Every internal business decision has financial implications for the organization. As well - a rounded MBA, you will make decisions that impact an organization's financial health and sustainability. These decisions include how to raise capital, how to increase the value of the company or the return to investors, how to balance cash flow with risk management, and how to budget and plan for external financing

Assume the role of a financial analyst of a company such as Boston retail where you will be asked to assist with the corporate financial planning process. This planning process insures that the organization has sufficient resources to execute its strategies. The financial planning process consists of establishing an operating budget in the short term and making capital budgeting decisions. As a financial analyst, you will assist in prioritizing how resources are allocated within the organization

Financial management builds upon concepts used in accounting, but unlike financial accounting which focuses on reporting, financial managers use this information to make strategic decisions. The budgeting or financial planning process is an art rather than a perfect science, as you must consider market factors such as the competition, changing consumer demands, and the impact of technology, government regulations, and macroeconomic factors in establishing your revenue and expense projections

Part 1: Income Statement Forecast ( Operating Budget )

The first step is to develop an income statement forecast also that is referred to as an operating budget. This includes projecting sales/revenue and operating expenses to determine the level of expected profitability. A typical approach is to use past data to forecast future sales. A company will look at its historical pattern of sales growth to estimate future sales. Using historical data without considering the impact of both internal and external factors can be extremely risky. Therefore it is important to consider both external and internal factors that may impact future sales

Scenario :

Assume that the year 20x1 for Boston Retail is the most recently concluded calendar year. Therefore, 20x2 is the forecast calendar year

Part 2: Operating Cash Flow Forecast

In this second part. you will forecast the operating cash flow

1 . Forecast the level of sales

. Estimate three revenue growth rates for the forecast year 20x2: expected, optimistic, and pessimistic. Consider factors such as :

. External factors

. Most revenue growth rates for competitive firms ( such as Nike, The Gap, and American Eagle Outfitters )

. Projected growth within the industry

. Firm's market share

. General economic conditions

. Competitive forces

. Customer demand

. Internal factors if relevant :

. Product mix

. Manufacturing capacity

2. Forecast operating expenses: A manufacturing firm will need the cost of goods sold in addition to other operating expenses that must be estimated

. Observe the impact on the financial statements when you change the operating expense estimates

Part 3: Strategic Analysis and Executive Summary. In the final part, you will summarize your recommendation to the board of directors for approval

. Come up with a written discussion describing your spreadsheet analysis and a justification of your results. Your analysis must include all of the items identified below :

. Explanation of how you estimated the three revenue growth rates. For each one, including a detailed discussion of the internal and external factors that impacted sales revenue

. Explanation of the implications for profitability, if expenses are greater than estimated, and how the organization might address any expense variance

.Comparison of the three 20x2 scenario profit levels with the 20x1 profit and an explanation of the overall increase or decrease in profits for 20x2

Please provide references with cited resources or in-text citations as well. Most especially the links to the cited sources