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We average the sales growth rate for the previous 5 years. Average of sales growth rate is 22%.
We assume that sales growth rate for next 3 years will be 22%. With this sales growth, sales and
all other expenses related with sales will grow by same percentage.
Income Statement
We assumed that there will be 22% sales growth for Confident Cements in the next 3 years.
Only those expenses which are related with sales will grow by the sales growth in the Income
Statement.
Pro-Forma Income Statement
434,043,684.3
decrease in retained earning 99,317,171.43 8
But now we have found different result. As we have seen that in 2017 debt to equity ratio is
decreasing so we deducted the amount from issued shares. That confidence cement need to
repurchase its shares. After that we have found several EFN amount.
2017 2018 2019
10284714 12547352 38139836
EFN 94 18 83
As we had to make EFN 0, so we used another formula. As we have to add those EFN amount
with Total liabilities & owners equity. We have to also maintain Debt to Equity ratio constant.
So we have another formula:
Equity need to increase=EFN/ (1+ constant D to E ratio)
Debt need to increase= EFN- equity need to increase
Then we have found this table. They we have used two plug variables. They are issued shares
and short term loan. We increased debt and equity amount as they needed to increase to make
EFN 0.
Calculating Cash flow from Pro-Forma statement:
We Consider Depreciation to be constant for next 3 years in order to calculate Free Cash Flow.
We also considered Property, Plant and Equipment as Net Fixed Asset and New Working
Capital was the difference between Current Assets and Current Liabilities.
Change in NWC
Ending NWC 1457288474 1777891938 2169028164
1,194,498,74 1,457,288,47 1,777,891,93
Beginning NWC 9 4 8
Addition to NWC 262,789,725 320,603,464 391,136,226