Integrated

Financial Statement Planning

with SEM BPS

Product Management
SEM BPS
 Integrated Business Planning
Portfolio Management Long-term Plan
 3-5 year financial plan
 Product Portfolio
 Business specific value drivers
 Customer Portfolio
 Alternative plans

Mid-term Plan
P&L Balance sheet Cash Flow
 Changes of  Operating activities
 Net Revenue
accounts  Investing activities
 COGS
 Investments  Financing activities
 Overheads
 Cash Management

Profitability Plan Cost Center Plan Investment Plan

 Net Revenue  Promotional Exp.  Investment
Budget
 COGS  Overheads

 Promotional Exp.

 Overheads

Sales Plan Headcount Plan IT Cost Plan

 Sales Volume  Personnel Costs  New Hardware

 Discount  FTE  Maintenance

 SAP AG 2001, Title of Presentation, Speaker Name 2

 Mid-term focus

Business challenge: Mid-term Planning

Functionality
 Planning of balance sheet, income and cash flow
statements
 Integration with other plans such as:
 Sales plan
 Cost center plan
 Investment plan
 Long-term plan
 Derivation of account values via business functions
delivered by SAP

Business Benefits
 Reconciled mid-term plans
 High degree of integration with various
planning applications

 SAP AG 2001, Title of Presentation, Speaker Name 3

 Step 1 - Planning of Net Sales
Income Statement Balance Sheet Cash Flow Statement
Net Sales 3.600 $ Assets Net income/loss
Costs of goods sold (COGS) Current assets Depreciations
Gross Profit Cash and cash equivalents Changes in accounts receivable
Depreciations Accounts receivable (A/R) Changes in inventory
Other Operating Expenses Inventory Changes in accounts payable
Operating Expenses (OPEX) Property, plant and equipment Cash flow from operating activities
Operating Income/loss (EBIT) Land and land improvements Asset acquisitions
Interest income Buildings Asset retirements
Interest expense Machinery and equipment Cash flow from investing activities
Income/loss before income taxes (EBT) Long term investments Cash requirements
Income taxes Liabilities and stockholders’ equity Dividends paid
Liabilities Repayment of loans and current liabilities
Net income/loss
Raising loans and current liabilities
Current liabilities
Equity increase
Accounts payable (A/P)
Other accrued liabilities Cash flow from financing activities
Long-term debt Net increase in cash cash equivalents
Stockholders’ equity Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Method Example
1. entered manually

Net sales region North 1.500 $

Sales Net sales
2. taken over from subplan „Sales Planning“
Planning 3.600 $
Net sales region South 2.100 $

3. taken over from subplan „Profitability Planning“

4. derived from prior period values by pretending Net sales prior period region North Sales growth rate North 1.500 $
Net sales
a sales growth rate 1.000 $ 50%
3.600 $
(sales growth rate might be taken over from “Capital Net sales prior period region South Sales growth rate South 2.100 $
Market Interpreter” or entered manually) 1.800 $ 16,7%

 SAP AG 2001, Title of Presentation, Speaker Name 4

 Step 2 - Planning of Accounts Receivable (A/R)
Income Statement Balance Sheet Cash Flow Statement
Net Sales 3.600 $ Assets Net income/loss
Costs of goods sold (COGS) Current assets Depreciations
Gross Profit Cash and cash equivalents Changes in accounts receivable
Depreciations Accounts receivable (A/R) 180 $ Changes in inventory
Other Operating Expenses Inventory Changes in accounts payable
Operating Expenses (OPEX) Property, plant and equipment Cash flow from operating activities
Operating Income/loss (EBIT) Land and land improvements Asset acquisitions
Interest income Buildings Asset retirements
Interest expense Machinery and equipment Cash flow from investing activities
Income/loss before income taxes (EBT) Long term investments Cash requirements
Income taxes Liabilities and stockholders’ equity Dividends paid
Liabilities Repayment of loans and current liabilities
Raising loans and current liabilities
Current liabilities
Equity increase
Accounts payable (A/P)
Other accrued liabilities Cash flow from financing activities
Long-term debt Net increase in cash cash equivalents
Stockholders’ equity Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Method Example
1. entered manually

2. derived from net sales by planning days sales DSO 18 days

outstanding (DSO) 3.600 $ / 360 * 18 = 180$ A/R
Planned net sales 3.600 $

3. derived from net sales by planning sales Sales inpayment coefficient 95 %

inpayment coefficients 3.600 $ * (1- 0,95) = 180$ A/R
Planned net sales 3.600 $

 SAP AG 2001, Title of Presentation, Speaker Name 5

 Step 3 - Calculation of Changes in Accounts Receivable
Income Statement Balance Sheet Cash Flow Statement
Net Sales 3.600 $ Assets Net income/loss
Costs of goods sold (COGS) Current assets Depreciations
Gross Profit Cash and cash equivalents Changes in accounts receivable 20 $
Depreciations Accounts receivable (A/R) 180$ Changes in inventory
Other Operating Expenses Inventory Changes in accounts payable
Operating Expenses (OPEX) Property, plant and equipment Cash flow from operating activities
Operating Income/loss (EBIT) Land and land improvements Asset acquisitions
Interest income Buildings Asset retirements
Interest expense Machinery and equipment Cash flow from investing activities
Income/loss before income taxes (EBT) Long term investments Cash requirements
Income taxes Liabilities and stockholders’ equity Dividends paid
Liabilities Repayment of loans and current liabilities
Net income/loss
Raising loans and current liabilities
Current liabilities
Equity increase
Accounts payable (A/P)
Other accrued liabilities Cash flow from financing activities
Long-term debt Net increase in cash cash equivalents
Stockholders’ equity Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Method Example

1. calculation
Δ A/R = A/R planning period - A/R prior period
20 $ 180 $ 160 $

 SAP AG 2001, Title of Presentation, Speaker Name 6

 Step 4 - Planning of Costs of Goods Sold (COGS)
Income Statement Balance Sheet Cash Flow Statement
Net Sales 3.600 $ Assets Net income/loss
COGS 2.160 $ Current assets Depreciations
Gross Profit 1.440 $ Cash and cash equivalents Changes in accounts receivable 20 $
Depreciations Accounts receivable (A/R) 180 $ Changes in inventory
Other Operating Expenses Inventory Changes in accounts payable
Operating Expenses (OPEX) Property, plant and equipment Cash flow from operating activities
Operating Income/loss (EBIT) Land and land improvements Asset acquisitions
Interest income Buildings Asset retirements
Interest expense Machinery and equipment Cash flow from investing activities
Income/loss before income taxes (EBT) Long term investments Cash requirements
Income taxes Liabilities and stockholders’ equity Dividends paid
Liabilities Repayment of loans and current liabilities
Net income/loss
Raising loans and current liabilities
Current liabilities
Equity increase
Accounts payable (A/P)
Other accrued liabilities Cash flow from financing activities
Long-term debt Net increase in cash cash equivalents
Stockholders’ equity Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Method Example
1. entered manually

2. taken over from subplan „Profitability Planning“

3. derived from planned net sales by setting a Sales revenue North * (1-profit margin) = COGS North
profit margin 1.500 $ 1- 40 % 900 $ COGS
Sales revenue South * (1-profit margin) = COGS South 2.160 $
1.100 $ 1- 40 % 1.260 $

4. derived from prior period values COGS North prior period / Net sales North prior period * Net sales North planning period = COGS North
600 $ 1.000 $ 1.500 $ 900 $ COGS
2.160 $
COGS South prior period / Net sales South prior period * Net sales South planning period = COGS South
1.080 $ 1.800 $ 2.100 $ 1.260 $

 SAP AG 2001, Title of Presentation, Speaker Name 7

 Step 5 - Planning of Inventory
Income Statement Balance Sheet Cash Flow Statement
Net Sales 3.600 $ Assets Net income/loss
COGS 2.160 $ Current assets Depreciations
Gross Profit 1.440 $ Cash and cash equivalents Changes in accounts receivable 20 $
Depreciations Accounts receivable (A/R) 180 $ Changes in inventory
Other Operating Expenses Inventory 72 $ Changes in accounts payable
Operating Expenses (OPEX) Property, plant and equipment Cash flow from operating activities
Operating Income/loss (EBIT) Land and land improvements Asset acquisitions
Interest income Buildings Asset retirements
Interest expense Machinery and equipment Cash flow from investing activities
Income/loss before income taxes (EBT) Long term investments Cash requirements
Income taxes Liabilities and stockholders’ equity Dividends paid
Liabilities Repayment of loans and current liabilities
Net income/loss
Raising loans and current liabilities
Current liabilities
Equity increase
Accounts payable (A/P)
Other accrued liabilities Cash flow from financing activities
Long-term debt Net increase in cash cash equivalents
Stockholders’ equity Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Method Example
1. entered manually

2. taken over from subplan

3. derived from net sales by Net sales North / stock turnover = Inventory North
setting a stock turnover 1.500 $ 50 30 $ Inventory
Net sales South / stock turnover = Inventory South 72 $
2.100 $ 50 42 $

4. derived from prior period values Avarage Inventory North prior period / Net sales North prior period * Net sales North planning period = Inventory North
20 $ 1.000 $ 1.500 $ 30 $ Inventory
72 $
Avarage Inventory South prior period / Net sales South prior period * Net sales South planning period = Inventory South
36 $ 1.800 $ 2.100 $ 42 $

 SAP AG 2001, Title of Presentation, Speaker Name 8

 Step 6 - Calculation of Changes in Inventory
Income Statement Balance Sheet Cash Flow Statement
Net Sales 3.600 $ Assets Net income/loss
COGS 2.160 $ Current assets Depreciations
Gross Profit 1.440 $ Cash and cash equivalents Changes in accounts receivable 20 $
Depreciations Accounts receivable (A/R) 180 $ Changes in inventory 16 $
Other Operating Expenses Inventory 72 $ Changes in accounts payable
Operating Expenses (OPEX) Property, plant and equipment Cash flow from operating activities
Operating Income/loss (EBIT) Land and land improvements Asset acquisitions
Interest income Buildings Asset retirements
Interest expense Machinery and equipment Cash flow from investing activities
Income/loss before income taxes (EBT) Long term investments Cash requirements
Income taxes Liabilities and stockholders’ equity Dividends paid
Liabilities Repayment of loans and current liabilities
Net income/loss
Raising loans and current liabilities
Current liabilities
Equity increase
Accounts payable (A/P)
Other accrued liabilities Cash flow from financing activities
Long-term debt Net increase in cash cash equivalents
Stockholders’ equity Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Method Example

1. calculation
Δ Inventory = Inventory of planning period - Inventory of prior period
16 $ 72 $ 56 $

 SAP AG 2001, Title of Presentation, Speaker Name 9

 Step 7 – Planning of Other Operating Expenses
Income Statement Balance Sheet Cash Flow Statement
Net Sales 3.600 $ Assets Net income/loss
COGS 2.160 $ Current assets Depreciations
Gross Profit 1.440 $ Cash and cash equivalents Changes in accounts receivable 20 $
Depreciations Accounts receivable (A/R) 180 $ Changes in inventory 16 $
Other Operating Expenses 975 $ Inventory 72 $ Changes in accounts payable
Operating Expenses (OPEX) Property, plant and equipment Cash flow from operating activities
Operating Income/loss (EBIT) Land and land improvements Asset acquisitions
Interest income Buildings Asset retirements
Interest expense Machinery and equipment Cash flow from investing activities
Income/loss before income taxes (EBT) Long term investments Cash requirements
Income taxes Liabilities and stockholders’ equity Dividends paid
Liabilities Repayment of loans and current liabilities
Net income/loss
Raising loans and current liabilities
Current liabilities
Equity increase
Accounts payable (A/P)
Other accrued liabilities Cash flow from financing activities
Long-term debt Net increase in cash cash equivalents
Stockholders’ equity Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Method Example
1. entered manually

2. taken over from subplan Cost Center or Other operating expenses North 450 $ Other operating
„Cost Center Planning“ or Profit Center expenses
„Profit Center Planning“ Planning Other operating expenses South 525 $ 975 $

3. derived from prior period values Other operating expenses North = Other operating expenses North / Net sales North * Net sales North
prior period prior period planning period
450 $ 300 $ 1.000 $ 1.500 $ Other operating
expenses
Other operating expenses South = Other operating expenses South / Net sales South * Net sales South 975 $
prior period prior period planning period
525 $ 450 $ 1.800 $ 2.100 $

 SAP AG 2001, Title of Presentation, Speaker Name 10

 Step 8 – Planning of Accounts Payable (A/P)
Income Statement Balance Sheet Cash Flow Statement
Net Sales 3.600 $ Assets Net income/loss
COGS 2.160 $ Current assets Depreciations
Gross Profit 1.440 $ Cash and cash equivalents Changes in accounts receivable 20 $
Depreciations Changes in inventory 16 $
Accounts receivable (A/R) 180 $
Other Operating Expenses 975 $ Inventory 72 $ Changes in accounts payable
Operating Expenses (OPEX) Property, plant and equipment Cash flow from operating activities
Operating Income/loss (EBIT) Land and land improvements Asset acquisitions
Interest income Buildings Asset retirements
Interest expense Machinery and equipment Cash flow from investing activities
Income/loss before income taxes (EBT) Long term investments Cash requirements
Income taxes Liabilities and stockholders’ equity Dividends paid
Liabilities Repayment of loans and current liabilities
Net income/loss
Raising loans and current liabilities
Current liabilities
180 $ Equity increase
Accounts payable (A/P)
Other accrued liabilities Cash flow from financing activities
Long-term debt Net increase in cash cash equivalents
Stockholders’ equity Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Method Example
1. entered manually

2. taken over from a subplan

3. derived from COGS by setting a turnover COGS planning period / turnover frequency = A / P
frequency 2.160 $ 12 180 $

4. derived from prior period values A / P prior period / COGS prior period * COGS planning period = A / P
140 $ 1.680 $ 2.160 $ 180 $

 SAP AG 2001, Title of Presentation, Speaker Name 11

 Step 9 – Calculation of Changes in Accounts Payable (A/P)
Income Statement Balance Sheet Cash Flow Statement
Net Sales 3.600 $ Assets Net income/loss
COGS 2.160 $ Current assets Depreciations
Gross Profit 1.440 $ Cash and cash equivalents Changes in accounts receivable 20 $
Depreciations Changes in inventory 16 $
Accounts receivable (A/R) 180 $
Other Operating Expenses 975 $ Changes in accounts payable 40 $
Inventory 72 $
Operating Expenses (OPEX) Property, plant and equipment Cash flow from operating activities
Operating Income/loss (EBIT) Land and land improvements Asset acquisitions
Interest income Buildings Asset retirements
Interest expense Machinery and equipment Cash flow from investing activities
Income/loss before income taxes (EBT) Long term investments Cash requirements
Income taxes Liabilities and stockholders’ equity Dividends paid
Liabilities Repayment of loans and current liabilities
Net income/loss
Raising loans and current liabilities
Current liabilities
180 $ Equity increase
Accounts payable (A/P)
Other accrued liabilities Cash flow from financing activities
Long-term debt Net increase in cash cash equivalents
Stockholders’ equity Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Method Example

1. calculation
Δ A / P = A / P planning period - A / P prior period
40 $ 180 $ 140 $

 SAP AG 2001, Title of Presentation, Speaker Name 12

 Step 10 – Planning of Accrued Liabilities
Income Statement Balance Sheet Cash Flow Statement
Net Sales 3.600 $ Assets Net income/loss
COGS 2.160 $ Current assets Depreciations
Gross Profit 1.440 $ Cash and cash equivalents Changes in accounts receivable 20 $
Depreciations Changes in inventory 16 $
Accounts receivable (A/R) 180 $
Other Operating Expenses 975 $ Changes in accounts payable 40 $
Inventory 72 $
Operating Expenses (OPEX) Property, plant and equipment Cash flow from operating activities
Operating Income/loss (EBIT) Land and land improvements Asset acquisitions
Interest income Buildings Asset retirements
Interest expense Machinery and equipment Cash flow from investing activities
Income/loss before income taxes (EBT) Long term investments Cash requirements
Income taxes Liabilities and stockholders’ equity Dividends paid
Liabilities Repayment of loans and current liabilities
Net income/loss
Raising loans and current liabilities
Current liabilities
180 $ Equity increase
Accounts payable (A/P)
Other accrued liabilities 165 $ Cash flow from financing activities
Long-term debt Net increase in cash cash equivalents
Stockholders’ equity Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Method Example
1. entered manually

2. derived from prior period values which are changed Accrued liabilities = Accrued liabilities prior period * (1+ changing percentage)
by a manually entered percentage 165 $ 150 $ ( 1+ 10 %)

 SAP AG 2001, Title of Presentation, Speaker Name 13

 Step 11 – Planning of Asset Acquisitions & Retirements
Income Statement Balance Sheet Cash Flow Statement
Net Sales 3.600 $ Assets Net income/loss
COGS 2.160 $ Current assets Depreciations
Gross Profit 1.440 $ Cash and cash equivalents Changes in accounts receivable 20 $
Depreciations Changes in inventory 16 $
Accounts receivable (A/R) 180 $
Other Operating Expenses 975 $ Changes in accounts payable 40 $
Inventory 72 $
Operating Expenses (OPEX) Property, plant and equipment Cash flow from operating activities
Asset acquisitions 850 $
Operating Income/loss (EBIT) Land and land improvements
Interest income Buildings Asset retirements 200 $
Interest expense Machinery and equipment Cash flow from investing activities -650$
Income/loss before income taxes (EBT) Long term investments Cash requirements
Income taxes Liabilities and stockholders’ equity Dividends paid
Liabilities Repayment of loans and current liabilities
Net income/loss
Raising loans and current liabilities
Current liabilities
180 $ Equity increase
Accounts payable (A/P)
Other accrued liabilities 165 $ Cash flow from financing activities
Long-term debt Net increase in cash cash equivalents
Stockholders’ equity Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Method Example
1. completely taken over from subplan Asset acquisitions 850 $
Asset acquisition 1 150 $
investment planning Investment
Planning
Asset retirement n 50 $ Asset retirements 200 $

2. partly taken over from operational systems and

Asset acquisition 1 150 $
partly manually entered Operational
Systems
Asset retirement x 20 $ Asset acquisitions 850 $

Asset acquisition y 150 $ Asset retirements 200 $

Asset retirement n 20 $

 SAP AG 2001, Title of Presentation, Speaker Name 14

 Step 12 – Planning of Depreciations
Income Statement Balance Sheet Cash Flow Statement
Net Sales 3.600 $ Assets Net income/loss
COGS 2.160 $ Current assets Depreciations 250 $
Gross Profit 1.440 $ Cash and cash equivalents Changes in accounts receivable 20 $
Depreciations 250 $ Changes in inventory 16 $
Accounts receivable (A/R) 180 $
Other Operating Expenses 975 $ Changes in accounts payable 40 $
Inventory 72 $
Operating Expenses (OPEX) 1.225 $ Property, plant and equipment Cash flow from operating activities
Operating Income/loss (EBIT) 215 $ Land and land improvements Asset acquisitions 730 $
Interest income Buildings Asset retirements 80 $
Interest expense Machinery and equipment Cash flow from investing activities -650$
Income/loss before income taxes (EBT) Long term investments Cash requirements
Income taxes Liabilities and stockholders’ equity Dividends paid
Liabilities Repayment of loans and current liabilities
Net income/loss
Raising loans and current liabilities
Current liabilities
180 $ Equity increase
Accounts payable (A/P)
Other accrued liabilities 165 $ Cash flow from financing activities
Long-term debt Net increase in cash cash equivalents
Stockholders’ equity Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Method Example
Depreciations of already existing properties, plants and equipment

Transactional Depreciation of plant x 10 $ depreciations

1. taken over from transactional systems
systems 150 $

Depreciations of investments which are capitalized in planning period

Investment Depreciation of plant y 20 $ depreciations

1. taken over from subplan investment planning
planning 100 $

2. manually entered

3. calculated by depreciation functions in financial Depreciation Depreciation of plant y 20 $ depreciations

statement planning functions 100 $

 SAP AG 2001, Title of Presentation, Speaker Name 15

 Step 13 – Planning of Properties, Plants and Equipment
Income Statement Balance Sheet Cash Flow Statement
Net Sales 3.600 $ Assets Net income/loss
COGS 2.160 $ Current assets Depreciations 250 $
Gross Profit 1.440 $ Cash and cash equivalents Changes in accounts receivable 20 $
Depreciations 250 $ Changes in inventory 16 $
Accounts receivable (A/R) 180 $
Other Operating Expenses 975 $ Changes in accounts payable 40 $
Inventory 72 $
Operating Expenses (OPEX) 1.225 $ Property, plant and equipment 1.600 $ Cash flow from operating activities
Operating Income/loss (EBIT) 215 $ Land and land improvements 330 $ Asset acquisitions 730 $
Interest income Buildings 490 $ Asset retirements 80 $
Interest expense Machinery and equipment 780 $ Cash flow from investing activities -650$
Income/loss before income taxes (EBT) Long term investments Cash requirements
Income taxes Liabilities and stockholders’ equity Dividends paid
Liabilities Repayment of loans and current liabilities
Net income/loss
Raising loans and current liabilities
Current liabilities
180 $ Equity increase
Accounts payable (A/P)
Other accrued liabilities 165 $ Cash flow from financing activities
Long-term debt Net increase in cash cash equivalents
Stockholders’ equity Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Method Example
1. Calculation Ending balance values of = prior period ending balance + asset acquisitions - planned depreciations - asset retirements
(prior period ending balance machinery and equipment values of machinery of machinery and of machinery and of machinery and
values and asset acquisitions and equipment equipment equipment equipment
shortened by planned depre-
ciations and asset retirements) 780 $ 600 $ 430 $ 200 $ 50 $

Ending balance values of buildings and land and land improvement are calculated the same way (there are no depreciations of land)
Values for the example:
Land and land improvements 330 $
Buildings 490 $

 SAP AG 2001, Title of Presentation, Speaker Name 16

 Step 14 – Planning of Interest Income and Expenses
Before Financing Activities
Income Statement Balance Sheet Cash Flow Statement
Net Sales 3.600 $ Assets Net income/loss
COGS 2.160 $ Current assets Depreciations 250 $
Gross Profit 1.440 $ Cash and cash equivalents Changes in accounts receivable 20 $
Depreciations 250 $ Changes in inventory 16 $
Accounts receivable (A/R) 180 $
Other Operating Expenses 975 $ Changes in accounts payable 40 $
Inventory 72 $
Operating Expenses (OPEX) 1.225 $ Property, plant and equipment 1.600 $ Cash flow from operating activities
Operating Income/loss (EBIT) 215 $ Land and land improvements 330 $ Asset acquisitions 730 $
Interest income 25 $ Buildings 490 $ Asset retirements 80 $
Interest expense 110 $ Machinery and equipment 780 $ Cash flow from investing activities -650 $
Income/loss before income taxes (EBT)130 $ Long term investments Cash requirements
Income taxes Liabilities and stockholders’ equity Dividends paid
Liabilities Repayment of loans and current liabilities
Net income/loss
Raising loans and current liabilities
Current liabilities
180 $ Equity increase
Accounts payable (A/P)
Other accrued liabilities 165 $ Cash flow from financing activities
Long-term debt Net increase in cash cash equivalents
Stockholders’ equity Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Method Example
1. entered manually

Interest income before financing activities 25 $

Transactional
2. taken over from transactional systems
Systems
Interest expenses before financing activities 110 $

 SAP AG 2001, Title of Presentation, Speaker Name 17

 Step 15 – Planning Income Taxes Before Financing
Activities
Income Statement Balance Sheet Cash Flow Statement
Net Sales 3.600 $ Assets Net income/loss
COGS 2.160 $ Current assets Depreciations 250 $
Gross Profit 1.440 $ Cash and cash equivalents Changes in accounts receivable 20 $
Depreciations 250 $ Changes in inventory 16 $
Accounts receivable (A/R) 180 $
Other Operating Expenses 975 $ Changes in accounts payable 40 $
Inventory 72 $
Operating Expenses (OPEX) 1.225 $ Property, plant and equipment 1.600 $ Cash flow from operating activities
Operating Income/loss (EBIT) 215 $ Land and land improvements 330 $ Asset acquisitions 730 $
Interest income 25 $ Buildings 490 $ Asset retirements 80 $
Interest expense 110 $ Machinery and equipment 780 $ Cash flow from investing activities -650 $
Income/loss before income taxes (EBT)130 $ Long term investments Cash requirements
Income taxes 52 $ Liabilities and stockholders’ equity Dividends paid
Liabilities Repayment of loans and current liabilities
Net income/loss
Raising loans and current liabilities
Current liabilities
180 $ Equity increase
Accounts payable (A/P)
Other accrued liabilities 165 $ Cash flow from financing activities
Long-term debt Net increase in cash cash equivalents
Stockholders’ equity Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Method Example
1. derived from EBT (before
Income taxes = EBT (before financing activities) * Tax rate
financing activities) by entering
52 $ 130 $ 40 %
a tax rate

 SAP AG 2001, Title of Presentation, Speaker Name 18

 Step 16 – Calculation of Interim Values of Net Income / Loss, CF
from Operating Activities and Cash Requirements
Income Statement Balance Sheet Cash Flow Statement
Net Sales 3.600 $ Assets Net income/loss 78 $
COGS 2.160 $ Current assets Depreciations 250 $
Gross Profit 1.440 $ Cash and cash equivalents Changes in accounts receivable 20 $
Depreciations 250 $ Changes in inventory 16 $
Accounts receivable (A/R) 180 $
Other Operating Expenses 975 $ Changes in accounts payable 40 $
Inventory 72 $
Operating Expenses (OPEX) 1.225 $ Property, plant and equipment 1.600 $ Cash flow from operating activities 332 $
Operating Income/loss (EBIT) 215 $ Land and land improvements 330 $ Asset acquisitions 730 $
Interest income 25 $ Buildings 490 $ Asset retirements 80 $
Interest expense 110 $ Machinery and equipment 780 $ Cash flow from investing activities -650 $
Income/loss before income taxes (EBT)130
130 $ Long term investments Cash requirements 318 $
Income taxes 52 $ Liabilities and stockholders’ equity Dividends paid
Liabilities Repayment of loans and current liabilities
Net income/loss 78 $
Raising loans and current liabilities
Current liabilities
180 $ Equity increase
Accounts payable (A/P)
Other accrued liabilities 165 $ Cash flow from financing activities
Long-term debt Net increase in cash cash equivalents
Stockholders’ equity Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Method Example
1. calculation
Net income / loss = EBT - Income taxes
78 $ 130 $ 52 $

CF from operating activities = Net income / loss + Depreciations - Δ A / R - Δ Inventory +ΔA/P

332 $ 78 $ 250 $ 20 $ 16 $ 40 $

Cash requirements = - CF from operating activities - CF from investing activities

318 $ 332 $ -650 $

 SAP AG 2001, Title of Presentation, Speaker Name 19

 Financial Statement/Financing
Planning-Scenario

Staff responsible for the business unit simultaneously plans the

income statement, balance sheet, and cash flow statement, but not
the financing of cash requirements.
Each business unit has a planning book with all dependencies. The
model logic is basically the same, and is centrally stored in BPS.
Special logic can be added in Excel.
The plan data of all BUs is aggregated in SEM and summarized at the
(sub-) group level. Simple consolidation is achieved in BPS by
"dropping" items, whereas complex consolidation is performed in
SEM-BCS.
The meeting of capital requirements is planned centrally at the group
level.
Three Frontends to choose from:
 Excel InPlace within BPS-Framework
 ALV and GUI visualization of planning books
 HTML based visualization of planning books

 SAP AG 2001, Title of Presentation, Speaker Name 20

 Step 17 – Planning Influences of Financing Activities on Balances of
Assets, Liabilities and Stockholders’ Equity
Income Statement Balance Sheet Cash Flow Statement
Net Sales 3.600 $ Assets Net income/loss 78 $
COGS 2.160 $ Current assets Depreciations 250 $
Gross Profit 1.440 $ Cash and cash equivalents Changes in accounts receivable 20 $
Depreciations 250 $ Changes in inventory 16 $
Accounts receivable (A/R) 180 $
Other Operating Expenses 975 $ Changes in accounts payable 40 $
Inventory 72 $
Operating Expenses (OPEX) 1.225 $ Property, plant and equipment 1.600 $ Cash flow from operating activities 332 $
Operating Income/loss (EBIT) 215 $ Land and land improvements 330 $ Asset acquisitions 730 $
Interest income 25 $ Buildings 490 $ Asset retirements 80 $
Interest expense 110 $ Machinery and equipment 780 $ Cash flow from investing activities -650 $
Income/loss before income taxes (EBT)130 $ Long term investments 150 $ Cash requirements 318 $

Income taxes 52 $ Liabilities and stockholders’ equity 2.100 $ Dividends paid 60 $

Liabilities 1.295 $ Repayment of loans and current liabilities 50 $
Net income/loss 78 $
Raising loans and current liabilities 450 $
Current liabilities 250 $
Equity increase 0$
Accounts payable (A/P) 180 $
Other accrued liabilities 165 $ Cash flow from financing activities 340 $
Long-term debt 700 $ Net increase in cash cash equivalents
Stockholders’ equity 805 $ Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Method Example
1. Ending balance values and changes of these Balance Sheet
items are taken over from planning application Current liabilities 250 $
liquidity planning Long – term debt 950 $
Stockholders’ equity 805 $
Long term investments 150 $
Liquidity
Planning Cash Flow Statement
Dividend paid 60 $
Repayment of loans and current liabilities 50 $
Raising loans and current liabilities 450 $
Equity Income 0$

 SAP AG 2001, Title of Presentation, Speaker Name 21

 Step 18 – Planning Interest Income and Interest Expense
Income Statement Balance Sheet Cash Flow Statement
Net Sales 3.600 $ Assets Net income/loss 38 $
COGS 2.160 $ Current assets Depreciations 250 $
Gross Profit 1.440 $ Cash and cash equivalents Changes in accounts receivable 20 $
Depreciations 250 $ Changes in inventory 16 $
Accounts receivable (A/R) 180 $
Other Operating Expenses 975 $ Changes in accounts payable 40 $
Inventory 72 $
Operating Expenses (OPEX) 1.225 $ Property, plant and equipment 1.600 $ Cash flow from operating activities 292 $
Operating Income/loss (EBIT) 215 $ Land and land improvements 330 $ Asset acquisitions 730 $
Interest income 25 $ Buildings 490 $ Asset retirements 80 $
Interest expense 150 $ Machinery and equipment 780 $ Cash flow from investing activities -650 $
Income/loss before income taxes (EBT) 90 $ Long term investments 150 $ Cash requirements 358 $

Income taxes 52 $ Liabilities and stockholders’ equity 2.100 $ Dividends paid 60 $

Liabilities 1.295 $ Repayment of loans and current liabilities 50 $
Net income/loss 38 $
Raising loans and current liabilities 450 $
Current liabilities 250 $
Equity increase 0$
Accounts payable (A/P) 180 $
Other accrued liabilities 165 $ Cash flow from financing activities 340 $
Long-term debt 700 $ Net increase in cash cash equivalents
Stockholders’ equity 805 $ Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Method Example
1. Values are taken over from planning application Interest income 25 $
Liquidity
liquidity planning
Planning
Interest expense 150 $

 SAP AG 2001, Title of Presentation, Speaker Name 22

 Step 19 – Planning Income Taxes
Income Statement Balance Sheet Cash Flow Statement
Net Sales 3.600 $ Assets Net income/loss 54 $
COGS 2.160 $ Current assets Depreciations 250 $
Gross Profit 1.440 $ Cash and cash equivalents Changes in accounts receivable 20 $
Depreciations 250 $ Changes in inventory 16 $
Accounts receivable (A/R) 180 $
Other Operating Expenses 975 $ Changes in accounts payable 40 $
Inventory 72 $
Operating Expenses (OPEX) 1.225 $ Property, plant and equipment 1.600 $ Cash flow from operating activities 308 $
Operating Income/loss (EBIT) 215 $ Land and land improvements 330 $ Asset acquisitions 730 $
Interest income 25 $ Buildings 490 $ Asset retirements 80 $
Interest expense 150 $ Machinery and equipment 780 $ Cash flow from investing activities -650 $
Income/loss before income taxes (EBT) 90 $ Long term investments 150 $ Cash requirements 342 $
Income taxes 36 $ Liabilities and stockholders’ equity 2.100 $ Dividends paid 60 $
Liabilities 1.295 $ Repayment of loans and current liabilities 50 $
Net income/loss 54 $
Raising loans and current liabilities 450 $
Current liabilities 250 $
Equity increase 0$
Accounts payable (A/P) 180 $
Other accrued liabilities 165 $ Cash flow from financing activities 340 $
Long-term debt 700 $ Net increase in cash cash equivalents
Stockholders’ equity 805 $ Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Method Example
1. derived from EBT by entering
Income taxes = EBT * Tax rate
a tax rate
36 $ 90 $ 40 %

 SAP AG 2001, Title of Presentation, Speaker Name 23

 Step 20 – Completing of Financial Statement Planning
Income Statement Balance Sheet Cash Flow Statement
Net Sales 3.600 $ Assets 2.100 $ Net income/loss 54 $
COGS 2.160 $ Current assets 350 $ Depreciations 250 $
Gross Profit 1.440 $ Cash and cash equivalents 98 $ Changes in accounts receivable 20 $
Depreciations 250 $ Changes in inventory 16 $
Accounts receivable (A/R) 180 $
Other Operating Expenses 975 $ Changes in accounts payable 40 $
Inventory 72 $
Operating Expenses (OPEX) 1.225 $ Property, plant and equipment 1.600 $ Cash flow from operating activities 308 $
Operating Income/loss (EBIT) 215 $ Land and land improvements 330 $ Asset acquisitions 730 $
Interest income 25 $ Buildings 490 $ Asset retirements 80 $
Interest expense 150 $ Machinery and equipment 780 $ Cash flow from investing activities -650 $
Income/loss before income taxes (EBT) 90 $ Long term investments 150 $ Cash requirements 342 $
Income taxes 36 $ Liabilities and stockholders’ equity 2.100 $ Dividends paid 60 $
Liabilities 1.295 $ Repayment of loans and current liabilities 50 $
Net income/loss 54 $
Raising loans and current liabilities 450 $
Current liabilities 250 $
Equity increase 0$
Accounts payable (A/P) 180 $
Other accrued liabilities 165 $ Cash flow from financing activities 340 $
Long-term debt 700 $ Net increase in cash cash equivalents -2 $
Stockholders’ equity 805 $ Cash and cash equivalents at beginning of period 100 $
Cash and cash equivalents at end of period 98 $

Method Example

1. After entering starting balance of cash and Cash and cash equivalents at the beginning of the period 100 $
cash equivalents the ending balance can be
calculated and balance sheet can be
completed Cash and cash equivalents = Net increase in cash - Cash and cash equivalents
and cash equivalents at beginning of period
98 $ -2 $ 100 $

 SAP AG 2001, Title of Presentation, Speaker Name 24

Financial Statement Planning

The responsible planner only requires one planning book.

The screen has an input area and an output area to structure simulation.

The planning book contains different layouts from all relevant Planning
levels. Local Excel Formulas can connect data from different layouts.

The planner uses the tabs to go through the process. The planning functions
already contain the right planning packages and parameter groups.

The "business logic" resides centrally in SEM-BPS (formulas, asset

statement, offsetting item determination).

Data is read from and written to SEM-BPS so data-integrity is insured by the

OLAP-Database.

Future Release: Central plan parameters can be maintained from within the
application (value drivers).

 SAP AG 2001, Title of Presentation, Speaker Name 25

 Financial Statement Planning

Automatic functions
e.g. depreciation

Grouping of
Plan Items Subplan Integration
e.g. Sales Planning
Input Layout

Display of results
 I/S, B/S, Cash Flow
 Measures, e.g. ROCE

 SAP AG 2001, Title of Presentation, Speaker Name 26

 Planning Folder (GUI)

 SAP AG 2001, Title of Presentation, Speaker Name 27

 SAP AG 2001, Title of Presentation, Speaker Name 28