Using the data in the file P&G.xls (downloadable from the test support site at http://mayes.swlearning.com) forecast the June 30, 2003, income statement and balance sheet for Proctor & Gamble.

Use the percent of sales method and the following assumptions:

(1) Sales in FY 2003 will be $41,736; (2) The tax rate will be 35%; and (3) Each item which changes with sales will be the five-year average percentage of sales.

a. What is the discretionary financing needed in 2003? Is this a surplus or deficit?

b. Create a chart of Cash vs. Sales and add a linear trend line.
Does there appear to be a consistent trend in this relationship?

c. Use the regression tool to verify your results from Part

b. Is the trend statistically significant? Use at least three methods to show why or why not.

d. Use the Scenario Manager to set up three scenarios:
1) Best Case ó Sales are 10% higher than expected.
2) Base Case ó Sales are exactly as expected.
3) Worst Case ó Sales are 10% less than expected.
What is the DFN under each scenario?