[2,469.25 – (273.027 + 0.0631NLt) - 0.03NLt]}
= 9,006.20 + 861.04 - 0.0357NLt
(d) Rt = 9,867.24 - 0.0357NLt
(13) Lt = (St + Rt)Kt
Lt = 1.2446St + 1.2446Rt
(e) Lt – 1.2446St – 1.2446Rt = 0
(b) – (e) = (f)
0 = (Lt – NLt – 4,326.90) – (Lt - 1.2446St - 1.2446Rt)
4,326.90= 1.2446St + 1.2446Rt – NLt
(f) – 1.2446(c) = (g)
4,326.9-4,880.7= (1.2446St - 1.2446Rt – NLt ) – 1.2446(-NSt + St )
3,435.64= 1.2446NSt - NLt + 1.2446Rt
23.3 Eastman Kodak as a case study
(g) – 1.2446(d) = (h)
3,435.64 - 12,280.77
= (1.2446NSt – NLt + 1.2446Rt ) – 1.2446(.0494NLt + Rt )
- 8,845.13 = 1.2446NSt – 1.06148NLt
(h) – 1.2446(a) = (i)
1.2446NSt – 1.06148NLt – 1.2446(NSt + 0.9505NLt )
= - 8,845.13 + 8,440.78
NLt = 180.15
Substitute NLt in (a)
NSt + 0.9635(180.15) = -6,781.92
NSt = -6,955.49
23.3 Eastman Kodak as a case study
Substitute NLt in (b)
Lt = 4,880.60 – 553.70 + 180.15
= 4,507.05
Substitute NSt in (c)
10,159.65 + St = 716.10
St = -6,239.39
Substitute NLt in (d)
Rt = 9,867.24 - 0.0357(180.15)
Rt = 9,860.81
Substitute NLtLt in (12)…
it(4,505.76) = 273.027 +0.0357(180.15)
it =0.0631
23.3 Eastman Kodak as a case study
(14) EAFCDt = (1 – Tt)(EBITt – itLt – ULtNLt)- PFDIVt
= 0.6476[2,469.25 – (0.0631)(4,505.76) - 0.0631(178.86)]
= 1,407.55
(15) CMDIVt = (1 – bt)EAFCDt
= 0.3946(1,407.55)
= 555.42
(16) NUMCSt = X1 = NUMCSt-1 + NEWCSt
X1 = 461.10 + NEWCSt
(17) NEWCSt = X2 = NSt / (1 – Ust) Pt
X2 = - 6,955.49 / (1 - 0.1016)Pt
(18) Pt = X3 = mtEPSt
X3 = 23.70(EPSt)
23.3 Eastman Kodak as a case study
(19) EPSt = X4 = EAFCDt / NUMCSt
X4 = 1,407.55 / NUMCSt
(20) DPSt = X5 = CMDIVt/ NUMCSt
X5 = 555.42 / NUMCSt
(A) = For (18) and (19) we obtain X3 = 23.70(1,407.55) / NUMCSt
=33,452.55/X1
Substitute (A) into Equation (17) to calculate (B)
(B) = -6,955.49 / (1-0.1016)(23.70)(1,407.55) / X1
(B) = 0.2321X1
23.3 Eastman Kodak as a case study
Substitute (B) into Equation (16) to calculate (C)
(C) = X1 = 461.10 - 0.2321X1
(C) = X1 = 374.24
Substitute (C) into (B)…
(B) = 0.3231X1
(B) = 116.92
From Equation (19) and (20) we obtain X4, X5 and X3
X4 = 1,411.5 / 374.24 = 3.76
X5 = 555.42 / 344.24 = 1.48
X3 = 23.70(3.76) = 89.11
23.3 Eastman Kodak as a case study
The results of the above calculations allow us to forecast the following information
regarding Anheuser-Busch in the 2000 fiscal year ($ in thousands, except for per
share data):




















Sales = $12,553.38
Current Assets = $1,717.30
Fixed Assets = $8,542.58
Total Assets = $10,259.88
Current Payables = $2,131.56
Needed Funds = ($6,781.92)
Earnings Before Interest and Taxes = $2,469.25
New Debt = $180.15
New Stock = ($6,955.49)
Total Debt = $4,507.05
Common Stock = ($6,239.39)
Retained Earnings $9,858.34
Interest Rate on Debt = 6.31%
Earnings Available for Common Dividends = $1,407.55
Common Dividends = $555.42
Number of Common Shares Outstanding = 374.24
New Common Shares Issued = 86.86
Price per Share = $89.11
Earnings per Share = $3.76
Dividends per Share = $1.48
23.3 Eastman Kodak as a case study
TABLE 23.4 The Comparison of Financial Forecast of Anheuser-Busch Companies,
Inc.: Hand Calculation and FinPlan Forecasting.
Category
INCOME STATEMENT
Sales
Operating Income
Interest Expense
Income before taxes
Taxes
Net Income
Common Dividends
Debt Repayments
BALANCE SHEET
Assets
Current Assets
Fixed Assets
Total Assets
Manual
Calculation
Financial Plan
Model
Variance
(|(A - F)/A|)
12,553.38
2,469.25
284.39
2,173.49
765.94
1,407.55
555.42
553.70
12,553.39
2,469.25
284.39
2,173.49
765.94
1,407.55
555.42
553.70
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
1,717.30
8,542.58
10,259.88
1,717.30
8,542.58
10,259.88
0.0%
0.0%
0.0%
23.3 Eastman Kodak as a case study
TABLE 23.4 The Comparison of Financial Forecast of Anheuser-Busch Companies,
Inc.: Hand Calculation and FinPlan Forecasting. (Cont.)
Category
LIABILITIES AND NET WORTH
Current Payables
Total Debt
Common Stock
Retained Earnings
Total Liabilities and Net Worth
PER SHARE DATA
Price per Share
Earnings per Share (EPS)
Dividends per Share (DPS)
Manual
Calculation
Financial Plan
Model
Variance
(|(A - F)/A|)
2,131.56
4,507.05
-6,237.07
9,858.34
10,259.88
2,131.57
4,507.04
-6,237.06
9,858.33
10,259.88
0.0%
0.0%
0.0%
0.0%
0.0%
89.11
3.76
1.48
88.61
3.74
1.48
0.6%
0.6%
0.3%
FINPLAN input
YEAR=1999
23.3
Eastman
Kodak as
a case
study
TABLE 23.5
FINPLAN
input
Variable Number for
Beginning
Value of Data
FinPlan Computer Program Period
11703.7
2
0
716.1
15
0
9006.2
17
0
0.0631
10
0
461.1
16
0
4
1
0
4880.6
9
0
0.0726
3
1
0.1368
6
1
0.6805
7
1
0.1698
8
1
0.1967
4
1
553.7
12
1
0.6054
18
1
1.2446
19
1
23.7
20
1
0.3524
5
1
0.0631
11
1
0.03
21
1
0.06
22
1
Last
Period
0
0
0
0
0
0
0
4
4
4
4
4
4
4
4
4
4
4
4
4
23.3 Eastman Kodak as a case study
TABLE 23.6
Pro forma balance sheet of Anheuser-Busch Companies, Inc.: 2000-2003
Item/ Year
Assets
Current assets
Fixed assets
Total assets
Liabilities and net worth
Current liabilities
Long term debt
Preferred stock
Common stock
Retained earnings
Total liabilities and net worth
Computed DBT/EQ
Int. rate on total debt
Per share data
Earnings
Dividends
Price
2000
2001
2002
2003
1,717.30 1,841.98 1,975.71 2,119.14
8,542.58 9,162.77 9,827.99 10,541.50
10,259.88 11,004.75 11,803.70 12,660.65
2,131.57 2,286.32 2,452.30 2,630.34
4,507.04 4,834.25 5,185.22 5,561.67
0.00
0.00
0.00
0.00
-6,237.05 -6,871.13 -7,552.24 -8,283.79
9,858.33 10,755.32 11,718.42 12,752.43
10,259.88 11,004.75 11,803.70 12,660.65
1.24
1.24
1.24
1.24
0.06
0.06
0.06
0.06
3.74
1.48
88.61
4.01
1.58
95.09
4.39
1.73
104.08
4.81
1.90
113.93
23.3 Eastman Kodak as a case study
TABLE 23.7
Pro forma income statement of Anheuser-Busch Companies, Inc.: 2000-2003
Item/ Year
Sales
Operating income
Interest expense
Underwriting commission -- debt
Income before taxes
Taxes
Net income
Preferred dividends
Available for common dividends
Common dividends
Debt repayments
Actual funds needed for investment
2000
2001
2002
2003
12,553.39 13,464.76 14,442.31 15,490.82
2,469.25 2,648.52 2,840.80 3,047.04
284.39
305.04
327.19
350.94
11.37
55.59
57.08
58.69
2,173.49 2,287.89 2,456.53 2,637.41
765.94
806.25
865.68
929.42
1,407.55 1,481.64 1,590.85 1,707.99
0.00
0.00
0.00
0.00
1,407.55 1,481.64 1,590.85 1,707.99
555.42
584.65
627.75
673.97
553.70
553.70
553.70
553.70
-6,773.01
246.83
223.56
198.60
23.3
Eastman
Kodak as
a case
study
TABLE 23.8
Results of sensitivity analysis
Year
g=
0.073
EPS =
DPS =
PPS =
g=
0.03
EPS =
DPS =
PPS =
g=
0.09
EPS =
DPS =
PPS =
g=
0.078
EPS =
DPS =
PPS =
g=
0.078
EPS =
DPS =
PPS =
g=
0.078
EPS =
DPS =
PPS =
g=
0.078
EPS =
DPS =
PPS =
2000
2001
2002
2003
b=
k=
0.6054 1.245
3.74
1.48
88.61
4.01
1.58
95.09
4.39
1.73
104.08
4.81
1.90
113.93
3.64
1.44
86.36
3.77
1.49
89.28
3.98
1.57
94.22
4.20
1.66
99.43
3.78
1.49
89.52
4.11
1.62
97.51
4.57
1.80
108.30
5.07
2.00
120.27
3.72
1.86
88.26
3.98
1.99
94.27
4.33
2.17
102.70
4.72
2.36
111.89
3.75
1.13
88.92
4.04
1.21
95.82
4.44
1.33
105.33
4.89
1.47
115.78
3.73
1.47
88.38
4.01
1.58
95.09
4.39
1.73
104.00
4.80
1.89
113.74
3.71
1.46
87.87
4.02
1.59
95.31
4.41
1.74
104.41
4.83
1.90
114.37
b=
k=
0.6054 1.245
b=
k=
0.6054 1.245
b=
k=
0.5 1.245
b=
0.7
k=
1.245
b=
k=
0.6054
1
b=
k=
0.6054
1.5
23.4 Francis and Rowell (FR) model
 The
FR model specification
 A brief
discussion of FR’s
empirical results
23.4 Francis and Rowell (FR) model
TABLE 23.9 List of variables for FR model.
23.4 Francis and Rowell (FR) model
TABLE 23.9 List of variables for FR model. (Cont.)
23.4 Francis and Rowell (FR) model
TABLE 23.9 List of variables for FR model. (Cont.)
23.4 Francis and Rowell (FR) model
TABLE 23.9 List of variables for FR model. (Cont.)
23.4 Francis and Rowell (FR) model
TABLE 23.10 List of equations for FR Model.
23.4 Francis and Rowell (FR) model
TABLE 23.10 List of equations for FR Model. (Cont.)
23.4 Francis and Rowell (FR) model
TABLE 23.11 Sector interdependence
1
Explained
Sector
1
2
3
4
5
6
7
8
9
10
2
Earning Sector
3
4
5
6
7
8
9
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
10
23.4 Francis and Rowell (FR) model
TABLE 23.12 Variable interdependence within sector seven
23.4 Francis and
Rowell (FR)
model
TABLE 23.13
Transformation of
industry sales
moments to company
NIAT and EBIY moments
23.4 Francis and
Rowell (FR)
model
TABLE 23.13
Transformation of
industry sales
moments to company
NIAT and EBIY moments
(Cont.)
23.4 Francis and Rowell (FR) model
TABLE 23.13 Transformation of industry sales moments to company NIAT
and EBIY moments (Cont.)
(Cont.)
23.4 Francis and Rowell (FR) model
TABLE 23.13 Transformation of industry sales moments to company NIAT
and EBIY moments (Cont.)
(Cont.)
23.4 Francis and Rowell (FR) model
TABLE 23.13 Transformation of industry sales moments to company NIAT
and EBIY moments (Cont.)
(Cont.)
23.4 Francis and Rowell (FR) model
Share price 
Cash dividend per year
(Equity capitaliza tion rate, its ) - (Growth rate, g ta )
23.5 Summary
Two simultaneous-equation financial planning models are
discussed in detail in this chapter. There are 20 equations
and 20 unknowns in the WS model. Annual financial data
from Anheuser-Busch Co. are used to show how the WS
model can be used to perform financial analysis and
planning. A computer program of the WS model is
presented in Appendix B.
The FR model is a generalized WS financial-planning
model. There are 36 equation and 36 unknown in the FR
model. The two simultaneous-equation financial-planning
models discussed in this chapter are an alternative to
Carleton's linear-programming model, to perform financial
analysis, planning, and forecasting.
Appendix 23A. Appendix 23A. Procedure of Using
Microsoft Excel to Run FINPLAN Program
Appendix 23A. Appendix 23A. Procedure of Using
Microsoft Excel to Run FINPLAN Program
Appendix 23A. Appendix 23A. Procedure of Using
Microsoft Excel to Run FINPLAN Program
The program of FinPlan is available on the Website: http://www.pegasus.rutgers.edu/~wpt
Appendix 23B. Program of FINPLAN
With An Example
This program is composed under Visual Basic Application (VBA) environment.
Option Explicit
Sub FinPlan()
Dim i As Integer
Dim bNYEARFound As Boolean
Dim NDATE As Integer
Dim NUMVR As Integer
Dim NYEAR() As Integer
Dim
Dim
Dim
Dim
Dim
Dim
Dim
Dim
Dim
Dim
N As Integer
SALES() As Double
GSALS() As Double
ORATE() As Double
T() As Double
CARAT() As Double
FARAT() As Double
CLRAT() As Double
ZL() As Double
ZI() As Double
'Looping control variable
'Check if Year Being Simulated is found
'Year immediately preceeding the first forecasted year
'Variable code number
'Year being simulated
'1 The number of years to be simulated
'2 Sales in the simulation year
'3 Growth rate of sales
'4 Operating income rate (EBIT/SALES)
'5 Federal income tax rate
'6 Ratio of current assets to sales
'7 Ratio of fixed assets to sales
'8 Ratio of current liabilities to sales
'9 Long term debt
'10 Interest rate on total debt
Appendix 23B. Program of FINPLAN
With An Example
Dim ZIE() As Double
Dim ZLR() As Double
Dim PFDSK() As Double
Dim PFDIV() As Double
Dim S() As Double
Dim ZNUMC() As Double
Dim R() As Double
Dim B() As Double
Dim ZK() As Double
Dim PERAT() As Double
Dim UL() As Double
Dim US() As Double
'11 Interest rate on new debt
'12 Debt repayments
'13 Preferred stock
'14 Preferred dividends
'15 Common stock
'16 Cummulative number of common stock shares outstanding
'17 Retained earnings
'18 Retention rate
'19 Desired debt to equity ratio
'20 Price / Earnings ratio
'21 Underwriting commission of new debt
'22 Underwriting commission of new stock
Appendix 23B. Program of FINPLAN
With An Example
Dim O() As Double
Dim CA() As Double
Dim FA() As Double
Dim A() As Double
Dim CL() As Double
Dim ZNF() As Double
Dim ZNL() As Double
Dim EXINT() As Double
Dim DBTUC() As Double
Dim EAIBT() As Double
Dim TAX() As Double
Dim EAIAT() As Double
'Operating income
'Current assets
'Fixed assets
'Total assets
'Current liabilities
'Estimated needed funds
'Value of new debt issued
'Interest expense
'Debt underwriting commission
'Earnings after interest and before tax
'Federal income taxes
'Earnings after interest and after tax
Appendix 23B. Program of FINPLAN
With An Example
Dim EAFCD() As Double
'Earnings available for common dividends
Dim
Dim
Dim
Dim
Dim
Dim
Dim
Dim
Dim
'Common stock dividends
'Value of new common stock issued
'Total liabilities and net worth
'Computed debt to equity
'Actual needed funds
'Per share market price of common stock
'Value of new common stock shares issued
'Common stock earnings per share
'Common stock dividends per share
COMDV() As Double
ZNS() As Double
TLANW() As Double
COMPK() As Double
ANF() As Double
P() As Double
ZNEW() As Double
EPS() As Double
DPS() As Double
Appendix 23B. Program of FINPLAN
With An Example
On Error GoTo ErrorHandler
Columns("a").ColumnWidth = 29
'Set default column A width
Range("a2").Select
NDATE = ActiveCell.Value
'Get the year being simulated from cell A2
Range("b5").Select
NUMVR = ActiveCell.Value
'Get the variable code number from cell B5
bNYEARFound = False
While NUMVR <> Empty And Not bNYEARFound
If NUMVR = 1 Then
'If the number of years to be simulated is found
N = ActiveCell.Previous.Value + 1
bNYEARFound = True
End If
ActiveCell.Offset(1, 0).Activate
NUMVR = ActiveCell.Value
Wend
Appendix 23B. Program of FINPLAN
With An Example
If Not bNYEARFound Then N = 5
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
NYEAR(N)
SALES(N)
GSALS(N)
ORATE(N)
T(N)
CARAT(N)
FARAT(N)
CLRAT(N)
ZL(N)
ZI(N)
ZIE(N)
ZLR(N)
PFDSK(N)
PFDIV(N)
S(N)
ZNUMC(N)
R(N)
B(N)
ZK(N)
PERAT(N)
UL(N)
US(N)
'If the number of years to be simulated is not found
'then set the default of N as 5
Appendix 23B. Program of FINPLAN
With An Example
NYEAR(1) = NDATE
For i = 2 To N
NYEAR(i) = NYEAR(i - 1) + 1
Next
Range("b5").Select
NUMVR = ActiveCell.Value
While NUMVR <> Empty
Select Case NUMVR
Case 2
SALES(1) = ActiveCell.Previous.Value
Case 3
For i = ActiveCell.Next.Value + 1 To ActiveCell.Next.Next.Value + 1
GSALS(i) = ActiveCell.Previous.Value
Next
Appendix 23B. Program of FINPLAN
With An Example
Case 4
For i = ActiveCell.Next.Value + 1 To ActiveCell.Next.Next.Value + 1
ORATE(i) = ActiveCell.Previous.Value
Next
Case 5
For i = ActiveCell.Next.Value + 1 To ActiveCell.Next.Next.Value + 1
T(i) = ActiveCell.Previous.Value
Next
Case 6
For i = ActiveCell.Next.Value + 1 To ActiveCell.Next.Next.Value + 1
CARAT(i) = ActiveCell.Previous.Value
Next
Case 7
For i = ActiveCell.Next.Value + 1 To ActiveCell.Next.Next.Value + 1
FARAT(i) = ActiveCell.Previous.Value
Next
Appendix 23B. Program of FINPLAN
With An Example
Case 8
For i = ActiveCell.Next.Value + 1 To ActiveCell.Next.Next.Value + 1
CLRAT(i) = ActiveCell.Previous.Value
Next
Case 9
ZL(1) = ActiveCell.Previous.Value
Case 10
ZI(1) = ActiveCell.Previous.Value
Case 11
For i = ActiveCell.Next.Value + 1 To ActiveCell.Next.Next.Value + 1
ZIE(i) = ActiveCell.Previous.Value
Next
Case 12
For i = ActiveCell.Next.Value + 1 To ActiveCell.Next.Next.Value + 1
ZLR(i) = ActiveCell.Previous.Value
Next
Appendix 23B. Program of FINPLAN
With An Example
Case 13
For i = ActiveCell.Next.Value + 1 To ActiveCell.Next.Next.Value + 1
PFDSK(i) = ActiveCell.Previous.Value
Next
Case 14
For i = ActiveCell.Next.Value + 1 To ActiveCell.Next.Next.Value + 1
PFDIV(i) = ActiveCell.Previous.Value
Next
Case 15
S(1) = ActiveCell.Previous.Value
Case 16
ZNUMC(1) = ActiveCell.Previous.Value
Case 17
R(1) = ActiveCell.Previous.Value
Case 18
For i = ActiveCell.Next.Value + 1 To ActiveCell.Next.Next.Value + 1
B(i) = ActiveCell.Previous.Value
Next
Appendix 23B. Program of FINPLAN
With An Example
Case 19
For i = ActiveCell.Next.Value + 1 To ActiveCell.Next.Next.Value + 1
ZK(i) = ActiveCell.Previous.Value
Next
Case 20
For i = ActiveCell.Next.Value + 1 To ActiveCell.Next.Next.Value + 1
PERAT(i) = ActiveCell.Previous.Value
Next
Case 21
For i = ActiveCell.Next.Value + 1 To ActiveCell.Next.Next.Value + 1
UL(i) = ActiveCell.Previous.Value
Next
Case 22
For i = ActiveCell.Next.Value + 1 To ActiveCell.Next.Next.Value + 1
US(i) = ActiveCell.Previous.Value
Next
End Select
Appendix 23B. Program of FINPLAN
With An Example
ActiveCell.Offset(1, 0).Activate
NUMVR = ActiveCell.Value
Wend
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
ReDim
O(N)
CA(N)
FA(N)
A(N)
CL(N)
ZNF(N)
ZNL(N)
EXINT(N)
DBTUC(N)
EAIBT(N)
TAX(N)
EAIAT(N)
EAFCD(N)
COMDV(N)
ZNS(N)
TLANW(N)
COMPK(N)
ANF(N)
P(N)
ZNEW(N)
EPS(N)
DPS(N)
Appendix 23B. Program of FINPLAN
With An Example
For i = 2 To N
'Solve simultaneous equations for N periods
SALES(i) = SALES(i - 1) * (1 + GSALS(i))
O(i) = ORATE(i) * SALES(i)
CA(i) = CARAT(i) * SALES(i)
FA(i) = FARAT(i) * SALES(i)
A(i) = CA(i) + FA(i)
CL(i) = CLRAT(i) * SALES(i)
ZNF(i) = (A(i) - CL(i) - PFDSK(i)) - (ZL(i - 1) - ZLR(i)) - S(i - 1) - R(i - 1) _
- B(i) * ((1 - T(i)) * (O(i) - ZI(i - 1) * (ZL(i - 1) - ZLR(i))) - PFDIV(i))
ZNL(i) = (ZK(i) / (1 + ZK(i))) * (A(i) - CL(i) - PFDSK(i)) - (ZL(i - 1) - ZLR(i))
ZL(i) = (ZL(i - 1) - ZLR(i)) + ZNL(i)
ZI(i) = ZI(i - 1) * ((ZL(i - 1) - ZLR(i)) / ZL(i)) + ZIE(i) * (ZNL(i) / ZL(i))
If ZNL(i) <= 0 Then ZI(i) = ZI(i - 1)
EXINT(i) = ZI(i) * ZL(i)
DBTUC(i) = Abs(UL(i) * ZNL(i))
EAIBT(i) = O(i) - EXINT(i) - DBTUC(i)
TAX(i) = T(i) * EAIBT(i)
Appendix 23B. Program of FINPLAN
With An Example
EAIAT(i) = EAIBT(i) - TAX(i)
EAFCD(i) = EAIAT(i) - PFDIV(i)
COMDV(i) = (1 - B(i)) * EAFCD(i)
R(i) = R(i - 1) + B(i) * ((1 - T(i)) * (O(i) - ZI(i) * ZL(i) - UL(i) * _
ZNL(i)) - PFDIV(i))
S(i) = ZL(i) / ZK(i) - R(i)
ZNS(i) = S(i) - S(i - 1)
TLANW(i) = CL(i) + PFDSK(i) + ZL(i) + S(i) + R(i)
COMPK(i) = ZL(i) / (S(i) + R(i))
ANF(i) = ZNF(i) + B(i) * (1 - T(i)) * (ZI(i) * ZL(i) + UL(i) * _
ZNL(i) - ZI(i - 1) * (ZL(i - 1) - ZLR(i)))
P(i) = (PERAT(i) * EAFCD(i) - ZNS(i) / (1 - US(i))) / ZNUMC(i - 1)
ZNEW(i) = ZNS(i) / ((1 - US(i)) * P(i))
ZNUMC(i) = ZNUMC(i - 1) + ZNEW(i)
EPS(i) = EAFCD(i) / ZNUMC(i)
DPS(i) = COMDV(i) / ZNUMC(i)
Next
Appendix 23B. Program of FINPLAN
With An Example
Range(ActiveCell.Offset(0, -1), ActiveCell.Offset(70, N)).Clear 'Clear the report area
ActiveCell.Offset(6, 0).Activate
'Select the Income Statemet Starting Cell
With ActiveCell.Font
.Bold = True
.Size = 11
End With
ActiveCell.Value = "Pro forma Income Statement"
ActiveCell.Offset(2, -1).Activate
For i = 1 To N
ActiveCell.Offset(0, i).Value = NYEAR(i)
Next
'Generate Income Statement
Appendix 23B. Program of FINPLAN
With An Example
ActiveCell.Offset(2, 0).Activate
Range(ActiveCell, ActiveCell.Offset(15, N)).NumberFormat = "###0.00"
ActiveCell.Value = "Sales"
For i = 1 To N
ActiveCell.Offset(0, i).Value = SALES(i)
Next
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Operating income"
For i = 1 To N
ActiveCell.Offset(0, i).Value = O(i)
Next
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Interest expense"
For i = 1 To N
ActiveCell.Offset(0, i).Value = EXINT(i)
Next
Appendix 23B. Program of FINPLAN
With An Example
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Underwriting commission -- debt"
For i = 1 To N
ActiveCell.Offset(0, i).Value = DBTUC(i)
Next
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Income before taxes"
For i = 1 To N
ActiveCell.Offset(0, i).Value = EAIBT(i)
Next
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Taxes"
For i = 1 To N
ActiveCell.Offset(0, i).Value = TAX(i)
Next
Appendix 23B. Program of FINPLAN
With An Example
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Net income"
For i = 1 To N
ActiveCell.Offset(0, i).Value = EAIAT(i)
Next
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Preferred dividends"
For i = 1 To N
ActiveCell.Offset(0, i).Value = PFDIV(i)
Next
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Available for common dividends"
For i = 1 To N
ActiveCell.Offset(0, i).Value = EAFCD(i)
Next
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Common dividends"
For i = 1 To N
ActiveCell.Offset(0, i).Value = COMDV(i)
Next
Appendix 23B. Program of FINPLAN
With An Example
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Debt repayments"
For i = 1 To N
ActiveCell.Offset(0, i).Value = ZLR(i)
Next
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Actl funds needed for investment"
For i = 1 To N
ActiveCell.Offset(0, i).Value = ANF(i)
Next
ActiveCell.Offset(5, 1).Activate
With ActiveCell.Font
.Bold = True
.Size = 11
End With
'Generate Balance Sheet
Appendix 23B. Program of FINPLAN
With An Example
ActiveCell.Value = "Pro forma Balance Sheet"
ActiveCell.Offset(2, -1).Activate
For i = 1 To N
ActiveCell.Offset(0, i).Value = NYEAR(i)
Next
ActiveCell.Offset(1, 0).Activate
ActiveCell.Font.Bold = True
ActiveCell.Value = "Assets"
ActiveCell.Offset(1, 0).Activate
Range(ActiveCell, ActiveCell.Offset(9, N)).NumberFormat = "###0.00"
Range(ActiveCell.Offset(10, 0), ActiveCell.Offset(15, N)).NumberFormat = "###0.0000"
ActiveCell.Value = "Current assets"
For i = 1 To N
ActiveCell.Offset(0, i).Value = CA(i)
Next
Appendix 23B. Program of FINPLAN
With An Example
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Fixed assets"
For i = 1 To N
ActiveCell.Offset(0, i).Value = FA(i)
Next
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Total assets"
For i = 1 To N
ActiveCell.Offset(0, i).Value = A(i)
Next
ActiveCell.Offset(1, 0).Activate
ActiveCell.Font.Bold = True
ActiveCell.Value = "Liabilities and net worth"
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Current liabilities"
For i = 1 To N
ActiveCell.Offset(0, i).Value = CL(i)
Next
Appendix 23B. Program of FINPLAN
With An Example
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Long term debt"
For i = 1 To N
ActiveCell.Offset(0, i).Value = ZL(i)
Next
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Preferred stock"
For i = 1 To N
ActiveCell.Offset(0, i).Value = PFDSK(i)
Next
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Common stock"
For i = 1 To N
ActiveCell.Offset(0, i).Value = S(i)
Next
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Retained earnings"
For i = 1 To N
ActiveCell.Offset(0, i).Value = R(i)
Next
Appendix 23B. Program of FINPLAN
With An Example
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Total liabilities and net worth"
For i = 1 To N
ActiveCell.Offset(0, i).Value = TLANW(i)
Next
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Computed DBT/EQ"
For i = 1 To N
ActiveCell.Offset(0, i).Value = COMPK(i)
Next
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Int. rate on total debt"
For i = 1 To N
ActiveCell.Offset(0, i).Value = ZI(i)
Next
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Per share data"
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Earnings"
For i = 1 To N
ActiveCell.Offset(0, i).Value = EPS(i)
Next
Appendix 23B. Program of FINPLAN
With An Example
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Dividends"
For i = 1 To N
ActiveCell.Offset(0, i).Value = DPS(i)
Next
ActiveCell.Offset(1, 0).Activate
ActiveCell.Value = "Price"
For i = 1 To N
ActiveCell.Offset(0, i).Value = P(i)
Next
Exit Sub
' Exit to avoid ErrorHandler.
ErrorHandler: ' Error-handling routine.
Select Case Err.Number ' Evaluate error number.
Case 9
MsgBox "'The number of years to be simulated' does not match your " & _
"'Last Period' input.", vbExclamation
Case 11
MsgBox Str$(Err.Number) & ", " & Err.Description & Chr$(10) & _
"'The number of years to be simulated' does not match your " & _
"'Last Period' input.", vbExclamation
Case Else
MsgBox Str$(Err.Number) & ", " & Err.Description
End Select
End Sub