Financial Forecasting (120 points)
There are two parts to this assignment.
Part 1:
In this assignment, you will conduct a financial forecast for a healthcare organizations external funding. After you conduct that forecast, you will discuss the learning concepts from the module.
ABC Company is a small manufacturer of ultrasound equipment. The Year 1 financial statements for the firm are shown below:
Balance Sheet as of December 31, Year 1 (thousands of SAR)
Cash
90,000
Receivables
180,000
Inventories
360,000
Total current assets
630,000
Net fixed assets
720,000
Total assets
1,350,000
Accounts payable
180,000
Notes payable
78,000
Accruals
90,000
Total current liabilities
348,000
Common stock
900,000
Retained earnings
102,000
Total liabilities & equity
1,350,000
Income Statement for Year 1 (thousands of SAR)
Sales
1,800,000
Operating costs
1,639,860
Earnings before interest and taxes
160,140
Interest
10,140
Earnings before taxes
150,000
Taxes (20%)
30,000
Net income
120,000
Dividends (60%)
72,000
Addition to retained earnings
48,000
Suppose that in Year 2, sales only increase by 8 percent over Year 1 sales. Construct the pro forma financial statements using the constant growth method. Assume the firm operated at full capacity in Year 1. What will be the external funding requirement?
Part 2:
How does trend analysis help in the forecasting revenue, expenses and profit on the Profit and Loss Statement for an organization? Explain whether forecasting difficulties depend on the type of healthcare organization, such as a hospital or an outpatient clinic. Additionally, explain what impact a growing population within the Kingdom of Saudi Arabia will have on the ability to forecast utilization of assets (on the Balance Sheet) effectively.
Express the financial concepts of this course such as revenue payment methods, financial risk, debt, equity, capital acquisition, financial forecasting, and the revenue cycle.
Your paper should meet the following structural requirements:
The paper should be 6-8 pages in length, not including the cover sheet and reference page.
You must show all your calculations for credit. Your calculations for this assignment must be submitted as an Excel file, identified as Appendix A, and included as part of the Word document submission.
Format the paper according to APA and Saudi Electronic University writing standards.
Provide support for your statements with in-text citations from a minimum of two scholarly articles.
Three of these sources may be from the class readings and the textbook, but three must be external and come from peer-reviewed journals.
The Saudi Digital Library is a good place to find these references.
