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Sales revenue
Other revenue
Cash
Accounts Receivable
Inventories
Other Current Assets
Investments
Fixed Assets
Other Assets
Accounts Payable
Notes Payable
Other Current Liabilities
Long-Term Debt
Other Liabilities
Contributed Capital
Retained Earnings
Interest Expense
Income Tax Expense
Net Income
Dividends
Change in Retained Earnings
Investing
Acquisition of Fixed Assets
Sale of investments
Acquisition of Investments
Other Investing Transactions
Cash Flow from Investing
Volume: Consider
International sales
Consider
international competition
value of dollars
VC
use projected cost of goods sold percentage of
sales
EXHIBIT 10.2
Pro Forma Statement of Income and Retained Earnings for Coke
(amounts in millions)
Year 8
Year 9
Year 10 Year 11 Year 12
Projected Projected Projected Projected Projected
Sales
$19, 659 $20, 839 $22, 089 $23, 414 $24, 819
Other Revenues
590
625
663
702
745
Cost of Goods Sold
(7, 077)
(7, 502) (7, 952)
(8, 429) (8, 935)
Selling and Administrative
(7, 864)
(8, 335) (8, 836)
(9, 366) (9, 928)
Interest Expense
(325)
(403)
(494)
(599)
(716)
Net Income before Income Taxes
$4, 983
$5, 223 $5, 470
$5, 723 $5, 985
Income Tax Expense
1, 545
1, 619
1, 696
1, 774
1, 855
Net Income
$3, 438
$3, 604 $3, 774
$3, 949 $4, 130
Dividends
(1, 397)
(1, 564) (1, 752)
(1, 962) (2, 198)
Change in Retained Earnings
$2, 041
$2, 040 $2, 022
$1, 987 $1, 932
Amount
$16,161
$17,729
$19,448
$21,335
$23,404
$25,674
Percentage Change
9.7%
9.7%
9.7%
9.7%
9.7%
Total Assets
Sales
$19, 659
$20, 839
$22, 089
$23, 414
$24, 819
Total Average
Assets Total Beginning End of
Turnover Assets of Year Year
1. 2
1. 2
1. 2
1. 2
1. 2
$16,383
$17,365
$18,407
$19,512
$20,683
$16,161
$16,604
$18,216
$18,689
$20,334
$16,604
$18,216
$18,689
$20,334
$21,031
Dollars
Assets
Year
Year 7
Year 8
Year 9
Year 10
Year 11
Year 12
Year 7 Actual
Year 8 Projected
Year 9 Projected
Year 10 Projected
Year 11 Projected
Year 12 Projected
Sales
$18,546
$19,659
$20,839
$22,089
$23,414
$24,819
Total
Assets
1.15
1.15
1.15
1.15
1.15
1.15
Year-End Percentage
Assets Increase
$16,161
$17,095
6%
$18,120
6%
$19,208
6%
$20,360
6%
$21,582
6%
Year 11
Projected
Year 12
Projected
$1, 585
176
1, 768
1, 045
1, 759
$6, 333
6, 543
6, 188
( 2, 252)
798
$17, 610
$1, 732
192
1, 904
1, 148
1, 865
$6, 841
7, 197
6, 859
( 2, 496)
846
$19, 247
$1, 894
210
2, 051
1, 261
1, 976
$7, 392
7, 917
7, 604
( 2, 767)
897
$21, 043
$2, 071
230
2, 210
1, 384
2, 095
$7, 990
8, 708
8, 430
( 3, 068)
951
$23, 011
$2, 265
252
2, 380
1, 520
2, 220
$8, 637
9, 579
9, 346
( 3, 401)
1, 008
$25, 169
$3, 125
4, 288
9
1, 099
8, 521
1, 233
319
1, 253
$3, 285
5, 115
422
1, 165
9, 987
1, 347
338
1, 329
$3, 454
7, 015
16
1, 235
11, 720
1, 473
358
1, 408
$3, 632
8, 470
257
1, 310
13, 669
1, 611
380
1, 492
$3, 819
10, 563
2
1, 387
15, 771
1, 762
403
1, 582
$11, 326
$2, 203
17, 169
( 601)
( 12, 487)
$6, 284
$17, 610
$13, 001
$2, 534
19, 209
( 637)
( 14, 860)
$6, 246
$19, 247
$14, 959
$2, 914
21, 231
( 675)
( 17, 386)
$6, 084
$21, 043
$17, 152
$3, 351
23, 218
( 716)
( 19, 994)
$5, 859
$23, 011
$19, 518
$3, 854
25, 149
( 759)
( 22, 593)
$5, 651
$25, 169
plug in figure
Change in cash on the balance sheet must agree to
change in cash on the projected statement of cash flows
If cash is too high, assume the firm will invest the
excess in marketable securities or pay down
borrowings
If negative, the firm uses short-term borrowings to
bring about a desired level of cash
Accounts
Year 8 Projected
Year 9 Projected
Year 10 Projected
Year 11 Projected
Year 12 Projected
Sales
$19,659
$20,839
$22,089
$23,414
$24,819
Average
Receivable Accounts
Turnover Receivable
11.1 $1,771
11.1 $1,877
11.1 $1,990
11.1 $2,109
11.1 $2,236
Accounts Receivable
Beginning End of
of Year Year
$1,641 $1,901
$1,901 $1,854
$1,854 $2,126
$2,126 $2,092
$2,092 $2,380
$1,641
$1,768
$1,904
$2,051
$2,210
$2,380
7.72%
7.72%
7.72%
7.72%
7.72%
Year 8 Projected
Year 9 Projected
Year 10 Projected
Year 11 Projected
Year 12 Projected
6.5
6.5
6.5
6.5
$1,154
$1,223
$1,297
$1,375
$1,226
$1,082
$1,365
$1,229
$1,082
$1,365
$1,229
$1,520
Year 7 Actual
Year-End Inventories
$952
Percentage Increase
Year 8 Projected
$1,045
9.81%
Year 9 Projected
Year 10 Projected
Year 11 Projected
Year 12 Projected
$1,148
$1,261
$1,384
$1,520
9.81%
9.81%
9.81%
9.81%
Investments in Securities
Other Assets
10% of Assets
Individual liabilities
Shareholders equity
Treasury stock
Depreciation
Other addbacks
Increases in borrowing
Dividends
Change in Cash
EXHIBIT 10.5
Pro Forma Statement of Cash Flows for Coke
(amounts in millions)
Year 8
Year 9
Year 10 Year 11 Year 12
Projected Projected Projected Projected Projected
Operations
(1) Net Income
$3, 438
$3, 604
$3, 774
$3, 949
$4, 130
(2) Depreciation
221
244
271
300
334
(3) Other Addbacks (net)
55
58
62
65
69
(4) (Increase) in Accounts Receivable
( 127)
( 136)
( 147)
( 159)
( 170)
(5) (Increase) in Inventories
( 93)
( 103)
( 113)
( 123)
( 136)
(6) (Increase) in Prepayments
( 100)
( 106)
( 112)
( 119)
( 126)
(7) Increase in Accounts Payable
153
160
169
178
187
(8) Increase in Other Current Liabilities
63
67
70
75
78
Cash Flow from Operations
$3, 610
$3, 788
$3, 974
$4, 166
$4, 366
Investing
(9) Acquisition of Marketable Securities and Investments
(net) ( $671)
( $546)
( $738)
( $811)
( $892)
(10) Acquisition of Property, Plant, and Equipment ( 607)
( 671)
( 745)
( 825)
( 917)
(11) Other Investing Transactions
( 45)
( 48)
( 51)
( 55)
( 57)
Cash Flow from Investing
( $1, 198) ( $1, 390) ( $1, 534) ( $1, 691) ( $1, 866)
Financing
(12) Increase (Decrease) in Short-term Borrowing $900
$827
$1, 899
$1, 456
$2, 092
(13) Increase in Long-term Debt
117
528
( 280)
379
( 104)
(14) Increase in Common Stock
287
331
380
437
503
(15) Dividends
( 1, 397) ( 1, 564) ( 1, 752) ( 1, 962) ( 2, 198)
(16) Acquisition of Common Stock
( 2, 167) ( 2, 373) ( 2, 526) ( 2, 608) ( 2, 599)
Cash Flow from Financing
( $2, 260) ( $2, 251) ( $2, 279) ( $2, 298) ( $2, 306)
(17) Change in Cash
152
147
161
177
194
Cash-Beginning of Year
1, 433
1, 585
1, 732
1, 894
2, 071
Cash-End of Year
$1, 585
$1, 732
$1, 893
$2, 071
$2, 265