Dividends and CFs are ______ measures

1. Dividends and CFs are ______ measures.

Book Based

2. Earnings are _____ measures

Market and Book Based

3. Economic theory teaches us that the value of an investment is:

Sum of projected future payoffs/1+Discount Rate

4. Want to project what is going to change on IS and BS can't do this without understanding

SCF

5. We use forecasted statements for many reasons:

Planning (internal)
Budgeting (internal)
Analyzing (internal and external)
Investing (external)

6. Forecasting Methodology: Seven Steps

Project Revenues
Project Operating Expenses
Project Operating Assets
Project Financial Assets, Liabilities, CE Capital
Project Income Before Taxes (including effect of nonrecurring Gains/Losses)
Balance financial statements by determine where the excess goes or where financing is needed
Create cash flow statements

7. Internally, analysts can often rely on Marketing projections
   Externally, growth is much more

difficult to determine

8. Looking at historical growth may cause problems

Are you combining lines of business?
Are there major changes to the business?
Are there major changes to the economy?

9. Revenues:

have price taking power

10. Growth rate=

End-Beg/End