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BUSINES
S PLAN
ANALYSI
S

Copyright 2009, MYC Academy.

This computer program is protected by copyright law.

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MainMenu

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Instructions for Using BPA

BPA is intended as a companion to ANALYSIS FOR FINANCIAL MANAGEMENT,
2009 edition, by MYC Academy. Some basic familiarity with Microsoft Excel will be helpful,
but not necessary, to use this program.
BPA converts user-supplied information and assumptions about a company into pro
forma financial forecasts for as many as five years into the future. It also provides a ratio
analysis and a sustainable growth analysis of the results. Additional "what-if" analysis can
be easily performed. The program FSA, also in this workbook, offers a convenient
way to develop the user-supplied information and assumptions required by BPA.
BPA output is in the form of four, one-page tables:
Table
A
B
C
D

Contents
Pro forma assumptions
Pro forma balance sheets 1-5 years
Pro forma income statements 1-5 years
Pro forma ratio and sustainable growth analysis

INSTRUCTIONS FOR USE

All of the worksheets in BPA are tied to the Main Menu, from which you selected the
Instructions button. To launch the other worksheets, simply choose the appropriate button from
the Main Menu. You can return to the Main Menu at any time by selecting the Main Menu
button from any worksheet.
You may want to begin by printing a copy of these instructions. To do so, use the regular
Print command in your software. You can print any of the Output Tables this way.
Enter Information and Forecasts
1. Leave the instructions and return to the Main Menu by clicking on the Main Menu button
at the top of this page. At the Main Menu, select Input Data and fill in the fields
in the dialog box. When you have finished, you will see Table A.
2. Table A is where you need to enter your assumptions and forecasts. Fill in the fields
in light blue. You are not required to enter information in every field if the field is not relevant.
You may also customize any label in blue simply by typing over the field name.
3. When you have completed the information in Table A, click on the Analyze button. This
will return you to the Main Menu.
4. To view the output, click on the View Tables button and select the Table you wish to
view. In order to view another table, simply return to the Main Menu and repeat this process.
What If Analysis
If you are interested in doing a "what if" analysis of your initial pro forma forecast, you can do
so by changing your assumptions in Table A. Use the View Tables button to return to Table A.
In Table A, simply change whichever assumptions you wish and click on the Analyze button.
For example, if you originally entered a sales growth of 10 percent and wonder what the forecast
would look like at a 15 percent growth rate, change the 10 to 15 and click on the Analyze button.

01/06/2017

Analysis for Financial Management, 5th Ed.

by Robert C. Higgins

Published by Irwin McGraw-Hill

Clear
The Clear button on the Main Menu clears all the tables so you can analyze another company.
If you want to save your work, use the Save As command in your software and rename this program.
Discussion of Output
1. The red field labeled "Required External Financing" at the bottom of the Balance Sheets is the
amount of external financing calculated by the computer that is implied by your forecasts.
A positive number in the field implies a need for cash. The ensuing calculations assume
the financing requirements are funded with short-term debt and assess interest expense accordingly.
A negative financing requirement is assumed to be invested in securities and earns interest.
Interest income and expense, and the ratios in Table D, are consistent with these assumptions.
Once you know the sign and magnitude of the external financing requirement, you can fine-tune
your forecast by assuming all or a portion of the financing will be funded with long-term debt
or equity; or that a negative financing requirement will be invested in securities. To enter these
adjustments, return to Table A using the View Output button at the Main Menu. Make your changes
at the bottom of Table A in the fields labeled for fine tuning. Remember that these adjustments
are INCREMENTAL to the forecast numbers. Click the Analyze button when you are finished.
2. The forecast assumes that dividends will be paid only if income available for common is positive.
3. The ratios in Table D are the same as those in Table F of FSA. See the instructions to
FSA for detailed definitions.

01/06/2017

Analysis for Financial Management, 5th Ed.

by Robert C. Higgins

Published by Irwin McGraw-Hill

Table A. Pro Forma Assumptions

Actuals:
Net sales
Net plant
Long-term debt
Owner's equity

Growth in sales (%)

Gross margin (%)
Op. expenses/sales (%)
Non-op income (expense)
Int. rate on excess cash (%)
Interest rate on debt (%)
Income tax rate (%)
Ex. gains (loss) net tax
Other gains (losses)
Preferred dividends
Dividend payout ratio (%)
Minimum cash balance
Collection period (days)
Inventory turnover (x)
Other current assets
Growth in fixed assets (%)
Other investments
Other long-term assets
Payables period (days)
Other short-term debt
Accrued taxes
Other accruals
Current portion l-t debt
Deferred taxes
Other deferrals
Minority interests
Other long-term liabilities
Preferred stock
Once FINANCING has been estimated, use items below for fine-tuning
Incr. (decr.) in securities
Incr. (decr.) in long-term debt
Incr. (decr.) in equity

01/06/2017

Analysis for Financial Management, 6th Ed.

by Robert C. Higgins

Published by Irwin/McGraw-Hill

Table B. Pro Forma Balance Sheets

Dell
$ in Millions
December

ASSETS
Cash
Securities
Accounts receivable
Inventory
Other current assets
Total current assets
Net property, plant, etc.
Other investments
Other long-term assets
Total Assets

#DIV/0!
-

#DIV/0!
-

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

LIABILITIES AND SHAREHOLDERS' EQUITY

Short term debt
Ext'l Fin
Ext'l Fin
Other short-term debt
Accounts payable
Accrued taxes
Other accruals
Current portion l-t. debt
-

#DIV/0!
#DIV/0!

31

#DIV/0!
-

#DIV/0!
-

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

Ext'l Fin
-

Ext'l Fin
-

Ext'l Fin
-

Total current liabilities

L-t. debt and capital leases

Deferred taxes
Other deferrals
Minority interests
Other long-term liabilities

Total liabilities

Preferred stock
Owners' equity
Total equity

#DIV/0!
Err:522

#DIV/0!
Err:522

#DIV/0!
Err:522

#DIV/0!
Err:522

#DIV/0!
Err:522

Total liabilities & equity

Err:522

Err:522

Err:522

Err:522

Err:522

External Financing Req'd

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

01/06/2017

Analysis for Financial Management, 6th Ed.

by Robert C. Higgins

Published by Irwin/McGraw-Hill

Table C. Pro Forma Income Statements

Dell
$ in Millions
December 31

Net sales
Cost of goods sold

Gross profit

Operating expenses

Operating income

Non-op. income (expense)

Interest income
Interest expense

#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

Income before tax

Provision for tax

#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!

Net income

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

Available for common

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

Common dividends

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

Added to retained earnings

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

#DIV/0!

Ex. gains (loss) net tax

Other gains (losses)
Preferred dividends

01/06/2017

Analysis for Financial Management, 6th Ed.

by Robert C. Higgins

Published by Irwin/McGraw-Hill

Table D. Pro Forma Ratio and Sustainable Growth Analysis

Dell

PROFITABILITY RATIOS:
Return on equity (%)
Return on assets (%)
Return on inv. captial (%)
Profit margin (%)
Gross margin (%)

#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

LEVERAGE & LIQUIDITY RATIOS:

Assets to equity (%)
Total liabilities to assets (%)
Total liabilities to equity (%)
Long term debt to equity (%)
Times interest earned (x)
Times burden covered (x)
Current ratio (x)
Acid test (x)

#DIV/0!
#DIV/0!
#DIV/0!
Err:522
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!
Err:522
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!
Err:522
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!
Err:522
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!
Err:522
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

TURNOVER-CONTROL RATIOS:
Asset turnover (x)
Inventory turnover (x)
Collection period (days)
Days sales in cash (days)
Payables period (days)
Fixed asset turnover (x)

#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

Pro Forma Sustainable Growth Analysis

1995

1996

1997

REQUIRED RATIOS:
Profit margin (P)
Retention ratio (R)
Asset turnover (A)
Financial leverage# (T)

#DIV/0!
100.0%
#DIV/0!
#DIV/0!

#DIV/0!
100.0%
#DIV/0!
#DIV/0!

#DIV/0!
100.0%
#DIV/0!
#DIV/0!

#DIV/0!
100.0%
#DIV/0!
#DIV/0!

#DIV/0!
100.0%
#DIV/0!
#DIV/0!

Sustainable growth rate (g*)

Actual growth rate (g)

#DIV/0!
0.0%

#DIV/0!
0.0%

#DIV/0!
0.0%

#DIV/0!
0.0%

#DIV/0!
0.0%

#Defined as assets divided by beginning-of-period equity

01/06/2017

Analysis for Financial Management, 6th Ed.

by Robert C. Higgins

Published by Irwin/McGraw-Hill

DialogData

Month
Date
January
Februrary
March
April
May
June
July
August
September
October
November
December

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31

Analysis Years
1
2
3
4
5

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ProformaDialog

Input Proforma Data

Company Name

Dell

Currency, Scale
(e.g. $ in Millions)

$ in Millions

Fiscal Year End

January
Februrary
March
April
1995
May
June
1
July
2
August
3
September
4
October
5
November
December

First Analysis Yea...

Number of Years
to Analyze

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31

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OK
Cancel

TableViewer

PROFORMA Tables
Select The Table You Wish to View

OK

Table A: Assumptions

Cancel

Table B: Balance Sheets

Table C: Income Statements
Table D: Ratio and Sustainable Growth Analysis

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