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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 organization’s 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.
You are strongly encouraged to submit all assignments to the Turnitin Originality Check prior to submitting them to your instructor for grading. If you are unsure how to submit an assignment to the Originality Check tool, review the Turnitin Originality Check Student Guide.
