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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
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Phoniex University
Oct-2001 - Nov-2016
An Excel spreadsheet containing R&E Supplies’ 2012 pro forma financial forecast as shown in Table 3.5 is available for download at www.mhhe.com/higgins10e. (Select Student Edition Choose a Chapter Files.) Using this spreadsheet, the information presented in the following list of figures, and the modified equations determined earlier in question 6, extend the forecast for R&E Supplies contained in Table 3.5 through 2013.
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a. What is R&E’s projected external financing required in 2013? How does this number compare to the 2012 projection?
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b. Perform a sensitivity analysis on this projection. How does R&E’s projected external financing required change if the ratio of cost of goods sold to net sales declines from 86.0 percent to 84.0 percent?
c. Perform a scenario analysis on this projection. How does R&E’s projected external financing required change if a severe recession occurs in 2013? Assume net sales decline 5 percent, cost of goods sold rises to 88 percent of net sales due to price cutting, and current assets increase to 35 percent of net sales as management fails to cut purchases promptly in response to declining sales
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