Forecasting and 
    Pro Forma Analysis
       Timing of financial needs
       Amount of financial needs
       Flow of funds
       Check the covenants
            Pro forma Income          Pro forma Balance  Plug Figure            Financing Options 
            Statement                 Sheet 
              Depreciation
                                     Change in Net Plant 
              Capital Expenditures   & Equipment
                                                                               Short-Term Debt
                                                                               Long-Term Debt
                                    Working Capital 
                     Sales             Accounts               External
                   Forecast                                  Financing
                                                              Required
                 Net Income
                                       Change in Retained 
             Dividend Policy            Earnings
   Steps in Financial Forecasting
   Forecast sales
   Project the assets needed to support 
    sales
   Project internally generated funds
   Project outside funds needed
   Decide how to raise funds
   See effects of plan on ratios and stock 
    price
   Sales Forecast
    Seasonal changes
    Business cycle
      Recession
      Expansion
    Market segment
      High growth
      Contraction
    Inflation
     2001 Balance Sheet (Millions of $)
     Cash & sec.           $20       Accts. pay. &           
                                     accruals               $100
     Accounts rec.         240       Notes payable          100
     Inventories           240          Total CL            $200
        Total CA           $500      L-T debt               100
                                     Common stk             500
     Net fixed                       Retained                
     Assets                500       Earnings               200
        Total assets       $1000        Total claims        $1000