In: Finance
Zeebadee Inc. wants to forecast free cash flow to equity (FCFE) using the percent-of-sales method. Prior year sales were $10,000.
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|
Sales growth |
8.00% |
14.00% |
12.00% |
10.00% |
6.00% |
Profit margin |
8.00% |
10.00% |
12.00% |
12.00% |
11.00% |
Net FCInv (% of Sales) |
8.00% |
8.00% |
8.00% |
6.00% |
3.00% |
WCInv (% of Sales) |
3.00% |
3.00% |
3.00% |
2.00% |
1.00% |
DR |
30.00% |
30.00% |
30.00% |
30.00% |
30.00% |
Q1)
Net borrowings for year 4 is a)$364.04
The same with Excel formulas shown:
Q2)
FCFE in year 5 is d)$1,318.44