Excel Project: Projecting Financial Statements Assignment Instructions

My company is Lockheed Martin. I have uploaded the financial information from my excel sheets. I am stuck on the projections sheets.

Projection of Income Statements: I do not understand how to incorporate the horizontal analysis, plus market research to determine how much revenues should increase or decrease over the next 3 years. Or how to use the common-sized income statement to project the expenses (most should be a % of total revenues; some are not variable with revenues)

Projection of balance sheet. I do not understand how to use reasonable assumptions to determine how much the accounts might fluctuate in the future. Make sure to annotate your thoughts so I can follow your reasoning.

After the income statement and balance sheet are complete, finish with the statement of cash flows. Most of this information will flow directly from the other two statements (e.g. Operating Cash Flows start with net income, add non-cash expenses like depreciation, and changes in current assets and liabilities from the balance sheet, etc.). Also, make sure the investing and financing sections of your statements of cash flows tie to the changes in long-term liabilities and stockholder equity sections of the balance sheet

I also uploaded a copy of the formulas used in the excel sheet that I have used.

Overview

Common Sized Balance Sheets (Tabs 12), Common Sized Income Statements (Tab 13), Horizontal Analysis Balance Sheets (Tab 14), Horizontal Analysis Income Statements (Tab 15), and Projected Financial Statements (Tabs 16-18)

Instructions

Continue in the same Excel workbook prepared in Module 4: Week 4, adding the following tabs:

The 12^th tab in your Financial Statement Analysis Template must be labeled Common Sized Balance Sheets.

Set-up like the Historical Balance Sheets (Tab 3), this worksheet should use formulas to calculate the common sized percentages, linking to the Historical Balance Sheets for the calculations. "Total Assets" should be used as the base for all common sized calculations on the Balance Sheets. Common sized percentages should be calculated for all three historical years presented.

See Exhibit A for a partial example of this tab.

The 13^th tab in your Financial Statement Analysis Template must be labeled Common Sized Income Statements.

Set-up like the Historical Income Statements (Tab 2), this worksheet should use formulas to calculate the common sized percentages, linking to the Historical Income Statements for the calculations. "Revenue" or "Total Revenue" (depending on your company) should be used as the base for all common sized calculations on the Income Statements. Common sized percentages should be calculated for all three historical years presented.

The 14^th tab in your Financial Statement Analysis Template must be labeled Horizontal Analysis of Balance Sheets.

Start by copying and pasting the Historical Balance Sheets from Tab 3 to this worksheet. Then, add dollar and percentage change columns between each of the set of historical years.

See Exhibit B for an example of this tab.

The 15^th tab in your Financial Statement Analysis Template must be labeled Horizontal Analysis of Income Statements.

Start by copying and pasting the Historical Income Statements from Tab 2 to this worksheet. Then, add dollar and percentage change columns between each of the set of historical years.

The 16^th tab in your Financial Statement Analysis Template must be labeled Projected Income Statements. Three years of projected statements should be included, starting with the most recent year after the company's last issued report.

The 17^th tab in your Financial Statement Analysis Template must be labeled Projected Balance Sheets. Three years of projected statements should be included. Three years of projected statements should be included, starting with the most recent year after the company's last issued report.

The 18^th tab in your Financial Statement Analysis Template must be labeled Projected Statement of Cash Flows. Three years of projected statements should be included, starting with the most recent year after the company's last issued report. Other information relating to projected tabs:

Projections should be based on research performed on your company and its industry. Use historical, trend, ratio data and current and future economic projections as well as information from the company's MD&A to aid in preparing projections.

Clearly state your assumptions in a text box at the bottom of each tab. Cite sources for assumptions based on research.

The statements should be consistent, reasonable, and accurate. Areas that will be checked for accuracy include:

The Balance Sheets should balance for all years presented.

Retained earnings should be properly calculated using the prior year's balance, net income, and dividends.

The Ending Cash Balance on the Statement of Cash Flows should agree to the Cash Balance shown on the Balance Sheet for the same year.

Net Income on the Income Statements should match what is reported on the top of the Statement of Cash Flows (if indirect method is used).

Other instructions:The Excel workbook should be professionally formatted. Professional formatting includes:

All numbers are formatted similarly. The use of decimals, commas for thousands, and other formatting is consistent.

Dollar signs are included in the first and last numbers of each column.

Subtotals and totals are preceded by a single underline. Totals are followed by a double underline.

Line descriptions are indented/bolded in a manner that makes the spreadsheet easy to read.

All common sized, horizontal analysis, and projection items should be calculated using formulas. Totals and subtotals should also be calculated using formulas. For an example of which cells may need formulas, please see Exhibits A & B.

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