Financial Forecasting (120 points)

  

Financial Forecasting (120 points)

There are two parts to this assignment.

Part 1:
In this assignment, you will conduct a financial forecast for a healthcare organization’s external funding. After you conduct that forecast, you will discuss the learning concepts from the module.

ABC Company is a small manufacturer of ultrasound equipment. The Year 1 financial statements for the firm are shown below:

Balance Sheet as of December 31, Year 1 (thousands of SAR)

  

   Cash

90,000

 

Receivables

180,000

 

Inventories

360,000

 

Total current assets

630,000

 

Net fixed assets

720,000

 

Total assets

1,350,000

  

Accounts payable

180,000

 

Notes payable

78,000

 

Accruals

90,000

 

Total current   liabilities

348,000

  

Common stock

900,000

 

Retained earnings

102,000

 

Total liabilities &   equity

1,350,000

Income Statement for Year 1 (thousands of SAR)

  

   Sales

1,800,000

 

Operating costs

1,639,860

  

Earnings before   interest and taxes

160,140

 

Interest

10,140

 

Earnings before taxes

150,000

 

Taxes (20%)

30,000

 

Net income

120,000

 

Dividends (60%)

72,000

 

Addition to retained   earnings

48,000

Suppose that in Year 2, sales only increase by 8 percent over Year 1 sales. Construct the pro forma financial statements using the constant growth method. Assume the firm operated at full capacity in Year 1. What will be the external funding requirement?

Part 2:
How does trend analysis help in the forecasting revenue, expenses and profit on the Profit and Loss Statement for an organization? Explain whether forecasting difficulties depend on the type of healthcare organization, such as a hospital or an outpatient clinic. Additionally, explain what impact a growing population within the Kingdom of Saudi Arabia will have on the ability to forecast utilization of assets (on the Balance Sheet) effectively.

Express the financial concepts of this course such as revenue payment methods, financial risk, debt, equity, capital acquisition, financial forecasting, and the revenue cycle.

Your paper should meet the following structural requirements:

• The paper should be 6-8 pages in length, not including      the cover sheet and reference page.
• You must show all your calculations for credit. Your      calculations for this assignment must be submitted as an Excel file,      identified as Appendix A, and included as part of the Word document      submission.
• Format the paper according to APA and Saudi Electronic      University writing standards.
• Provide support for your statements with in-text      citations from a minimum of two scholarly articles.
• Three of these sources may be from the class readings      and the textbook, but three must be external and come from peer-reviewed      journals.
• The Saudi Digital Library is a good place to find these      references.