Wahlen, Baginski & Bradshaw 2007 2008 2009 2010 2011

Financial Statement Analysis Package (FSAP): Version 7.
0
Financial Reporting, Financial Statement Analysis, and Valuation: A Strategic Perspective, 7th Edition
By James Wahlen, Steve Baginski and Mark Bradshaw
The FSAP User Guides appear in column I to the right.
Analyst Name: Wahlen, Baginski & Bradshaw

Company Name:
Year (Most recent in far right column.) 2007 2008 2009 2010 2011
BALANCE SHEET DATA

Assets:
Cash and cash equivalents 600 1,164 1,148
Marketable securities 286 903
Accounts receivable - net 303 387
Inventories 543 966
Prepaid expenses and other current assets 157 162
Deferred tax assets - current 304 230
Other current assets (1)
Current Assets 0 0 600 2,757 3,796
Long term investments 192 107
Property, plant, and equipment - at cost 5,889 6,163
<Accumulated depreciation> -3,472 -3,808
Amortizable intangible assets (net) 417 410
Goodwill and nonamortizable intangibles 262 322
Deferred tax assets - noncurrent
Other noncurrent assets (1) 342 372
Other noncurrent assets (2)
Total Assets 0 0 600 6,387 7,362
Liabilities and Equities:
Accounts payable - trade 283 540
Current accrued liabilities 936 941
Notes payable and short-term debt
Current maturities of long-term debt
Deferred tax liabilities - current
Income taxes payable
Other current liabilities (1) 414 449
Other current liabilities (2) 146 146
Current Liabilities 0 0 0 1,779 2,076
Long-term debt 549 550
Long-term accrued liabilities 375 348
Deferred tax liabilities - noncurrent
Other noncurrent liabilities (1)
Total Liabilities 0 0 0 2,703 2,974
Minority interest
Preferred stock
Common stock + Additional paid in capital 146 41

Retained earnings <deficit> 3,471 4,297
Accum. other comprehensive income <loss> 57 46
Other equity adjustments
<Treasury stock>
Common Shareholders' Equity 0 0 0 3,674 4,384
Total Liabilities and Equities 0 0 0 6,377 7,358
INCOME STATEMENT DATA 2007 2008 2009 2010 2011
Revenues 10,707 11,700

<Cost of goods sold> -4,459 -4,916
Gross Profit 0 0 0 6,248 6,784
<Store operating expenses> -3,551 -3,595
<Research and development expenses> -293 -393
<Depreciation & Amortization> -510 -523
<General and administrative expenses> -570 -749
<Non-recurring operating gain> -53 30
Income from equity investees 148 174
Other operating income (1)
<Non-recurring operating losses>
Operating Profit 0 0 0 1,419 1,728
Interest income 50 116
<Interest expense> -33 -33
Income <Loss> from equity affiliates
Other income or gains
<Other expenses or losses>
Income before Tax 0 0 0 1,436 1,811
<Income tax expense> -489 -563
<Minority interest in earnings>
Income <Loss> from discontinued operations
Extraordinary gains <losses>
Changes in accounting principles
Net Income (computed) 0 0 0 947 1,248
Net Income (enter reported amount as a check) 948 1,248
Earning per share 1.3 2
Other comprehensive income items -8 -11
Comprehensive Income 0 0 0 940 1,239
STATEMENT OF CASH FLOWS DATA 2007 2008 2009 2010 2011
Net Income 0 0 0 947 1,248

Add back depreciation and amortization expenses 541 550
Add back stock-based compensation expense 77 145
Deferred income taxes -42 106
<Income from equity affiliates, net of dividends> -17 -33
<Increase> Decrease in accounts receivable -33 -89
<Increase> Decrease in inventories 123 -422
<Increase> Decrease in prepaid expenses
<Increase> Decrease in other current assets (1)
<Increase> Decrease in other current assets (2)
Increase <Decrease> in accounts payable -4 228
Increase <Decrease> in other current liabilities (1) 1 -82
Increase <Decrease> in other current liabilities (2)
Increase <Decrease> in other noncurrent liabilities (1)
Increase <Decrease> in other noncurrent liabilities (2)
Other addbacks to net income 24 36
<Other subtractions from net income> 52 -52
Other operating cash flows 35 -23
Net CF from Operations 0 0 0 1,704 1,612
Proceeds from sales of property, plant, and equipment
<Property, plant, and equipment acquired> -441 -415
<Increase> Decrease in marketable securities -338 -536
Investments sold
<Investments acquired> -12 -56
Other investment transactions (1) 1 -13
Other investment transactions (2)
Net CF from Investing Activities 0 0 0 -790 -1,020
Increase in short-term borrowing 0 31
<Decrease in short-term borrowing>
Increase in long-term borrowing -7 -4
<Decrease in long-term borrowing>
Issue of capital stock 128 235
Proceeds from stock option exercises 37 104
<Share repurchases - treasury stock> -286 -556
<Dividend payments> -171 -390
Other financing transactions (1) -48 -28
Other financing transactions (2)
Net CF from Financing Activities 0 0 0 -347 -608
Effects of exchange rate changes on cash -5 -1
Net Change in Cash 0 0 0 562 -17
Cash and cash equivalents, beginning of year 0 0 600 1,164
Cash and cash equivalents, end of year 0 600 1,164 1,148
SUPPLEMENTAL DATA 2007 2008 2009 2010 2011
Statutory tax rate 35.0% 35.0%

Average tax
After-tax rateofimplied
effects from income
nonrecurring statement
and unusual data
items on ### ### ### 34.1% 31.1%
net income 0 0 0 0 0
Total deferred tax assets (from above) 0 0 0 304 230
Deferred tax asset valuation allowance
Allowance for uncollectible accounts receivable
Depreciation expense 510 523
Preferred stock dividends (total, if any)
Common shares outstanding
Earnings per share (basic) 1.27 1.66
Common dividends per share ### ### ### #DIV/0! #DIV/0!
Market price per share at fiscal year end
FINANCIAL DATA CHECKS

Assets - Liabilities - Equities 0 0 600 10 4
Net Income (computed) - Net Income (reported) 0 0 0 -1 0
Cash Changes 0 -600 -2 -1
ective, 7th Edition
2012
1,189
848
486
1,242
197
239
4,201
116
6,903
-4,244
386
399
460
8,221
398
1,134
510
168
2,210
550
345
3,105
40
5,046
23
5,109
8,214
2012
13,300
-5,813
7,487
-3,918
-430
-550
-801
0
211
1,999
94
-33
2,060
-674
1,386
1,385
2
-24
1,364
2012
1,386
581
154
61
-49
-90
-273
-105
24
61
24
-20
1,754
-851
48
-129
-42
-974
-31
237
170
-549
-513
-59
-745
10
45
1,148
1,189
2012
35.0%
32.7%
0
239
550
749
1.83
0.68
7
1
4
FSAP User Guides:
The FSAP user should only enter data in the blue-font cells shaded light green.
The Data spreadsheet is designed for up to six years of financial statement data. The user must input the most rece
The user must conform financial statement data to the FSAP template because the spreadsheets within FSAP use th
FSAP automatically computes the amounts of various sub-totals and totals within the Data spreadsheet. These item
Insert your name in column B.
Enter the name of the company in Column B. This name will appear on the output of all spreadsheets within FSAP.
Throughout FSAP, enter amounts for account titles listed in brackets <> as negative numbers. Except for per share a
Enter Balance Sheet Data:
Other current assets (1) and (2) can be renamed and used for different types of current assets for different firms.
FSAP automatically computes the amount of total current assets.
Other noncurrent assets (1) and (2) can be renamed and used for different types of long term assets for different firm
FSAP automatically computes the amount of total assets.
Other current liabilities (1) and (2) can be renamed and used for different types of current liabilities for different firms.
FSAP automatically computes the amount of total current liabilities.
Other noncurrent liabilities (1) and (2) can be renamed and used for different types of non-current liabilities for differe
FSAP automatically computes the amount of total liabilitries.

The amount for this item appears either on the Balance Sheet or the Statement of Shareholders' Equity. Be sure to e
Include on this line any items that do not fall within some other shareholders' equity line. Such items seldom appear
FSAP automatically computes the amount of total shareholders' equity.

FSAP automatically computes the amount of total liabilities plus shareholders' equity.
Enter Income Statement Data:
When entering income statement data, enter amounts that increase income (revenues, gains, income) as positive am
FSAP automatically computes the amount of gross profit.
Other operating expenses (1), (2), and (3) can be renamed and used for different types of recurring operating expen
Other operating income (1) and (2) can be renamed used for different sources of recurring operating income for diffe
The FSAP user must decide whether particular operating gains or losses are non-recurring - infrequent and unusual
FSAP automatically computes the amount of operating profit.
Enter any amounts of income (or <loss>) from equity or noncontrolled affiliates.
Enter income or gain amounts that are unusual and non-recurring and outside of normal business operations.
Enter expense or loss amounts that are unusual and non-recurring and outside of normal buisness operations. Enter
FSAP automatically computes the amount of income before tax.
Enter the amount of income tax expense that appears on the income statement in the section for income from contin
Enter the amount of minority interest in income. Enter the amount as a negative number.
Enter any amount reported in the separate section of the income statement labeled Discontinued Operations. The am
Enter any amount reported in the separate section of the income statement labeled Extraordinary Items. The amoun
Enter any amount reported in the separate section of the income statement labeled Changes in Accounting Principle
FSAP automatically computes the amount of net income using the above data for revenues, expenses, gains and los
Enter the amount of reported net income on this line. It will be used by FSAP to provide a mathematical check on th
This amount usually appears in the Statement of Shareholders' Equity. Enter as a positive or negative number as ap
FSAP automatically computes the amount of comprehensive income.
Enter Statement of Cash Flows Data:
In the Statement of Cash Flows Data, enter amounts reported on the firm's statement of cash flows. Enter amounts
FSAP automatically enters the Net Income amount computed above.
FSAP automatically computes the amount of cash flow from operations.
FSAP automatically computes the amount of cash flow from investing activities.
FSAP automatically computes the amount of cash flow from financing activities.
FSAP automatically computes the net change in cash.

Enter Supplemental Data:
Enter the statutory income tax rate applicable to ordinary income and deductions (such as the deduction for interest
This rate is computed by FSAP as the ratio of the income tax expense to income before tax.
This row automatically sums the pre-tax amounts of unusual and nonrecurring items and the after-tax amounts of dis
This row automatically sums the total deferred tax assets (current plus non-current) amounts from the asset section o
Enter the deferred tax asset valuation allowance amounts. These amounts (if any) are usually disclosed in the tax no
Enter the allowances for uncollectible accounts receivable. These amounts (if any) are usually disclosed either in the
Enter the amount of depreciation expense on property, plant and equipment. These amounts (if any) are usually disc
Enter the total amount of preferred stock dividends paid, if any.
Enter the number of common shares outstanding at the end of each year. Be sure to reduce the number of shares is
Enter the amount that appears on the firm's income statement.
This cell computes common dividends per share by dividing the dividend payments from the cash flow statement by
This should be the closing market price per share on the last day of the firm's accounting period (usually December 3
FSAP checks for an equality between total assets and total liabilities plus shareholders' equity. A non-zero amount in
FSAP checks that the inputted amounts of revenues and expenses equal the reported amount of net income. A non
FSAP checks that the change in cash on the statement of cash flows equals the change in cash on the balance shee
r must input the most recent year of financial statement data in column G, regardless of the number of years of data inputted.
sheets within FSAP use the Data spreadsheet as their base. The user can, however, rename account titles as necessary to match the acc
spreadsheet. These items are shaded in gray and serve in checking the mathematical accuracy of inputted amounts. FSAP checks to ens
readsheets within FSAP.

ers. Except for per share amounts, be consistent with the units of the amounts entered (for example, thosands or millions).
sets for different firms.
rm assets for different firms.
abilities for different firms.
current liabilities for different firms.

olders' Equity. Be sure to enter as a positive or negative amount as appropriate.
uch items seldom appear in balance sheets of U.S. firms. Amounts that increase (decrease) total shareholders' equity should be entered a
ns, income) as positive amounts, and enter amounts that decrease income (expenses, losses) as negative amounts.
recurring operating expenses for different firms.
operating income for different firms.
- infrequent and unusual given the firm's business and operating environment. If so, enter the amounts on the appropriate rows. Enter exp
usiness operations.
buisness operations. Enter these amounts as negative numbers.
ion for income from continuing operations. If income tax expense reduces income, enter the amount as a negative number.
tinued Operations. The amount is reported net of tax effects. Enter as a positive or negative number as appropriate.
rdinary Items. The amount is reported net of taxes. Enter as a positive or negative number as appropriate.
es in Accounting Principles. The amount is reported net of income taxes. Enter as a positive or negative number as appropriate.
s, expenses, gains and losses.
mathematical check on the amounts of all revenues and expenses on preceding lines.
or negative number as appropriate.

ash flows. Enter amounts that increase (decrease) cash as positive (negative) numbers. The row headings help indicate whether amounts s
the deduction for interest expense). The Federal corporate income tax rate is currently 35 percent in the United States. Alternatively, one ca
he after-tax amounts of discontinued operatons, extraordinary items and changes in accounting principles from the income statement above
ts from the asset section of teh balance sheet above.
ally disclosed in the tax note.
ually disclosed either in the receivables note or in a supplemental inforrmation note.
nts (if any) are usually disclosed either in the property, plant and equipment note or in a supplemental inforrmation note. If depreciation expe
ce the number of shares issued by the number of any shares held as treasury stock to arrive at the number of common shares outstanding.
e cash flow statement by the number of outstanding shares. This assumes the firm pays immaterial preferred dividends. If that assumption
eriod (usually December 31 of each year). If stock markets are closed on the last day of the accounting period, use the closing price on the
uity. A non-zero amount in this row indicates a likely data input error in one or more balance sheet accounts.
ount of net income. A non-zero amount on this row likely indicates an input error in one or more income statement accounts.
cash on the balance sheet. A non-zero amount indicates either a data input error on one or more rows of the cash flow statement or the us
of years of data inputted.
unt titles as necessary to match the account titles of the particular firm. FSAP contains a number of general purpose accounts that can be r
inputted amounts. FSAP checks to ensure that total assets equal total liabilities and shareholders’ equity, that total revenues and gains mi
, thosands or millions).
hareholders' equity should be entered as positive (negative) amounts.
egative amounts.
unts on the appropriate rows. Enter expense and loss amounts as negative numbers.
t as a negative number.
er as appropriate.
ative number as appropriate.

adings help indicate whether amounts should be positive or negative.
n the United States. Alternatively, one can enter a statutory tax rate that captures the combined effects of Federal, state, and foreign incom
ciples from the income statement above. The analyst must then adjust the items that are stated in pre-tax amounts to an after-tax basis eith
al inforrmation note. If depreciation expense is not disclosed separately from amortization expense, enter depreciation plus amortization exp
number of common shares outstanding. The number of common shares outstanding should be expressed in the same numerical units (for
preferred dividends. If that assumption does not hold, enter the amount of common dividends per share directly.
nting period, use the closing price on the most recent trading day following the end of the period.
ome statement accounts.

ows of the cash flow statement or the use of a different definition of cash on the two financial statements. The user should identify the reaso
urpose accounts that can be renamed to fit the accounts of the particular firm (for example, Other Current Assets (1) and (2)).
at total revenues and gains minus total expenses and losses equal reported net income, and that cash flows from operating, investing, and
deral, state, and foreign income taxes. These rates are commonly disclosed in the tax note.
ounts to an after-tax basis either by adjusting for the specific amounts of applicable tax (or tax savings) as disclosed by the firm, or if not dis
preciation plus amortization expense.
the same numerical units (for example, thousands or millions) as the financial statement amounts entered in the preceding cells.
e user should identify the reason for and correct any non-zero amount.
sets (1) and (2)).
from operating, investing, and financing activities equal the change in cash on the balance sheet. These financial data checks appear at th
sclosed by the firm, or if not disclosed, by adjusting these items for the statutory tax rate.
the preceding cells.

ancial data checks appear at the bottom of the Data spreadsheet. Any material non-zero amounts (that are not due to rounding) on these ro
ot due to rounding) on these rows require the user to re-check amounts inputted to identify and correct the error.
Company-operated store
2010 2011 2012 2013 2014
New store opened -33 43 234 393 412
Total store 7,580 7,623 7,857 8,250 8,662
# of stores
Store growth 0.57% 3.07% 5%
Assumption Assume growth at constant rate
America
Total revenue ----- 8,365.5 9,077.0 9,292.1 9,756.7
Revenue per store 1.1 1.2 1.1
Revenue
Revenue growth 8.51% 5.00%
New store opened -64 25 10 18 18
Total store 847 872 882 900 919
# of stores
Store growth 2.95% 1.15% 2.05%
EMEA
Total revenue ----- 905.5 968.3 988.1 1,008.4
Revenue
New store opened 30 73 154 266 373
Total store 439 512 666 932 1,305
# of stores
Store growth 16.63% 30.08% 40.00%
CAP
Total revenue ----- 361.4 489.2 684.9 958.8
Revenue
CPG
2010 2011 2012 2013 2014
Total revenue 868.7 1,060.5 1,554.7 2,279.2 3,341.3
Growth rate 22.08% 46.60% 46.60%
Total
2010 2011 2012 2013 2014
Total number of stores 16,858 17,003 18,066 19,535 21,219
Total revenue 10,707.4 11,672.7 13,286.7 14,529.3 16,455.9
Growth rate 9.02% 13.83% 9.35% 13.26%
Rev/store 0.635 0.687 0.735 0.744 0.776
perated store Licensing
2015 2016 2017 2010 2011 2012 2013 2014 2015 2016
433 455 478 111 -268 270 285 301 318 336
9,095 9,550 10,028 5,044 4,776 5,046 5,331 5,633 5,951 6,288
5% -5.31% 5.65% 5.65%
h at constant rate Assume growth at constant rate
10,244.6 10,756.8 11,294.6 ----- 676.7 825.8 872.5 921.8 973.9 1,029.0
1.1 0.1 0.2 0.2
5.00% 22.03% 0.00%
19 19 20 100 79 101 113 125 140 156
937 957 976 807 886 987 1,100 1,225 1,364 1,520
2.05% 9.79% 11.40% 11.40%
1,029.1 1,050.1 1,071.7 ----- 112.2 139.5 155.4 173.1 192.9 214.8
1.1 0.1 0.1 0.1
2.05% 24.33% 11.40%
522 731 1,023 79 193 294 394 453 521 600
1,828 2,559 3,582 2,141 2,334 2,628 3,022 3,476 3,997 4,596
40.00% 9.01% 12.60% 15.00%
1,342.4 1,879.3 2,631.0 ----- 190.9 232.2 257.1 295.7 340.0 391.0
0.7 0.1 0.1 0.1
40.00% 21.63% 15.00%
PG Provided
2015 2016 2017 Calculated
4,898.4 7,181.1 10,527.5 Projected
46.60%
h at constant rate
otal
2015 2016 2017
23,173 25,469 28,208
19,021.2 22,502.2 27,301.0
15.59% 18.30% 21.33%
0.821 0.884 0.968
2017
355
6,643
1,087.2
173
1,693
239.3
689
5,286
449.7
Financial Statement Analysis Package (FSAP): Version 7.0
The FSAP User Guides appear in column J to the right.

Company Name: 0
DATA CHECKS
Assets - Liabilities - Equities 0 0 600 10
Net Income (computed) - Net Income (reported) 0 0 0 -1
Cash Changes 0 -600 -2
In the computations below, a #DIV/0! message indicates that a ratio denominator is zero.
PROFITABILITY FACTORS:
Year 2008 2009 2010 2011
RETURN ON ASSETS (based on reported amounts):

Profit Margin for ROA 9.0% 10.9%
x Asset Turnover 0.0 3.1 1.7
= Return on Assets 0.0% 27.7% 18.5%
RETURN ON ASSETS (excluding the effects of nonrecurring items):

Profit Margin for ROA 9.0% 10.9%
= Return on Assets 0.0% 27.7% 18.5%
RETURN ON COMMON EQUITY (based on reported amounts):

Profit Margin for ROCE 8.8% 10.7%
x Capital Structure Leverage 1.9 1.7
= Return on Common Equity 51.6% 31.0%
RETURN ON COMMON EQUITY (excluding the effects of nonrecurring items):

Profit Margin for ROCE 8.8% 10.7%
x Capital Structure Leverage 1.9 1.7
= Return on Common Equity 51.6% 31.0%
OPERATING PERFORMANCE:
Gross Profit / Revenues 58.4% 58.0%
Operating Profit / Revenues 13.3% 14.8%
Net Income / Revenues 8.8% 10.7%
Comprehensive Income / Revenues 8.8% 10.6%
PERSISTENT OPERATING PERFORMANCE (excluding the effects of nonrecurring items):

Persistent Operating Profit / Revenues 13.3% 14.8%
Persistent Net Income / Revenues 8.8% 10.7%
GROWTH:
Revenue Growth 9.3%
Net Income Growth 31.8%
Persistent Net Income Growth 31.8%
OPERATING CONTROL:
Gross Profit Control Index 99.4%
Operating Profit Contol Index 111.4%
Profit Margin Decomposition:
Gross Profit Margin 58.4% 58.0%
Operating Profit Index 22.7% 25.5%
Leverage Index 101.2% 104.8%
Tax Index 65.9% 68.9%
Net Profit Margin 8.8% 10.7%
Comprehensive Income Performance:
Comprehensive Income Index 99.3% 99.3%
Comprehensive Income Margin 8.8% 10.6%
RISK FACTORS:
Year 2008 2009 2010 2011
LIQUIDITY:
Current Ratio 1.55 1.83
Quick Ratio 0.99 1.17
Operating Cash Flow to Current Liabilities 191.6% 83.6%
ASSET TURNOVER:
Accounts Receivable Turnover 70.7 33.9
Days Receivables Held 5 11
Inventory Turnover 16.4 6.52
Days Inventory Held 22 56.02
Accounts Payable Turnover 35.3 13.0
Days Payables Held 10 28
Net Working Capital Days 17 39
Revenues / Average Net Fixed Assets 8.86 4.90
Cash Turnover 0.0 12.1 10.1
Days Sales Held in Cash 30.1 36.1
SOLVENCY:
Total Liabilities / Total Assets 0.0% 42.3% 40.4%
Total Liabilities / Shareholders' Equity 73.6% 67.8%
LT Debt / LT Capital 13.0% 11.1%
LT Debt / Shareholders' Equity 14.9% 12.5%
Operating Cash Flow to Total Liabilities 126.1% 56.8%
Interest Coverage Ratio (reported amounts) 44.5 55.9
Interest Coverage ratio (recurring amounts) 44.5 55.9
RISK FACTORS:
Bankruptcy Predictors:
Altman Z Score 3.38 3.51
Bankruptcy Probability 0.87% 0.60%
Earnings Manipulation Predictors:
Beneish Earnings Manipulation Score -2.48
Earnings Manipulation Probability 0.66%
STOCK MARKET-BASED RATIOS:

Stock Returns
Price-Earnings Ratio (reported amounts) 0.00 0.00
Price-Earnings Ratio (recurring amounts)
Market Value to Book Value Ratio 0.0 0.0
INCOME STATEMENT ITEMS AS A PERCENT OF REVENUES:
Year 2008 2009 2010 2011
Revenues 100.0% 100.0%

<Cost of goods sold> -41.6% -42.0%
Gross Profit 58.4% 58.0%
<Store operating expenses> -33.2% -30.7%
<Research and development expenses> -2.7% -3.4%
<Depreciation & Amortization> -4.8% -4.5%
<General and administrative expenses> -5.3% -6.4%
<Non-recurring operating gain> -0.5% 0.3%
Income from equity investees 1.4% 1.5%
Other operating income (2) 0.0% 0.0%
#REF! 0.0% 0.0%
<Non-recurring operating losses> 0.0% 0.0%
Operating Profit 13.3% 14.8%
Interest income 0.5% 1.0%
<Interest expense> -0.3% -0.3%
Income <Loss> from equity affiliates 0.0% 0.0%
Other income or gains 0.0% 0.0%
<Other expenses or losses> 0.0% 0.0%
Income before Tax 13.4% 15.5%
<Income tax expense> -4.6% -4.8%
<Minority interest in earnings> 0.0% 0.0%
Income <Loss> from discontinued operations 0.0% 0.0%
Extraordinary gains <losses> 0.0% 0.0%
Changes in accounting principles 0.0% 0.0%
Net Income (computed) 8.8% 10.7%
Other comprehensive income items -0.1% -0.1%

Comprehensive Income 8.8% 10.6%
INCOME STATEMENT ITEMS: GROWTH RATES
Year 2008 2009 2010 2011
YEAR TO YEAR GROWTH RATES:

Revenues 9.3%
<Cost of goods sold> 10.2%
Gross Profit 8.6%
<Store operating expenses> 1.2%
<Research and development expenses> 34.1%
<Depreciation & Amortization> 2.5%
<General and administrative expenses> 31.4%
<Non-recurring operating gain> -156.6%
Income from equity investees 17.6%
#REF!
<Non-recurring operating losses>
Operating Profit 21.8%
Interest income 132.0%
<Interest expense> 0.0%
Income <Loss> from equity affiliates
Other income or gains
<Other expenses or losses>
Income before Tax 26.1%
<Income tax expense> 15.1%
<Minority interest in earnings>
Income <Loss> from discontinued operations
Extraordinary gains <losses>
Changes in accounting principles
Net Income (computed) 31.8%
Other comprehensive income items 37.5%

Comprehensive Income 31.7%
COMMON SIZE BALANCE SHEET - AS A PERCENT OF TOTAL ASSETS
Year 2008 2009 2010 2011
Assets:
Cash and cash equivalents 100.0% 18.2% 15.6%
Marketable securities 0.0% 4.5% 12.3%
Accounts receivable - net 0.0% 4.7% 5.3%
Inventories 0.0% 8.5% 13.1%
Prepaid expenses and other current assets 0.0% 2.5% 2.2%
Deferred tax assets - current 0.0% 4.8% 3.1%
Other current assets (1) 0.0% 0.0% 0.0%
Other current assets (2) 0.0% 0.0% 0.0%
Current Assets 100.0% 43.2% 51.6%
Long term investments 0.0% 3.0% 1.5%
Property, plant, and equipment - at cost 0.0% 92.2% 83.7%
<Accumulated depreciation> 0.0% -54.4% -51.7%
Amortizable intangible assets (net) 0.0% 6.5% 5.6%
Goodwill and nonamortizable intangibles 0.0% 4.1% 4.4%
Deferred tax assets - noncurrent 0.0% 0.0% 0.0%
Other noncurrent assets (1) 0.0% 5.4% 5.1%
Other noncurrent assets (2) 0.0% 0.0% 0.0%
Total Assets 100.0% 100.0% 100.0%

Accounts payable - trade 0.0% 4.4% 7.3%
Current accrued liabilities 0.0% 14.7% 12.8%
Notes payable and short-term debt 0.0% 0.0% 0.0%
Current maturities of long-term debt 0.0% 0.0% 0.0%
Deferred tax liabilities - current 0.0% 0.0% 0.0%
Income taxes payable 0.0% 0.0% 0.0%
Other current liabilities (1) 0.0% 6.5% 6.1%
Other current liabilities (2) 0.0% 2.3% 2.0%
Current Liabilities 0.0% 27.9% 28.2%
Long-term debt 0.0% 8.6% 7.5%
Long-term accrued liabilities 0.0% 5.9% 4.7%
Deferred tax liabilities - noncurrent 0.0% 0.0% 0.0%
Other noncurrent liabilities (1) 0.0% 0.0% 0.0%
Other noncurrent liabilities (2) 0.0% 0.0% 0.0%
Total Liabilities 0.0% 42.3% 40.4%
Minority interest 0.0% 0.0% 0.0%
Preferred stock 0.0% 0.0% 0.0%
Common stock + Additional paid in capital 0.0% 2.3% 0.6%

Retained earnings <deficit> 0.0% 54.3% 58.4%
Accum. other comprehensive income <loss> 0.0% 0.9% 0.6%
Other equity adjustments 0.0% 0.0% 0.0%
<Treasury stock> 0.0% 0.0% 0.0%
Common Shareholders' Equity 0.0% 57.5% 59.5%
Total Liabilities and Equities 0.0% 99.8% 99.9%
BALANCE SHEET ITEMS: GROWTH RATES
Year 2008 2009 2010 2011
Assets: YEAR TO YEAR GROWTH RATES:

Cash and cash equivalents 94.0% -1.4%
Marketable securities 215.7%
Accounts receivable - net 27.7%
Inventories 77.9%
Prepaid expenses and other current assets 3.2%
Deferred tax assets - current -24.3%
Current Assets 359.5% 37.7%
Long term investments -44.3%
Property, plant, and equipment - at cost 4.7%
<Accumulated depreciation> 9.7%
Amortizable intangible assets (net) -1.7%
Goodwill and nonamortizable intangibles 22.9%
Deferred tax assets - noncurrent
Other noncurrent assets (1) 8.8%
Other noncurrent assets (2)
Total Assets 964.5% 15.3%

Accounts payable - trade 90.8%
Current accrued liabilities 0.5%
Notes payable and short-term debt
Current maturities of long-term debt
Deferred tax liabilities - current
Income taxes payable
Other current liabilities (1) 8.5%
Other current liabilities (2) 0.0%
Current Liabilities 16.7%
Long-term debt 0.2%
Long-term accrued liabilities -7.2%
Deferred tax liabilities - noncurrent
Total Liabilities 10.0%
Minority interest
Preferred stock
Common stock + Additional paid in capital -71.9%

Retained earnings <deficit> 23.8%
Accum. other comprehensive income <loss> -19.3%
Other equity adjustments
<Treasury stock>
Common Shareholders' Equity 19.3%
Total Liabilities and Equities 15.4%
RETURN ON ASSETS ANALYSIS (excluding the effects of non-recurring items)
Level 1 RETURN ON ASSETS

2010 2011 2012
27.7% 18.5% 18.1%
Level 2 PROFIT MARGIN FOR ROA ASSET TURNOVER

2010 2011 2012 2010
9.0% 10.9% 10.6% 3.1
Level 3 2010 2011 2012 2010

Revenues 100.0% 100.0% 100.0% 70.7
<Cost of goods sold> -41.6% -42.0% -43.7% 16.4
Gross Profit 58.4% 58.0% 56.3% 8.9
<Store operating expenses> -33.2% -30.7% -29.5%
Operating Profit 13.3% 14.8% 15.0%
Income before Tax 13.4% 15.5% 15.5%
<Income tax expense> -4.6% -4.8% -5.1%
Profit Margin for ROA* 9.0% 10.9% 10.6%
*Amounts do not sum.
RETURN ON COMMON SHAREHOLDERS' EQUITY ANALYSIS (excluding the effects of non-recurring items)
RETURN ON COMMON SHAREHOLDERS' EQUITY

2010 2011 2012
51.6% 31.0% 29.2%
2010 2011 2012

PROFIT MARGIN FOR ROCE 8.8% 10.7% 10.4%
ASSET TURNOVER 3.1 1.7 1.7
CAPITAL STRUCTURE LEVERAGE 1.9 1.7 1.6
STATEMENT OF CASH FLOWS: SUMMARY
Year 2008 2009 2010 2011
Operating Activities:
Net Income 0 0 947 1,248
Add back depreciation and amortization expenses 0 0 541 550
Net cash flows for working capital 0 0 87 -365
Other net addbacks/subtractions 0 0 129 179
Net CF from Operations 0 0 1,704 1,612
Investing Activities:
Capital expenditures (net) 0 0 -441 -415
Investments 0 0 -350 -592
Other investing transactions 0 0 1 -13
Net CF from Investing Activities 0 0 -790 -1,020
Financing Activities:
Net proceeds from short-term borrowing 0 0 0 31
Net proceeds from long-term borrowing 0 0 -7 -4
Net proceeds from share issues and repurchases 0 0 -121 -217
Dividends 0 0 -171 -390
Other financing transactions 0 0 -48 -28
Net CF from Financing Activities 0 0 -347 -608
Effects of exchange rate changes on cash 0 0 -5 -1

Net Change in Cash 0 0 562 -17
ctive, 7th Edition FSAP User Guides:
The Analysis worksheet in FSAP automatically computes a wide array of fin

The FSAP User Guides next to each row provide brief descriptions of ratio
4 FSAP checks the Data worksheet for an equality between total assets and
0 FSAP checks whether the net income amounts determined by revenue and
-1 FSAP checks that the change in cash on the statement of cash flows equa
Profitability Factors:
2012
Return on assets measures the rate of return the firm earns per average do
10.6% Profit margin for ROA measures how much profitability the firm derives from
1.7 Asset turnover measures how efficiently the firm uses its assets to generate
18.1% Rate of return on assets is the product of the firm's profitability and its effici
See the preceding FSAP User Guides on ROA.

10.6% These computations of ROA exclude the after-tax effects of nonrecurring ite
1.7
18.1%
Return on common equity measures the rate of return the firm earns per a
10.4% Profit margin for ROCE measures the net profit margin per dollar of sales. P
1.7 Asset turnover measures how efficiently the firm uses its assets to generate
1.6 Capital structure leverage measures the average amount invested in asset
29.2% Rate of return on common equity is the product of the firm's profitability, eff
See the preceding FSAP User Guides on ROCE.

10.4% These computations of ROCE exclude the after-tax effects of nonrecurring
1.7
1.6
29.2%
56.3% Gross profit margin as a percent of revenues.
15.0% Operating income as a percent of revenues.
10.4% Net income as a percent of revenues.
10.3% Comprehensive income as a percent of revenues.
15.0% Operating income as a percent of revenues after excluding the effects of no

10.4% Net income as a percent of revenues, after excluding the effects of non-rec
13.7% Year-on-year growth rate in revenues.

11.1% Year-on-year growth rate in net income.
11.1% Year-on-year growth rate in net income, after excluding the effects of non-r
97.1% The rate of change in gross profit relative to the rate of change in revenues
101.8% The rate of change in operating income relative to the rate of change in rev
56.3% Gross profit margin as a percent of revenues.

26.7% Operating profit as a percent of gross profit. The complement of this percen
103.1% Income before tax as a percent of operating profit. The complement of this
67.3% Net income as a percent of income before tax. The complement of this perc
10.4% Net income as a percent of revenues. The net profit margin will also equal t
98.4% Comprehensive income as a percent of net income.

10.3% Comprehensive income as a percent of revenues.
Risk Factors:
2012
1.90 Current assets divided by current liabilities.

1.14 More liquid current assets (cash and cash equivalents, marketable securitie
81.8% Operating cash flows divided by the average amount of current liabilities.
30.5 Total revenues divided by the average balance in accounts receivable.

12 The number of days in receivables is measured as 365 divided by the acco
5.27 Cost of goods sold divided by the average amaount of inventory.
69.32 The number of days in inventory is measured as 365 divided by the invento
13.0 Inventory purchases (computed as cost of goods sold plus the change in in
28 28 The number of days in payables is measured as 365 divided by the accoun
53 Net working capital days measures the number of days to make and sell in
5.31 Total revenues divided by the average balance in net property, plant, and e
11.4 Revenues divided by the average cash balance.
32.1 The number of days sales held in cash is measured as 365 divided by the c
37.8% This ratio measures the percentage of total ssets financed by total liabilities
60.8% This debt/equity ratio measures total liabiliteis as a percent of common sha
9.7% This ratio measures the percent of debt financing relative to total long term
10.8% This ratio measures the percent of long term debt financing relative to comm
57.7% Operating cash flows divided by the average amount of total liabilities.
63.4 Net income before interest expense, income taxes, and minority interest in
63.4 Net income before interest expense, income taxes, minority interest in inco
3.61 The Altman Z-score is a multivariate predictor of bankruptcy.

0.46% The probability of bankruptcy over the next two years as indicated by the A
-2.42 The Beneish Earnings Manipulation Score is a multivariate indicator of the

0.78% The probability of earnings manipulation given the Beneish Earnings Manip
Stock returns measure fiscal year-end share price plus dividends divided b
0.00 Fiscal year-end share price divided by earnings per share.
0.00 Fiscal year-end share price divided by earnings per share after excluding th
0.0 Market value of common equity divided by book value of common equity.
Common-Sized Income Statements:
2012
100.0% All of the common-size income statement ratios measure a particular incom
-43.7%
56.3%
-29.5%
-3.2%
-4.1%
-6.0%
0.0%
1.6%
0.0%
0.0%
0.0%
15.0%
0.7%
-0.2%
0.0%
0.0%
0.0%
15.5%
-5.1%
0.0%
0.0%
0.0%
0.0%
10.4%
-0.2%
10.3%
Income Statement Growth Rates:
2012
COMPOUND
GROWTH
RATE
13.7% The year-on-year growth rates indicate the annual rate of growth in a partic
18.2% The compound growth rates indicate the average compounded rate of grow
10.4%
9.0%
9.4%
5.2%
6.9%
-100.0%
21.3%
15.7%
-19.0%
0.0%
13.7%
19.7%
11.1%
118.2%
10.1%
Common-Sized Balance Sheets:
2012
14.5% All of the common-size balance sheet ratios measure a particular balance s
10.3%
5.9%
15.1%
2.4%
2.9%
0.0%
0.0%
51.1%
1.4%
84.0%
-51.6%
4.7%
4.9%
0.0%
5.6%
0.0%
100.0%
4.8%
13.8%
0.0%
0.0%
0.0%
0.0%
6.2%
2.0%
26.9%
6.7%
4.2%
0.0%
0.0%
0.0%
37.8%
0.0%
0.0%
0.5%
61.4%
0.3%
0.0%
0.0%
62.1%
99.9%
Balance Sheet Growth Rates:
2012
COMPOUND
GROWTH
RATE
3.6% The year-on-year growth rates indicate the annual rate of growth in a partic
-6.1% The compound growth rates indicate the average compounded rate of grow
25.6%
28.6%
21.6%
3.9%
10.7%
8.4%
12.0%
11.4%
-5.9%
23.9%
23.7%
11.7%
-26.3%
20.5%
13.6%
15.1%
6.5%
0.0%
-0.9%
4.4%
-2.4%
17.4%
-50.0%
16.5%
11.6%
Decomposition of ROA and ROCE:
This schematic provides a decomposition of ROA and ROCE into compone
ASSET TURNOVER
2011 2012
1.7 1.7
2011 2012 Turnovers: Level 3 component ratios provide more detail about components of income
33.9 30.5 Receivables
6.5 5.3 Inventory
4.9 5.3 Fixed Assets
of non-recurring items)
Summary Statement of Cash Flows:
2012 The Summary Statement of Cash Flows provides an aggregated summatio
While the Statement of Cash Flows provides useful detail on specific cash
1,386
581
-444
231
1,754
-851
-81
-42
-974
-31
0
-142
-513
-59
-745
10
45
lly computes a wide array of financial statement analysis ratios using the amounts entered on the Data worksheet.
vide brief descriptions of ratio computations. See the text for more in-depth discussion of how to compute and interpret each ratio.
ality between total assets and total liabilities plus shareholders' equity. A non-zero amount in this row indicates a likely data input error in on
nts determined by revenue and expense amounts entered in the Data worksheet equal the reported amount of net income. A non-zero amo
statement of cash flows equals the change in cash on the balance sheet in the Data worksheet. A non-zero amount indicates either a data
n the firm earns per average dollar invested in assets.

profitability the firm derives from its revenues. For this ratio, profitability is measured before the effects of financing costs (after tax) and mino
firm uses its assets to generate sales. It measures the number of sales dollars generated per average dollar invested in assets.
firm's profitability and its efficiency.
er-tax effects of nonrecurring items in income to measure the firm's persistent ROA.
e of return the firm earns per average dollar in common shareholders' equity.
ofit margin per dollar of sales. Profit margin for ROCE is measured after deducting any preferred dividends from net income, in order to com
firm uses its assets to generate sales. It measures the number of sales dollars generated per average dollar invested in assets.
rage amount invested in assets divided by the average amount financed by common equity shareholders.
uct of the firm's profitability, efficiency, and leverage.
ter-tax effects of nonrecurring items in income to measure the firm's persistent ROCE.
after excluding the effects of non-recurring operating income items (such as non-recurring operating expenses and losses).
xcluding the effects of non-recurring items in income.
r excluding the effects of non-recurring items in income.
the rate of change in revenues.

ive to the rate of change in revenues.
The complement of this percentage is the percent of gross profit absorbed by overhead and operating expenses.
profit. The complement of this percentage is the percent of operating profit absorbed by (net) financing costs. If this index is great than 100%
x. The complement of this percentage is the average effective tax rate. This index is also affected by items such as extraordinary gains and
et profit margin will also equal the product of the gross profit margin times the operating profit index, the leverage index and the tax index.
quivalents, marketable securities, accounts receivable) divided by current liabilities.
amount of current liabilities.
ce in accounts receivable.
red as 365 divided by the accounts receivable turnover rate. This measures the average number of days to collect receivables.
maount of inventory.
d as 365 divided by the inventory turnover rate. This measures the average number of days to make and sell inventory.
oods sold plus the change in inventory) divided by the average amount in accounts payable.
d as 365 divided by the accounts payable turnover rate. This measures the average number of days to pay payables.
ber of days to make and sell inventory plus the number of days to collect receivables, minus the number of days to pay payables.
ce in net property, plant, and equipment. This measures efficiency is using fixed assets to generate revenues.
asured as 365 divided by the cash turnover rate. It measures the average number of days of sales held in cash and cash equivalents.
sets financed by total liabilities.

s as a percent of common shareholders' equity.
ncing relative to total long term capital (long term debt plus commmon shareholders' equity).
debt financing relative to commmon shareholders' equity.
amount of total liabilities.
taxes, and minority interest in income, divided by interest expense.
taxes, minority interest in income, and non-recurring items divided by interest expense.
r of bankruptcy.
wo years as indicated by the Altman Z-score.
a multivariate indicator of the likelihood reported earnings numbers have been fraudulently manipulated.
n the Beneish Earnings Manipulation Score.
price plus dividends divided by beginning of year share price.

ngs per share.
ngs per share after excluding the per-share effects of non-recurring items in income.
ook value of common equity.
ios measure a particular income amount as a percent of total revenues.
nnual rate of growth in a particular income item.
rage compounded rate of growth in a particular income item over the five-year data period (six years of data yield five periods of growth). If
measure a particular balance sheet amount as a percent of total assets.
nnual rate of growth in a particular balance sheet item.
rage compounded rate of growth in a particular balance sheet item over the five-year data period (six years of data yield five periods of gro
ROA and ROCE into component ratios that determine ROA and ROCE.
l about components of income that affect the profit margin for ROA as well as turnover ratios for specific assets.
vides an aggregated summation of the major sources of cash inflows and outlfows.
useful detail on specific cash inflows and outflows, this aggegation provide a high-level summary of major categories of cash being genera
te and interpret each ratio.
dicates a likely data input error in one or more balance sheet accounts.
ount of net income. A non-zero amount on this row likely indicates an input error in one or more income statement accounts.
zero amount indicates either a data input error on one or more rows of the cash flow statement or the use of a different definition of cash on
financing costs (after tax) and minority interest in earnings.

ollar invested in assets.
ds from net income, in order to compute the amount of net income available to common equity shareholders.
ollar invested in assets.
enses and losses).
costs. If this index is great than 100%, it implies financing income (interest income, income from equity affiliates) exceeds financing costs (in
ms such as extraordinary gains and losses, discontinued operations, and changes in accounting principles.
leverage index and the tax index.
s to collect receivables.
d sell inventory.
pay payables.
of days to pay payables.
in cash and cash equivalents.

data yield five periods of growth). If fewer than six year of data have been entered into the Data Worksheet, these compounded growth rate
ears of data yield five periods of growth). If fewer than six year of data have been entered into the Data Worksheet, these compounded grow
jor categories of cash being generated and used. This aggregation reveals quickly how cash is being generated and how cash is being use
tatement accounts.
e of a different definition of cash on the two financial statements. The user should identify the reason for and correct any non-zero amount.
iliates) exceeds financing costs (interest expense).
et, these compounded growth rate computations should be revised to measure compounded growth over the period for which data are ava
orksheet, these compounded growth rate computations should be revised to measure compounded growth over the period for which data a
erated and how cash is being used.
correct any non-zero amount.
period for which data are available.
ver the period for which data are available.
By James Wahlen, Steve Baginski, and Mark Bradshaw
The FSAP User Guides appear in column L to the right.
FSAP OUTPUT: FINANCIAL STATEMENT FORECASTS

Company Name: 0
Row Format: Row Format:

Actual Amounts Forecast Amounts
Common Size Percentage Forecast assumption Long-Run Growth Rate:
Rate of Change Percentage Forecast assumption explanation Long-Run Growth Factor:
Actuals Forecasts
Year 2010 2011 2012 Year +1 Year +2 Year +3 Year +4
INCOME STATEMENT
Revenues 10,707 11,700 13,300 14,529 16,456 19,021 22,502
common size 100.0% 100.0% 100.0% 9.4% 13.3% 15.6% 18.3%
rate of change 9.3% 13.7% The driving factor for revenue is sale volume, not the price
<Cost of goods sold> -4,459 -4,916 -5,813 -6,350 -7,192 -8,314 -9,835
common size -41.6% -42.0% -43.7% -43.7% -43.7% -43.7% -43.7%
rate of change 10.2% 18.2% COGS increases as the volume (revenue) increases
Gross Profit 6,248 6,784 7,487 8,179 9,264 10,708 12,667
common size 58.4% 58.0% 56.3% 56.3% 56.3% 56.3% 56.3%
rate of change 8.6% 10.4% 9.2% 13.3% 15.6% 18.3%
<Store operating expenses> -3,551 -3,595 -3,918 -4,359 -4,937 -5,706 -6,751
common size -33.2% -30.7% -29.5% -30.0% -30.0% -30.0% -30.0%
rate of change 1.2% 9.0% Projected at constant 37.2% to revenue in Anual Report
<Research and development expenses> -293 -393 -430 -581 -658 -761 -900
common size -2.7% -3.4% -3.2% -4.0% -4.0% -4.0% -4.0%
rate of change 34.1% 9.4% Additional investments in store renovations, new store growth and man
<Depreciation & Amortization> -510 -523 -550 -583 -618 -655 -694
common size -4.8% -4.5% -4.1% -4.01% -3.76% -3.44% -3.09%
rate of change 2.5% 5.2% Amortization expense is estimated to be approximately $6 million each
<General and administrative expenses> -570 -749 -801 -944 -1,070 -1,236 -1,463
common size -5.3% -6.4% -6.0% -6.5% -6.5% -6.5% -6.5%
rate of change 31.4% 6.9% Portion of liability under the Management Deferred Compensation Plan
<Non-recurring operating gain> -53 30 0 0 0 0 0
common size -0.5% 0.3% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change -156.6% -100.0% We assume that our projections of future costs of goods sold and SG&A
Income from equity investees 148 174 211 247 296 361 450
common size 1.4% 1.5% 1.6% 1.7% 1.8% 1.9% 2.0%
rate of change 17.6% 21.3% Explain assumptions.
Other operating income (2) 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change #DIV/0! #DIV/0! Explain assumptions.
#REF! 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Explain assumptions
<Non-recurring operating losses> 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0
Operating Profit 1,419 1,728 1,999 1,959 2,277 2,710 3,310
common size 13.3% 14.8% 15.0% 13.5% 13.8% 14.2% 14.7%
rate of change 21.8% 15.7% -2.0% 16.3% 19.0% 22.1%
Interest income 50 116 94 102 115 133 158
common size 0.5% 1.0% 0.7% 0.7% 0.7% 0.7% 0.7%
rate of change 132.0% -19.0% Interest rate earned on average balance in cash and marketable securi
<Interest expense> -33 -33 -33 -33 -33 -33 -33
common size -0.3% -0.3% -0.2% -0.3% -0.3% -0.3% -0.3%
rate of change 0.0% 0.0% Interest rate paid on average balance in financial liabilities.
Income <Loss> from equity affiliates 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0%
rate of change #DIV/0! #DIV/0! Assume expected return of 12% on investments in noncontrolled affilate
Other income or gains 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0
<Other expenses or losses> 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0
Income before Tax 1,436 1,811 2,060 2,027 2,359 2,811 3,434
common size 13.4% 15.5% 15.5% 14.0% 14.3% 14.8% 15.3%
rate of change 26.1% 13.7% -1.6% 16.4% 19.1% 22.2%
<Income tax expense> -489 -563 -674 -726 -823 -951 -1,125
common size -4.6% -4.8% -5.1% -5.0% -5.0% -5.0% -5.0%
rate of change 15.1% 19.7% Effective income tax rate assumptions.
<Minority interest in earnings> 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0
Income <Loss> from discontinued operations 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0
Extraordinary gains <losses> 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0
Changes in accounting principles 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0
Net Income (computed) 947 1,248 1,386 1,301 1,537 1,859 2,309
common size 8.8% 10.7% 10.4% 9.0% 9.3% 9.8% 10.3%
rate of change 31.8% 11.1% -6.1% 18.1% 21.0% 24.2%
Other comprehensive income items -8 -11 -24 -29 -33 -38 -45
common size -0.1% -0.1% -0.2% -0.20% -0.20% -0.20% -0.20%
rate of change 37.5% 118.2% Assume random walk.
Comprehensive Income 939 1,237 1,362 1,272 1,504 1,821 2,264
common size 8.8% 10.6% 10.2% 8.8% 9.1% 9.6% 10.1%
rate of change 31.7% 10.1% -6.6% 18.2% 21.1% 24.3%
Company Name: 0
Row Format: Row Format:

Actual Amounts Forecast Amounts
Common Size Percent Forecast assumption Long-Run Growth Rate:
Rate of Change Percent Forecast assumption explanation Long-Run Growth Factor:
Actuals
2010 2011 2012 Year +1 Year +2 Year +3 Year +4
BALANCE SHEET
ASSETS:
Cash and cash equivalents 1,164 1,148 1,189 1,353 1,533 1,772 2,096
common size 18.2% 15.6% 14.5% 34.0 34.0 34.0 34.0
rate of change -1.4% 3.6% Assume ending cash balances equal to 34 days sales.
Marketable securities 286 903 848 955 1,082 1,251 1,480
common size 4.5% 12.3% 10.3% 24.0 24.0 24.0 24.0
rate of change 215.7% -6.1% Assume ending balances equal to 17 days sales.
Accounts receivable - net 303 387 486 549 623 732 871
common size 4.7% 5.3% 5.9% 13.0 13.0 13.0 13.0
rate of change 27.7% 25.6% Assume 13 days to collect sales in accounts receivable.
Inventories 543 966 1,242 1,298 1,579 1,747 2,187
common size 8.5% 13.1% 15.1% 5.0 5.0 5.0 5.0
rate of change 77.9% 28.6% Assume average inventory turnover of roughly 5 times per year.
Prepaid expenses and other current assets 157 162 197 215 244 282 334
common size 2.5% 2.2% 2.4% 9.4% 13.3% 15.6% 18.3%
rate of change 3.2% 21.6% Assume growth with sales.
Deferred tax assets - current 304 230 239 246 254 261 269
common size 4.8% 3.1% 2.9% 3% 3% 3% 3%
rate of change -24.3% 3.9% Assume steady growth.
Other current assets (1) 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0% 0% 0% 0%
rate of change #DIV/0! #DIV/0! Assume steady growth.
Other current assets (2) 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0% 0% 0% 0%
rate of change #DIV/0! #DIV/0! Assume steady growth.
Current Assets 2,757 3,796 4,201 4,617 5,314 6,044 7,237
common size 43.2% 51.6% 51.1% 51.5% 52.9% 53.8% 55.6%
rate of change 37.7% 10.7% 9.9% 15.1% 13.7% 19.7%
Long term investments 192 107 116 119 123 127 131
common size 3.0% 1.5% 1.4% 3% 3% 3% 3%
rate of change -44.3% 8.4% Assume steady growth.
Property, plant, and equipment - at cost 5,889 6,163 6,903 7,833 8,886 10,103 11,544
common size 92.2% 83.7% 84.0% 87.4% 88.5% 90.0% 88.7%
rate of change 4.7% 12.0% PP&E assumptions - see schedule in forecast development
<Accumulated depreciation> -3,472 -3,808 -4,244 -4,903 -5,652 -6,502 -7,474
common size -54.4% -51.7% -51.6% -54.7% -56.3% -57.9% -57.4%
rate of change 9.7% 11.4% See depreciation schedule in forecast development worksheet.
Amortizable intangible assets (net) 417 410 386 386 386 386 386
common size 6.5% 5.6% 4.7% 0.0 0.0 0.0 0.0
rate of change -1.7% -5.9% Assume amortization per PepsiCo disclosures in Note 4; assume no ne
Goodwill and nonamortizable intangibles 262 322 399 436 494 571 676
common size 4.1% 4.4% 4.9% 9.4% 13.3% 15.6% 18.3%
rate of change 22.9% 23.9% Assume growth with sales.
Deferred tax assets - noncurrent 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Other noncurrent assets (1) 342 372 460 474 488 503 518
common size 5.4% 5.1% 5.6% 3.0% 3.0% 3.0% 3.0%
rate of change 8.8% 23.7% Assume steady growth.
Other noncurrent assets (2) 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change #DIV/0! #DIV/0! Assume steady state growth.
Total Assets 6,387 7,362 8,221 8,962 10,040 11,232 13,016
common size 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
rate of change 15.3% 11.7% 9.0% 12.0% 11.9% 15.9%
LIABILITIES:
Accounts payable - trade 283 540 398 589 562 744 839
common size 4.4% 7.3% 4.8% 28.1 28.1 28.1 28.1
rate of change 90.8% -26.3% Assume a steady payment period consistent with recent years.
Current accrued liabilities 936 941 1,134 1,240 1,404 1,623 1,921
common size 14.7% 12.8% 13.8% 9.4% 13.3% 15.6% 18.3%
rate of change 0.5% 20.5% Assume growth with SG&A expenses, which grow with sales.
Notes payable and short-term debt 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0%
rate of change #DIV/0! #DIV/0! Assume 1.0 percent of total assets.
Current maturities of long-term debt 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Current maturities of long-term debt per long-term debt note.
Deferred tax liabilities - current 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Income taxes payable 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0%
rate of change #DIV/0! #DIV/0! Assume a steady percentage of total assets.
Other current liabilities (1) 414 449 510 556 623 697 807
common size 6.5% 6.1% 6.2% 6.2% 6.2% 6.2% 6.2%
rate of change 8.5% 13.6% Assume steady percentage of total assets
Other current liabilities (2) 146 146 168 183 205 230 266
common size 2.3% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
rate of change 0.0% 15.1% Assume steady percentage of total assets
Current Liabilities 1,779 2,076 2,210 2,568 2,795 3,294 3,833
common size 27.9% 28.2% 26.9% 28.7% 27.8% 29.3% 29.4%
rate of change 16.7% 6.5% 16.2% 8.8% 17.9% 16.4%
Long-term debt 549 550 550 676 758 848 982
common size 8.6% 7.5% 6.7% 7.5% 7.5% 7.5% 7.5%
rate of change 7.5% 0.2% 0.0% Assume steady percent of total assets.
Long-term accrued liabilities 375 348 345 377 427 494 584
common size 5.9% 4.7% 4.2% 9.4% 13.3% 15.6% 18.3%
rate of change -7.2% -0.9% Assume growth with SG&A expenses, which grow with sales.
Deferred tax liabilities - noncurrent 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change #DIV/0! #DIV/0! Assume steady percent of total assets.
Other noncurrent liabilities (1) 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Other noncurrent liabilities (2) 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Total Liabilities 2,703 2,974 3,105 3,622 3,980 4,635 5,399
common size 42.3% 40.4% 37.8% 40.4% 39.6% 41.3% 41.5%
rate of change 10.0% 4.4% 16.6% 9.9% 16.5% 16.5%
SHAREHOLDERS' EQUITY
Minority interest 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Minority interest assumptions
Preferred stock 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Preferred stock assumptions
Common stock + Additional paid in capital 146 41 40 44 49 55 63

common size 2.3% 0.6% 0.5% 0.5% 0.5% 0.5% 0.5%
rate of change -71.9% -2.4% Assume steady percent of total assets.
Retained earnings <deficit> 3,471 4,297 5,046 5,268 5,979 6,504 7,509
common size 54.3% 58.4% 61.4%
rate of change 23.8% 17.4% Add net income and subtract dividends; see dividends forecast box belo
Accum. other comprehensive income <loss> 57 46 23 29 33 38 45
common size 0.9% 0.6% 0.3% 0.0 0.0 0.0 0.0
rate of change -19.3% -50.0% Add accumulated other comprehensive income items from income state
Other equity adjustments 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Other equity adjustments assumptions
<Treasury stock> 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0%
rate of change #DIV/0! #DIV/0! Treasury stock repurchases, net of treasury stock reissues.
Common Shareholders' Equity 3,674 4,384 5,109.0 5,340.8 6,060.5 6,596.5 7,617.2
common size 57.5% 59.5% 62.1% 59.6% 60.4% 58.7% 58.5%
rate of change 19.3% 16.5% 4.5% 13.5% 8.8% 15.5%
Total Liabilities and Equities 6,377 7,358 8,214 8,962 10,040 11,232 13,016
common size 99.8% 99.9% 99.9% 100.0% 100.0% 100.0% 100.0%
rate of change 15.4% 11.6% 9.1% 12.0% 11.9% 15.9%
Check figures: Balance Sheet A=L+OE? 10 4 7 0 0 0 0
Initial adjustment needed to balance the balance sheet:
-386 -176 -566 -374
Account adjusted: Dividends

Dividends forecasts:
Common dividends: 693 650 768 930
50.0% 50.0% 50.0% 50.0%
Assume dividend payout of lagged net income from continuing operatio
Preferred dividends: 0 0 0 0
0.0 0.0 0.0 0.0
Enter preferred stock dividend payments, if any.
Implied dividends: 386 176 566 374
Implied dividend amount to balance the balance sheet.
Total dividends: 1,079 826 1,334 1,304
Total dividend forecast amounts.
Company Name: 0
Actuals Forecasts
IMPLIED STATEMENT OF CASH FLOWS 2011 2012 Year +1 Year +2 Year +3 Year +4
Net Income 1,248 1,386 1,301 1,537 1,859 2,309

Add back depreciation expense (net) 336 436 659 748 851 972
Add back amortization expense (net) 523 550 583 618 655 694
<Increase> Decrease in receivables - net -84 -99 -63 -74 -108 -139
<Increase> Decrease in inventories -423 -276 -56 -281 -168 -441
<Increase> Decrease in prepaid expenses -5 -35 -18 -29 -38 -52
<Increase> Decrease in other current assets (1) 0 0 0 0 0 0
<Increase> Decrease in other current assets (2) 0 0 0 0 0 0
Increase <Decrease> in accounts payable - trade 257 -142 191 -27 182 95
Increase <Decrease> in current accrued liabilities 5 193 106 164 219 297
Increase <Decrease> in income taxes payable 0 0 0 0 0 0
Increase <Decrease> in other current liabilities (1) 35 61 46 67 74 111
Increase <Decrease> in other current liabilities (2) 0 22 15 22 24 36
Net change in deferred tax assets and liabilities 74 -9 -7 -7 -8 -8
Increase <Decrease> in long-term accrued liabilities -27 -3 32 50 67 90
Increase <Decrease> in other noncurrent liabilities (1) 0 0 0 0 0 0
Increase <Decrease> in other noncurrent liabilities (2) 0 0 0 0 0 0
Net Cash Flows from Operations 1,939 2,084 2,789 2,788 3,609 3,965
<Increase> Decrease in property, plant, & equip. at cost -274 -740 -930 -1,053 -1,217 -1,440
<Increase> Decrease in marketable securities -617 55 -107 -127 -169 -229
<Increase> Decrease in investment securities 85 -9 -3 -4 -4 -4
<Increase> Decrease in amortizable intangible assets (net) -516 -526 -583 -618 -655 -694
<Increase> Decrease in goodwill and nonamort. intangibles -60 -77 -37 -58 -77 -105
<Increase> Decrease in other noncurrent assets (1) -30 -88 -14 -14 -15 -15
<Increase> Decrease in other noncurrent assets (2) 0 0 0 0 0 0
Net Cash Flows from Investing Activities -1,412 -1,385 -1,675 -1,873 -2,136 -2,487
Increase <Decrease> in short-term debt 0 0 0 0 0 0
Increase <Decrease> in long-term debt 1 0 126 81 90 135
Increase <Decrease> in minority interest and preferred stock 0 0 0 0 0 0
Increase <Decrease> in common stock + paid in capital -105 -1 4 5 6 9
Increase <Decrease> in accum. OCI and other equity adjs. -11 -23 6 4 5 7
Increase <Decrease> in treasury stock 0 0 0 0 0 0
Dividends -422 -637 -1,079 -826 -1,334 -1,304
Net Cash Flows from Financing Activities -537 -661 -943 -736 -1,234 -1,154
Net Change in Cash -10 38 171 179 239 324
Check Figure:
Net change in cash - Change in cash balance 6 -3 7 0 0 0
Company Name: 0
Actuals Forecasts
2010 2011 2012 Year +1 Year +2 Year +3 Year +4
FORECAST VALIDITY CHECK DATA:
GROWTH
Revenue Growth Rates: 9.3% 13.7% 9.2% 13.3% 15.6% 18.3%
Net Income Growth Rates: 31.8% 11.1% -6.1% 18.1% 21.0% 24.2%
Total Asset Growth Rates 964.5% 15.3% 11.7% 9.0% 12.0% 11.9% 15.9%
RETURN ON ASSETS (based on reported amounts):

Profit Margin for ROA 9.0% 10.9% 10.6% 9.1% 9.5% 9.9% 10.4%
x Asset Turnover 3.1 1.7 1.7 1.7 1.7 1.8 1.9
= Return on Assets 27.7% 18.5% 18.1% 15.4% 16.4% 17.7% 19.2%
RETURN ON ASSETS (excluding the effects of nonrecurring items):

Profit Margin for ROA 9.0% 10.9% 10.6% 9.1% 9.5% 9.9% 10.4%
x Asset Turnover 3.1 1.7 1.7 1.7 1.7 1.8 1.9
= Return on Assets 27.7% 18.5% 18.1% 15.4% 16.4% 17.7% 19.2%
RETURN ON COMMON EQUITY (based on reported amounts):

Profit Margin for ROCE 8.8% 10.7% 10.4% 9.0% 9.3% 9.8% 10.3%
x Asset Turnover 3.1 1.7 1.7 1.7 1.7 1.8 1.9
x Capital Structure Leverage 1.9 1.7 1.6 1.6 1.7 1.7 1.7
= Return on Common Equity 51.6% 31.0% 29.2% 24.9% 27.0% 29.4% 32.5%
RETURN ON COMMON EQUITY (excluding the effects of nonrecurring items):

Profit Margin for ROCE 8.8% 10.7% 10.4% 9.0% 9.3% 9.8% 10.3%
x Asset Turnover 3.1 1.7 1.7 1.7 1.7 1.8 1.9
x Capital Structure Leverage 1.9 1.7 1.6 1.6 1.7 1.7 1.7
= Return on Common Equity 51.6% 31.0% 29.2% 24.9% 27.0% 29.4% 32.5%
OPERATING PERFORMANCE:
Gross Profit / Revenues 58.4% 58.0% 56.3% 56.3% 56.3% 56.3% 56.3%
Operating Profit Before Taxes / Revenues 13.3% 14.8% 15.0% 13.5% 13.8% 14.2% 14.7%
ASSET TURNOVER:
Revenues / Avg. Accounts Receivable 70.7 33.9 30.5 28.1 28.1 28.1 28.1
COGS / Average Inventory 16.4 6.5 5.3 5.0 5.0 5.0 5.0
Revenues / Average Fixed Assets 8.9 4.9 5.3 5.2 5.3 5.6 5.9
LIQUIDITY:
Current Ratio 1.5 1.8 1.9 1.8 1.9 1.8 1.9
Quick Ratio 1.0 1.2 1.1 1.1 1.2 1.1 1.2
SOLVENCY:
Total Liabilities / Total Assets 0.42 0.40 0.38 0.40 0.40 0.41 0.41
Total Liabilities / Total Equity 0.74 0.68 0.61 0.68 0.66 0.70 0.71
Interest Coverage Ratio 44.5 55.9 63.4 62.4 72.5 86.2 105.1
FSAP User Guides:
A Comment on Entering Forecast Assumptions:

This worksheet allows the FSAP user to build forecasts of future income statements, balance sheets, and statements of cash flows
Year +6 and beyond: A Comment on Forecasts for Year +6 and Beyond:

Long-Run Growth Rate: 3.0% For long-run forecast amounts, the FSAP user needs to enter a long-run growth rate assumption. FSAP will automatically use that g
ong-Run Growth Factor: 103.0%

Year +5 Year +6 This worksheet allows the FSAP user to build forecasts of future income statements, balance sheets, and statements of cash flows
27,301 28,120 Income Statement Default Assumptions:

21.3% <note> The FSAP Forecasts worksheet defaults to assume that each income statement line item will remain the same percent of total reve
e volume, not the price The FSAP user must either accept this default as a reasonable expectation or override it and enter more reasonable forecast assum
-11,932 -12,290
-43.7% <note>
enue) increases
15,369 15,830
56.3% 56.3%
21.3% 3.0%
-8,190 -8,436
-30.0% <note>
nue in Anual Report
-1,092 -1,125
-4.0%
vations, new store growth and manufacturing capacity.
-736 -758
-2.70% <note>
o be approximately $6 million each year from fiscal 2013 through fiscal 2017
-1,775 -1,828
-6.5%
ment Deferred Compensation Plan (“MDCP”)
0 0
0.0% <note>
uture costs of goods sold and SG&A expenses would implicitly include these charges.
573 591
2.1% <note>
0 0
0.0%
0 0
0.0
0 0
0.0
4,149 4,273
15.2% 15.2%
25.4% 3.0%
191 197
0.7% <note>
ance in cash and marketable securities.
-33 -34
-0.3% <note>
e in financial liabilities.
0 0
investments in noncontrolled affilates.

0 0
0.0
0 0
0.0
4,307 4,436
15.8% 15.8%
25.4% 3.0%
-1,365 0
-5.0%
0 0
0.0
0 0
0.0
0 0
0.0
0 0
0.0
2,942 4,436
10.8% 15.8%
27.4% 50.8%
-55 -56
-0.20%
2,887 4,380
10.6% 15.6%
27.5% 51.7%
Year +6 and beyond:
Long-Run Growth Rate: 3.0%
ong-Run Growth Factor: 103.0%

Year +5 Year +6 This worksheet allows the FSAP user to build forecasts of future income statements, balance sheets, and statements of cash flows
2,543 2,619 Balance Sheet Default Assumptions:

34.0 <note> Tỉ lệ chuyể The FSAP Forecasts worksheet defaults to assume that each balance sheet item (except retained earnngs) will remain the same p
al to 34 days sales.
1,795 1,849
24.0 <note>
7 days sales.
1,074 1,106 Tại sao nhân 2 xong trừ???
13.0 <note> Tỉ lệ chuyển đổi từ revenue qua receivable
accounts receivable.
2,586 2,663
5.0 <note> 27.037037 Tỉ lệ chuyển từ hàng tồn kho sang hàng bán
of roughly 5 times per year.
405 417
21.3%
277 285
3% steady‐state growth is simply the growth rate to which an economy would converge in the absence of any new shocks. Thus, it reflects the bes
0 0
0%
0 0
0%
8,679 8,940
56.9% 56.9%
19.9% 3.0%
134 139
3%
13,291 13,690
87.1%
n forecast development
-8,593 -8,851
-56.3%
st development worksheet.
386 397
0.0
isclosures in Note 4; assume no new investments.
820 844
21.3%
0 0
0.0%
533 549
3.0%
0 0
0.0%
15,251 15,708
100.0% 100.0%
17.2% 3.0%
1,061 1,093
28.1 <note>
onsistent with recent years.
2,330 2,400
21.3%
es, which grow with sales.
0 0
0 0
0.0
per long-term debt note.
0 0
0.0%
0 0
946 974
6.2% <note>
312 321
2.0% <note>
4,649 4,788
30.5% 30.5%
21.3% 3.0%
1,151 1,185
7.5% <note>
709 730
21.3%
es, which grow with sales.
0 0
0.0%
0 0
0.0%
0 0
0.0%
6,508 6,704
42.7% 42.7%
20.5% 3.0%
0 0
0.0
0 0
0.0
74 76
0.5%
8,614 8,872
nds; see dividends forecast box below.

55 56
0.0
sive income items from income statement
0 0
0.0
0 0
reasury stock reissues.

8,742.3 9,005
57.3% 57.3%
14.8% 3.0%
15,251 15,708
100.0% 100.0%
17.2% 3.0%
0 0 These check figures should be zero, indicating the total assets on the balance sheet balances with the total liabilities and sharehol
nce the balance sheet:
-683 -2,989 A Comment on Balancing the Balance Sheet:
The Forecasts spreadsheet is programmed to balance the balance sheet by adjusting dividends (see dividends forecast box below
The initial adjustment to balance the balance sheet is computed as total assets minus total liabilities and shareholders equity before
1,154 1,189
50.0%
net income from continuing operations.
0 0
0.0
683 2,989
the balance sheet.
1,837 4,178
Implied Statements of Cash Flows:
Year +5 Year +6 The following implied statements of cash flows are derived from the above income statements and balance sheets. They are not th
2,942 4,436 1
1,119 258 2 This row approximates depreciation expense using the change in accumulated depreciation.
736 758 3 This row includes amortization expense on amortizable intangible assets.
-202 -32 4
-398 -78 5
-71 -12 6
0 0 7
0 0 8
222 32 9
410 70 10
0 0 11
139 28 12
46 9 13
-8 -8 14
125 21 15
0 0 16
0 0 17
5,058 5,483 18
-1,747 -399 19
-316 -54 20
-4 -4 21
-736 -770 22
-144 -25 23
-16 -16 24
0 0 25
-2,962 -1,267 26
0 0 27
169 35 28
0 0 29
11 2 30
10 2 31
0 0 32
-1,837 -4,178 33
-1,648 -4,140 34
447 76 35
0 0 These check figures should be zero, indicating the net change in cash on the statement of cash flows agrees with the change in ca
Year +5 Year +6
Forecast Validity Checks:
FSAP computes these ratios using the forecast amounts above. The FSAP user can evaluate these ratios to assess whether foreca
21.3% 3.0%
27.4% 50.8%
17.2% 3.0%
10.9% 15.9%
1.9 1.8
21.0% 28.9%
10.9% 15.9%
1.9 1.8
21.0% 28.9%
10.8% 15.8%
1.9 1.8
1.7 1.7
36.0% 50.0%
10.8% 15.8%
1.9 1.8
1.7 1.7
36.0% 50.0%
56.3% 56.3%
15.2% 15.2%
28.1 25.8
5.0 4.7
6.2 5.9
1.9 1.9
1.2 1.2
0.43 0.43
0.74 0.74
131.5 131.5
, and statements of cash flows. FSAP automatically enters data from the DATA spreadsheet for the most recent three years in columns B, C, and D. This worksheet allows the use
SAP will automatically use that growth rate to compute forecast amounts for all of the accounts for Year +6 and beyond. The FSAP user should not alter the specific forecast compu
the same percent of total revenues as in the most current year.

more reasonable forecast assumptions.
arnngs) will remain the same percent of total assets as in the most current year. The FSAP user must either accept this default as a reasonable expectation or override it and enter
hocks. Thus, it reflects the best estimate of the long ‐term growth potential of an economy at any given point in time
he total liabilities and shareholders' equity. If a check figure is not zero, it indicates one or more errors either on the balance sheet or in the plug figure used to balance the balance
e dividends forecast box below). The user can alter this assumption by reprogamming the computations to adjust an alternate flexible financial account.
and shareholders equity before any adjustments. The initial adjustment amount is then used to adjust dividends so that total assets equal total liabilities and equities.
alance sheets. They are not the reported statements of cash flows.
s agrees with the change in cash on the balance sheet. If a check figure is not zero, it indicates one or more errors either in the balance sheet or the statement of cash flows. The u
ratios to assess whether forecast assumptions are reasonable or not.
C, and D. This worksheet allows the user flexibility to compute forecast amounts for each income statement and balance sheet account. For each account, the user should enter th
hould not alter the specific forecast computations for any of the accounts for Year +6 and beyond. The FSAP user must be sure to enter the same long run growth rate assumption a
onable expectation or override it and enter more reasonable forecast assumptions.

e plug figure used to balance the balance sheet. The user must find and correct any errors.
cial account.
total liabilities and equities.
heet or the statement of cash flows. The user must find and correct any errors.
ch account, the user should enter the forecast computations in the first row (highlighted in green with bold blue font). In the second row for each account, the user can enter forecas
long run growth rate assumption as a valuation parameter in the Valuation spreadsheet.
ccount, the user can enter forecast assumption parameters (such as growth rates or percentages) to be used in the forecast computations. In the third row for each account, the us
e third row for each account, the user can enter a brief explanatory note to explain the forecast assumptions. The FSAP user can also develop more detailed computations of foreca
ore detailed computations of forecast amounts in the Forecast Development worksheet, and incorporate those forecast amounts by referencing them here in the Forecasts workshe
hem here in the Forecasts worksheet.

The FSAP User Guides appear in column K to the right.

Company Name: 0
Sales Revenue Forecast Development
Actuals Forecasts
Year 2010 2011 2012 Year +1 Year +2
Revenues 10,707 11,700 13,300 14,529 16,456

rate of change 9.3% 13.7% 9.4% 13.3%
11.5% Sales growth rate assumptions.
Sales Forecasts Combined by Segments:
Forecast Development: Capital Expenditures, Property, Plant and Equipment, and Depreciation
Capital Expenditures: CAPEX Forecasts:

2010 2011 2012 Year +1 Year +2
CAPEX:
PP&E Acquired 441 415 851
PP&E Sold 0 0 0
Net CAPEX 441 415 851 930 1,053
Net CAPEX as a percent of:

Gross PP&E 7.5% 6.7% 12.3%
Revenues 4.1% 3.5% 6.4% 6.40% 6.40%
4.5%
Property, Plant and Equipment and Depreciation Property, Plant and Equipment and D
PP&E at cost: 2010 2011 2012 Year +1 Year +2

Beg. balance at cost: 6,903 7,833
Add: CAPEX forecasts from above: 930 1,053
End balance at cost: 5,889 6,163 6,903 7,833 8,886
Accumulated Depreciation:
Beg. Balance: -4,244 -4,903
Subtract: Depreciation expense forecasts from below: -659 -748
End Balance: -3,472 -3,808 -4,244 -4,903 -5,652
PP&E - net 2,417 2,355 2,659 2,929 3,235
Depreciation Expense Forecast Development: Depreciation expense forecast on ex

Existing PP&E at cost: 6,903 581 581
Remaining balance to be depreciated. 2,659 2,078 1,497
PP&E Purchases: Depreciation expense forecasts on n

Capex Year +1 930 78 78
Capex Year +2 1,053 89
Capex Year +3 1,217
Capex Year +4 1,440
Capex Year +5 1,747
Total Depreciation Expense 659 748
Depreciation methods: 2010 2011 2012
PPE at Cost 5,889 6,163 6,903

Avg Depreciable PPE 6,026 6,533
Depreciation Expense 510 523 550
Implied Avg. Useful Life in Years 11.5 11.9
Useful Life Forecast Assumption: 11.9
(in years)
Year +3 Year +4 Year +5
19,021 22,502 27,301

15.6% 18.3% 21.3%
rate assumptions.
1,217 1,440 1,747
6.40% 6.40% 6.40%
nt and Equipment and Depreciation Forecasts:

8,886 10,103 11,544
1,217 1,440 1,747
10,103 11,544 13,291
-5,652 -6,502 -7,474

-851 -972 -1,119
-6,502 -7,474 -8,593
3,601 4,070 4,698
expense forecast on existing PP&E:

581 581 581
916 334 -247
expense forecasts on new PP&E:

78 78 78
89 89 89
102 102 102
121 121
147
851 972 1,119
FSAP User Guides:
Forecast Development:
This Forecast Development spreadsheet provides work space in which the analyst can:
- build detailed sales revenue forecasts
- build forecasts of capital expenditures, property, plant and equipment, depreciation expense, and accumulated
- build detailed forecasts of other financial statement amounts.
It is not necessary to use this spreadsheet to build financial statement forecasts in the FSAP Forecasts
spreadsheet. If you use this spreadsheet to build more detailed forecasts, the you will need to link these
forecast amounts to the appropriate cells in the financial statements in the FSAP Forecasts spreadsheet.
This sales revenue forecast development schedule was developed specifically for PepsiCo. FSAP users who wis
The Capital Expenditures schedule permits the FSAP user to build detailed forecasts of future capital expenditure
The Property, Plant & Equipment and Depreciation schedule automatically computes for the FSAP detailed forec
FSAP automatically links the projected amounts for gross PP&E, accumulated depreciation, depreciation expens
This computation shows depreciation expense based on the exisiting depreciable PP&E at the start of the foreca
This computation shows the amount of gross PP&E still to be depreciated. Once this amount falls to zero, depre
FSAP automatically computes a new depreciation schedule for each year's capital expenditures, which are includ
FSAP automatically estimates the estimated useful life for depreciation purposes by dividing the average amount
ciation expense, and accumulated depreciation.
s in the FSAP Forecasts

you will need to link these
P Forecasts spreadsheet.
for PepsiCo. FSAP users who wish to develop detailed sales forecasts of other firms should adapt this schedule as necessary to incorporat
ecasts of future capital expenditures as a percent of future revenues, gross PP&E or any other reasonable basis for these forecast assumpt
putes for the FSAP detailed forecasts of future PP&E based on exisitng PP&E plus projected future capital expenditures. The Depreciation
depreciation, depreciation expense, and capital expenditures into the financial statements in the Forecasts worksheet.
ble PP&E at the start of the forecast period. The computation assumes straight line depreciation methods, zero salvage value, and the estim
ce this amount falls to zero, depreciation is complete.The FSAP user should be sure that these amounts are not negative.
ital expenditures, which are included in PP&E. These computations assume straight line depreciation methods and zero salvage value. The
es by dividing the average amount of gross depreciable PP&E by depreciation expense. This estimate assume straight line depreciation an
dule as necessary to incorporate the other firms' various soruces of revenue.
asis for these forecast assumptions.
expenditures. The Depreciation expense schedule automatically computes future depreciation expense based on exisitng depreciable PP&E
ro salvage value, and the estimated useful life computed below. .
not negative.
ds and zero salvage value. The computations use the extimated useful life as computed below.
me straight line depreciation and zero salvage value.

d on exisitng depreciable PP&E future capital expenditures. The expected useful life for depreciation purposes is computed below.
es is computed below.
The FSAP User Guides appear in column L to the right.
DATA CHECKS - Estimated Value per Share

Dividend Based Valuation $ 76.06
Free Cash Flow Valuation $ 76.97
Residual Income Valuation $ 75.81
Residual Income Market-to-Book Valuation $ 75.81
Free Cash Flow for All Debt and Equity Valuation $ (195.57)
Check: All Estimated Value per Share amounts should be the same, with the possible exception of the share value from the
Free Cash Flow for All Debt and Equity model. See additional comments in cell L266.
FSAP OUTPUT: VALUATION MODELS

Company Name: 0
VALUATION PARAMETER ASSUMPTIONS
Current share price $ -

Number of shares outstanding 749.3
Current market value $ -
Long-run growth assumption used in forecasts 3.0%

Long-run growth assumption used in valuation. 3.0%
(Both long-run growth assumptions should be the same.)
COST OF EQUITY CAPITAL:

Equity risk factor (market beta) 0.75
Risk free rate 4.0%
Market risk premium 6.0%
Required rate of return on common equity: 8.50%
COST OF DEBT CAPITAL

Debt capital $ 550
Cost of debt capital, before tax 0.3%
Effective tax rate -5.0%
After-tax cost of debt capital 0.29%
COST OF PREFERRED STOCK

Preferred stock capital $ -
Preferred dividends $ -
Implied yield 0.00%
WEIGHTED AVERAGE COST OF CAPITAL

Weight of equity in capital structure 0.000
Weight of debt in capital structure 1.000
Weight of preferred in capital structure 0.00
Weighted average cost of capital 0.29%
Company Name: 0
1 2 3
Dividends-Based Valuation Year +1 Year +2 Year +3
Dividends Paid to Common Shareholders 1,078.7 826.0 1,334.4

Less: Common Stock Issues -3.6 -5.2 -5.8
Plus: Common Stock Repurchases 0.0 0.0 0.0
Dividends to Common Equity 1,075.1 820.7 1,328.6
Present Value Factors 0.922 0.849 0.783

Present Value Net Dividends 990.9 697.2 1,040.2
Sum of Present Value Net Dividends 4,877.6
Present Value of Continuing Value 49,791.6
Total 54,669.2
Adjust to midyear discounting 1.043
Total Present Value Dividends 56,992.6
Shares Outstanding 749.3
Estimated Value per Share $ 76.06

Percent difference #DIV/0!
Company Name: 0
1 2 3
Free Cash Flows for Common Equity Year +1 Year +2 Year +3
Net Cash Flow from Operations 2,789.0 2,788.5 3,609.0

Decrease (Increase) in Cash Required for Operations -171.4 -179.5 -239.0
Net Cash Flow from Investing -1,674.8 -1,873.4 -2,136.4
Net CFs from Debt Financing 126.3 81.3 89.9
Net CFs into Financial Assets 0.0 0.0 0.0
Net CFs - Pref. Stock and Minority Int. 0.0 0.0 0.0
Free Cash Flow for Common Equity 1,069.1 816.9 1,323.5

Present Value Free Cash Flows 985.3 693.9 1,036.2
Sum of Present Value Free Cash Flows 4,853.3
Total 55,324.9
Total Present Value Free Cash Flows to Equity 57,676.2

Company Name: 0
Free Cash Flow Valuation Sensitivity Analysis:
Long-Run Growth Assumptions

76.97 0% 2% 3% 4% 5%
Discount 5% #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Rates: 6% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
7% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
8.50% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Company Name: 0
1 2 3
RESIDUAL INCOME VALUATION Year +1 Year +2 Year +3
Comprehensive Income Available
for Common Shareholders 1,271.8 1,503.6 1,821.5
Lagged Book Value of Common
Shareholders' Equity (at t-1) 5,109.0 5,340.8 6,060.5
Required Earnings 434.3 454.0 515.1

Residual Income 837.6 1,049.7 1,306.3

Present Value Residual Income 772.0 891.6 1,022.7
Sum of Present Value Residual Income 5,405.0
Total 49,382.6
Add: Beginning Book Value of Equity 5,109.0
Present Value of Equity 54,491.6
Total Present Value of Equity 56,807.5

Company Name: 0
RESIDUAL INCOME VALUATION SENSITIVITY ANALYSIS:
Long-Run Growth Assumptions

75.81 0% 2% 3% 4% 5%
Discount 5% #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Rates: 6% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
8.50% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Company Name: 0
RESIDUAL INCOME VALUATION 1 2 3

Market-to-Book Approach Year +1 Year +2 Year +3
Comprehensive Income Available
for Common Shareholders 1,271.8 1,503.6 1,821.5
Book Value of Common
Shareholders' Equity (at t-1) 5,109.0 5,340.8 6,060.5
Implied ROCE 24.9% 28.2% 30.1%

Residual ROCE 16.4% 19.7% 21.6%
Cumulative growth factor in common equity as of t-1 100.0% 104.5% 118.6%
Residual ROCE times cumulative growth 16.4% 20.5% 25.6%

Present Value Residual ROCE times growth 0.151 0.175 0.200
Sum of Present Value Residual ROCE times growth 1.06
Present Value of Continuing Value 8.61
Total Present Value Residual ROCE 9.67
Add one for book value of equity at t-1 1.0
Sum 10.67
Adjust to mid-year discounting 1.043
Implied Market-to-Book Ratio 11.119
Times Beginning Book Value of Equity 5,109.0
Total Present Value of Equity 56,807.5

Sensitivity analysis for the market-to-book approach should be identical to that of the residual income approach.
Company Name: 0
1 2 3
Free Cash Flows for All Debt and Equity Year +1 Year +2 Year +3
Net Cash Flow from Operations 2,789.0 2,788.5 3,609.0

Add back: Interest Expense after tax 21.2 21.5 21.8
Subtract: Interest Income after tax 0.0 0.0 0.0
Decrease (Increase) in Cash Required for Operations -171.4 -179.5 -239.0
Free Cash Flow from Operations 2,638.8 2,630.5 3,391.9
Net Cash Flow from Investing -1,674.8 -1,873.4 -2,136.4
Add back: Net CFs into Financial Assets 0.0 0.0 0.0
Free Cash Flows - All Debt and Equity 964.0 757.0 1,255.4

Present Value Free Cash Flows 961.2 752.7 1,244.8
Sum of Present Value Free Cash Flows 5,768.4
Present Value of Continuing Value -151,549.3
Total Present Value Free Cash Flows to Equity and Debt -145,780.8
Less: Value of Outstanding Debt -550.0
Less: Value of Preferred Stock 0.0
Plus: Value of Financial Assets 0.0
Present Value of Equity -146,330.8
Total Present Value of Equity -146,539.4
Estimated Value per Share $ (195.57)

ctive, 7th Edition
ption of the share value from the

Continuing
4 5 Value
1,303.8 1,837.4
-8.7 -10.9
0.0 0.0
1,295.1 1,826.5 4,117.82
0.722 0.665
934.5 1,214.7
Continuing
4 5 Value
3,964.5 5,057.7 5,482.7

-324.3 -447.0 -76.3
-2,486.8 -2,962.4 -1,266.9
134.7 168.6 34.5
0.0 0.0 0.0
0.0 0.0 0.0
1,288.2 1,816.9 4,174.1
0.722 0.665
929.5 1,208.4
6% 8% 10%
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
Continuing
4 5 Value
2,263.9 2,887.5 4,380.1
6,596.5 7,617.2 8,742.3
560.7 647.5 743.1

1,703.2 2,240.0 3,637.0
0.722 0.665
1,229.0 1,489.7
6% 8% 10%
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
#DIV/0! #DIV/0! #DIV/0!
Continuing
4 5 Value
2,263.9 2,887.5 4,380.1
6,596.5 7,617.2 8,742.3
34.3% 37.9% 50.1%

25.8% 29.4% 41.6%
129.1% 149.1% 171.1%
33.3% 43.8% 71.2%
0.722 0.665
0.241 0.292
residual income approach.

Continuing
4 5 Value
3,964.5 5,057.7 5,482.7

22.2 22.5 34.0
0.0 0.0 0.0
-324.3 -447.0 -76.3
3,662.5 4,633.3 5,440.4
-2,486.8 -2,962.4 -1,266.9
0.0 0.0 0.0
1,175.7 1,670.9 4,173.5
0.989 0.986
1,162.4 1,647.3
FSAP User Guides:
A Comment on Entering Valuation Parameter Assumptions:

The FSAP user must enter valuation parameter assumptions in the green-shaded, blue font boxes below. These
FSAP automatically references the estimated value per share.

Market Value Parameters:

FSAP uses the most recent share price entered in the Data spreadsheet. The FSAP user can override this and
FSAP uses the most recent number of shares outstanding entered in the Data spreadsheet. The FSAP user can
FSAP computes market value of equity using market price per share times number of shares outstanding.
Long Run Growth Parameters:

Enter the long run growth rate assumption for use in the valuation models. This growth rate must agree with the
Cost of Equity Capital Parameters:

Enter the market beta.
Enter a risk-free rate of return, such as the yield on 3 to 5 year U.S. Treasury bonds.
Enter the expected market risk premium. This is the amount by which the average expected rate of return on a
Using the above parameters, FSAP computes the expected rate of return on equity using the market model vers
Cost of Debt Capital Parameters:

FSAP uses the total amount of short term debt and long term debt from the most recent balance sheet data in th
FSAP uses the interest rate assumption entered in the Forecasts spreadsheet. The analyst can override this de
FSAP uses the tax rate assumption entered in the Forecasts spreadsheet. The analyst can override this defaul
FSAP uses the above parameters to compute the after-tax cost of debt capital.
Cost of Preferred Stock Parameters:

FSAP uses the amount of preferred stock entered in the most recent balance sheet data in the Forecasts works
FSAP uses the preferred stock dividend entered in the Forecasts spreadsheet. The analyst can override this de
FSAP uses the above parameters to compute the cost of preferred stock capital.
Weighted Average Cost of Capital:

FSAP computes the weight of equity in the capital structure by dividing the market value of equity by the market
FSAP computes the weight of debt in the capital structure by dividing the value of debt by the market value of to
FSAP computes the weight of preferred stock in the capital structure by dividing the market value of preferred b
FSAP uses the above weights and costs of capital to compute a weighted average cost of capital.
Dividends-Based Valuation:
Chapter 11 describes the dividends-based valuation approach.
FSAP uses implied dividends for common shareholders from the Forecasts worksheet.
FSAP uses the change in common stock plus paid in capital from the Forecasts worksheet. Stock issues are tre
FSAP uses the change in treasury stock from the Forecasts worksheet. Purchases of treasury stock are treated
These figures represent the forecasted total dividends to common equity shareholders.
These present value factors are based on the equity cost of capital, computed above.
The sum of the present value of net dividends through Year +5.
The present value of continuing value dividends in Year +6 and beyond. Year +6 dividends are treated as a per
This adjustment corrects for over-discounting. The present value factors discount from the end of each year to t
The estimated value per share.
(Value/price)-1: positive number indicates underpricing.

Free Cash Flows for Common Equity Valuation:
Chapter 12 describes the free cash flows-based valuation approaches.
FSAP uses net cash flows from operations from the Forecasts worksheet.
The analyst should adjust free cash flows for changes in cash required for operations. As firms grow, they typic
FSAP uses net cash flows from investing from the Forecasts worksheet.
FSAP uses net cash flows from debt financing from the Forecasts worksheet.
This row enables the analyst to adjust for any investing cash flows that should be classified as financing cash flo
FSAP uses net cash flows from preferred stock and minority interests from the Forecasts worksheet.
These figures represent the forecasted total free cash flows to common equity shareholders.
The sum of the present value of free cash flows for common equity shareholders through Year +5.
The present value of continuing free cash flows in Year +6 and beyond. Year +6 free cash flows are treated as a

Sensitivity Analyses:
The FSAP user can enter the relevant range of discount rates in the left-most column and the relevant range of
Residual Income Valuation:
Chapter 13 describes the residual income valuation approach.
FSAP uses comprehensive income from the Forecasts worksheet, less any expected dividends to preferred sto
FSAP uses beginning of year (lagged) book value of common shareholders' equity from the Forecasts worskshe
FSAP computes required earnings as the equity cost of capital times the beginning of year book value of comm
Residual income is the difference between projected comprehensive income available to common and required
The sum of the present value of residual income through Year +5.
The present value of continuing residual income in Year +6 and beyond. Year +6 residual income is treated as a

Sensitivity Analyses:
The FSAP user can enter the relevant range of discount rates in the left-most column and the relevant range of
Market-to-Book Valuation:
Chapter 14 describes the market-to-book valuation approach.
FSAP uses comprehensive income from the Forecasts worksheet, less any expected dividends to preferred sto
FSAP uses beginning of year (lagged) book value of common shareholders' equity from the Forecasts workshee
FSAP computes the implied ROCE, dividing comprehensive income by beginning of year book value of commo
FSAP computes the residual ROCE as implied ROCE minus the equity cost of capital computed above.
FSAP computes the cumulative growth factor in common equity as beginning of year book value of common eq
The product of residual ROCE and the cumulative growth factor in common equity.
The sum of the present value of residual ROCE times cumulative growth through Year +5.
The present value of residual ROCE times cumulative growth in Year +6 and beyond. Year +6 residual ROCE is
The implied market-to-book value ratio.

Free Cash Flows for All Debt and Equity Valuation:
Chapter 12 describes the free cash flows-based valuation approaches.
FSAP uses net cash flows from operations from the Forecasts worksheet.
FSAP uses interest expense from the Forecasts worksheet, and adds back the after-tax amount of interest expe
The analyst should program FSAP to subtract interest income after tax if the analyst determines that the firm's f
The analyst should adjust free cash flows for changes in cash required for operations. As firms grow, they typic
FSAP uses net cash flows from investing from the Forecasts worksheet.
This row enables the analyst to adjust for any investing cash flows that should be classified as financing cash flo
These figures represent the forecasted total free cash flows to all debt and equity stakeholders.
These present value factors are based on the weighted average cost of capital, computed above.
The sum of the present value of free cash flows for all debt and equity stakeholders through Year +5.
The present value of continuing free cash flows in Year +6 and beyond. Year +6 free cash flows are treated as a
Total present value of all equity and debt.
Subtract the value of outstanding debt. Value should be market value, if known, or fair value if disclosed. If not,
Subtract the value of outstanding preferred stock. Value should be market value, if known, or fair value if disclo
Add the value of financial assets to be used to retire debt or pay dividends. Value should be market value, if kno
The estimated value per share. The first-iteration estimate of share value using this approach frequently differs

SAP User Guides:
he FSAP user should only enter data in the blue-font cells shaded light green.
Comment on Entering Valuation Parameter Assumptions:

he FSAP user must enter valuation parameter assumptions in the green-shaded, blue font boxes below. These valuation parameters involv
SAP automatically references the estimated value per share.

arket Value Parameters:

SAP uses the most recent share price entered in the Data spreadsheet. The FSAP user can override this and enter the most recent share p
SAP uses the most recent number of shares outstanding entered in the Data spreadsheet. The FSAP user can override this and enter the m
SAP computes market value of equity using market price per share times number of shares outstanding.
ong Run Growth Parameters:

nter the long run growth rate assumption for use in the valuation models. This growth rate must agree with the long run growth rate used to
ost of Equity Capital Parameters:

nter the market beta.
nter a risk-free rate of return, such as the yield on 3 to 5 year U.S. Treasury bonds.
nter the expected market risk premium. This is the amount by which the average expected rate of return on a diversified portfolio of stocks
sing the above parameters, FSAP computes the expected rate of return on equity using the market model version of the CAPM.
ost of Debt Capital Parameters:

SAP uses the total amount of short term debt and long term debt from the most recent balance sheet data in the Forecasts worksheet. The
SAP uses the interest rate assumption entered in the Forecasts spreadsheet. The analyst can override this default by entering here the exp
SAP uses the tax rate assumption entered in the Forecasts spreadsheet. The analyst can override this default by entering here the effectiv
SAP uses the above parameters to compute the after-tax cost of debt capital.
ost of Preferred Stock Parameters:

SAP uses the amount of preferred stock entered in the most recent balance sheet data in the Forecasts worksheet. The analyst can overrid
SAP uses the preferred stock dividend entered in the Forecasts spreadsheet. The analyst can override this default by entering the required
SAP uses the above parameters to compute the cost of preferred stock capital.
eighted Average Cost of Capital:

SAP computes the weight of equity in the capital structure by dividing the market value of equity by the market value of total capital (commo
SAP computes the weight of debt in the capital structure by dividing the value of debt by the market value of total capital (common equity, d
SAP computes the weight of preferred stock in the capital structure by dividing the market value of preferred by the market value of total cap
SAP uses the above weights and costs of capital to compute a weighted average cost of capital.
vidends-Based Valuation:
hapter 11 describes the dividends-based valuation approach.
SAP uses implied dividends for common shareholders from the Forecasts worksheet.
SAP uses the change in common stock plus paid in capital from the Forecasts worksheet. Stock issues are treated as negative dividends.
SAP uses the change in treasury stock from the Forecasts worksheet. Purchases of treasury stock are treated as dividends.
hese figures represent the forecasted total dividends to common equity shareholders.
hese present value factors are based on the equity cost of capital, computed above.
he sum of the present value of net dividends through Year +5.

he present value of continuing value dividends in Year +6 and beyond. Year +6 dividends are treated as a perpetuity with growth using the l
his adjustment corrects for over-discounting. The present value factors discount from the end of each year to the present, whereas dividend
he estimated value per share.
alue/price)-1: positive number indicates underpricing.

ee Cash Flows for Common Equity Valuation:
hapter 12 describes the free cash flows-based valuation approaches.
SAP uses net cash flows from operations from the Forecasts worksheet.
he analyst should adjust free cash flows for changes in cash required for operations. As firms grow, they typically require larger cash balan
SAP uses net cash flows from investing from the Forecasts worksheet.
SAP uses net cash flows from debt financing from the Forecasts worksheet.
his row enables the analyst to adjust for any investing cash flows that should be classified as financing cash flows. For example, if the inves
SAP uses net cash flows from preferred stock and minority interests from the Forecasts worksheet.
hese figures represent the forecasted total free cash flows to common equity shareholders.
he sum of the present value of free cash flows for common equity shareholders through Year +5.
he present value of continuing free cash flows in Year +6 and beyond. Year +6 free cash flows are treated as a perpetuity with growth using

ensitivity Analyses:
he FSAP user can enter the relevant range of discount rates in the left-most column and the relevant range of long run growth rates in the to
esidual Income Valuation:
hapter 13 describes the residual income valuation approach.
SAP uses comprehensive income from the Forecasts worksheet, less any expected dividends to preferred stockholders.
SAP uses beginning of year (lagged) book value of common shareholders' equity from the Forecasts worsksheet.
SAP computes required earnings as the equity cost of capital times the beginning of year book value of common shareholders' equity.
esidual income is the difference between projected comprehensive income available to common and required earnings.
he sum of the present value of residual income through Year +5.

he present value of continuing residual income in Year +6 and beyond. Year +6 residual income is treated as a perpetuity with growth using

ensitivity Analyses:
he FSAP user can enter the relevant range of discount rates in the left-most column and the relevant range of long run growth rates in the to
arket-to-Book Valuation:
hapter 14 describes the market-to-book valuation approach.
SAP uses comprehensive income from the Forecasts worksheet, less any expected dividends to preferred stockholders.
SAP uses beginning of year (lagged) book value of common shareholders' equity from the Forecasts worksheet.
SAP computes the implied ROCE, dividing comprehensive income by beginning of year book value of common equity.
SAP computes the residual ROCE as implied ROCE minus the equity cost of capital computed above.
SAP computes the cumulative growth factor in common equity as beginning of year book value of common equity divided by book value of c
he product of residual ROCE and the cumulative growth factor in common equity.
he sum of the present value of residual ROCE times cumulative growth through Year +5.
he present value of residual ROCE times cumulative growth in Year +6 and beyond. Year +6 residual ROCE is treated as a perpetuity with g
he implied market-to-book value ratio.

ee Cash Flows for All Debt and Equity Valuation:
hapter 12 describes the free cash flows-based valuation approaches.
SAP uses net cash flows from operations from the Forecasts worksheet.
SAP uses interest expense from the Forecasts worksheet, and adds back the after-tax amount of interest expense.
he analyst should program FSAP to subtract interest income after tax if the analyst determines that the firm's financial assets are part of the
he analyst should adjust free cash flows for changes in cash required for operations. As firms grow, they typically require larger cash balan
SAP uses net cash flows from investing from the Forecasts worksheet.
his row enables the analyst to adjust for any investing cash flows that should be classified as financing cash flows. For example, if the inves
hese figures represent the forecasted total free cash flows to all debt and equity stakeholders.
hese present value factors are based on the weighted average cost of capital, computed above.
he sum of the present value of free cash flows for all debt and equity stakeholders through Year +5.
he present value of continuing free cash flows in Year +6 and beyond. Year +6 free cash flows are treated as a perpetuity with growth using
otal present value of all equity and debt.
ubtract the value of outstanding debt. Value should be market value, if known, or fair value if disclosed. If not, use book value.
ubtract the value of outstanding preferred stock. Value should be market value, if known, or fair value if disclosed. If not, use book value.
dd the value of financial assets to be used to retire debt or pay dividends. Value should be market value, if known, or fair value if disclosed.
he estimated value per share. The first-iteration estimate of share value using this approach frequently differs slightly from the other share v

hese valuation parameters involve the costs of common equity capital, debt capital, and preferred stock capital (if any), as well as the long
and enter the most recent share price directly in this cell.
r can override this and enter the most recent number of shares outstanding directly in this cell.
the long run growth rate used to forecast Year +6 and Beyond in the Forecasts spreadsheet.
on a diversified portfolio of stocks is expected to exceed the expected rate of return on a portfolio of risk free securities. Reasonable estimat
version of the CAPM.
in the Forecasts worksheet. The analyst can override this default by entering the market value of debt capital, if known.
is default by entering here the expected interest rate on debt capital to be used in computing the weighted average cost of capital. The inte
efault by entering here the effective tax rate for use in computing the effective after-tax cost of debt capital.
orksheet. The analyst can override this default by entering the market value of debt capital, if known.
s default by entering the required rate of return on preferred stock, if known.
arket value of total capital (common equity, debt, and preferred stock).
of total capital (common equity, debt, and preferred stock).
ed by the market value of total capital (common equity, debt, and preferred stock).
e treated as negative dividends.
ated as dividends.
perpetuity with growth using the long-run growth rate assumption, discounted to present value at the equity cost of capital.
to the present, whereas dividends, cash flows, and earnings are generated throughout the year. This adjustment computes the present va
ypically require larger cash balances for liquidity in operating activities. FSAP is programmed to automatically adjust free cash flows for the
sh flows. For example, if the investing cash flows include cash outflows to acquire investment securities that will be used to retire debt, then
as a perpetuity with growth using the long-run growth rate assumption, discounted to present value at the equity cost of capital.
e of long run growth rates in the top row. Enter the discount rates and growth rates as percentages.
stockholders.
mmon shareholders' equity.

ired earnings.
as a perpetuity with growth using the long-run growth rate assumption, discounted to present value at the equity cost of capital.
e of long run growth rates in the top row. Enter the discount rates and growth rates as percentages.
stockholders.
mmon equity.
n equity divided by book value of common equity on the firm's current balance sheet.
CE is treated as a perpetuity with growth using the long-run growth rate assumption, discounted to present value at the equity cost of capita
m's financial assets are part of the financial capital structure (such as investment securities intended to retire debt).
ypically require larger cash balances for liquidity in operating activities. FSAP is programmed to automatically adjust free cash flows for the
sh flows. For example, if the investing cash flows include cash outflows to acquire investment securities that will be used to retire debt, then
as a perpetuity with growth using the long-run growth rate assumption, discounted to present value at the weighted average cost of capital
not, use book value.

sclosed. If not, use book value.
f known, or fair value if disclosed. If not, use book value.
ers slightly from the other share value estimates. Several iterations can be required to adjust the weights of debt and equity used to compu
al (if any), as well as the long run growth rate assumption. FSAP references data in the Data spreadsheet and the Forecasts spreadsheet
securities. Reasonable estimates commonly range from 3% to 9%.
erage cost of capital. The interest rate on debt capital used here in valuation should be consistent with the interest rate assumed in the fore
cost of capital.
ment computes the present value so that dividends, cash flows, and earnings are discounted from the mid-point of each year.
y adjust free cash flows for the change in the cash balance, which is assumed to be required for operations.
will be used to retire debt, then these cash outflows should be added back in computing free cash flows to debt and equity.
uity cost of capital.
uity cost of capital.
lue at the equity cost of capital.
y adjust free cash flows for the changes in cash balances, which are assumed to be required for operations.
will be used to retire debt, then these cash outflows should be added back in computing free cash flows to debt and equity.
eighted average cost of capital.
ebt and equity used to compute WACC to agree with the value of common equity implied by this valuation model.
nd the Forecasts spreadsheet when available. FSAP uses these parameters to compute costs of capital to use as discount rates in the valu
terest rate assumed in the forecasts of future interest expense in the Forecasts Spreadsheet.
int of each year.
bt and equity.
int of each year.

int of each year.
int of each year.
bt and equity.
int of each year.

e as discount rates in the valuation models.
Part 1
a 1 2 3 4
Operating activities
Net cash flow from operations 2,789 2,788 3,609 3,965
Subtract: Adjust changes in cash requirement for liquidity -171 -179 -239 -324
FCF from operations 2,618 2,609 3,370 3,640
Investment activities
FCF from investment -1,675 -1,873 -2,136 -2,487
Financing activities
Long-term borrowing—Construction allowance receipts 126 81 90 135
FCF for common equity shareholders 1,069 817 1,324 1,288

c Present value factors (7.5%) 0.930233 0.865333 0.804961 0.748801
Present value of free cash flows 994.4896 706.8649 1065.378 964.5833
Total present value from 1-5 4996.926
e Total PV year 1-6 & beyond 33965.35

Adjust for midyear discounting (multiply by 1 + [R /2]) 1.0375
Total present value of common equity 35239.05
Divide by number of shares outstanding 749.3
Value per share 47.02929
1 2 3 4
h Net cash flow from operations 2,789 2,788 3,609 3,965
Add back: Interest expense after tax -22 -22 -22 -22
Subtract: Interest income after tax -68.14264 -77.17809 -89.20939 -105.5353
Decrease (Increase) in cash required for operations -171 -179 -239 -324
Free cash flow from operations 2,527 2,510 3,259 3,513
Net cash flow from investing activities -1,675 -1,873 -2,136 -2,487
Add back: Net cash flows into financial assets 0 0 0 0
Free cash flow for all debt and equity stakeholders 853 636 1,122 1,026
Present value factors (RE=7.44%) 0.931225 0.867181 0.807541 0.752003
Present value of free cash flows 793.9189 551.7538 906.2863 771.4573
i Total present value from 1-5 4072.591
l Total PV year 1-6 & beyond 28714.67

Less: Value of outstanding debt 1263
Present value of equity 27451.67
Adjust for midyear discounting (multiply by 1 + [R /2]) 1.036927
Total present value of common equity 28465.38
Divide by number of shares outstanding 749.3
Value per share 37.9893
b
5 6d E[R] 7.500%
g 3%
5,058 5,483 Continuing value y 41587.91
-447 -76 PV of continuing v 28968.42
4,611 5,406
g Rd 6.25%
-2,962 -1,267 Tax 33%
Debt 1263
Equity 35239.05
169 35 Wd 3%
We 97%
1,817 4,174 RWACC 7.39%
0.696559
1265.611
i
5 6k Continuing value y 35188.71
5,058 5,483 PV of continuing v 24642.08
-22 -23
-128.0418 -131.8831
-447 -76
4,461 5,252
-2,962 -1,267
0 0
1,498 3,985
0.700284 0.652122
1049.175
g 3%
Re 7.500%
a b
Year + 0 1 2 3 4 5 6
Common shareholder's equity 5109 5340.814 6060.483 6596.461 7617.2 8742.32 9004.589
Comprehensive income 1,362 1,272 1,504 1,821 2,264 2,887 2,974
Required income 383.175 400.5611 454.5362 494.7345 571.29 675.3442
Residual income 889 1,103 1,367 1,769 2,316 2,318
c
PV factors 0.930233 0.865333 0.804961 0.748801 0.696559
PV of residual income 826.6577 954.519 1100.313 1324.757 1613.352
Sum PV of residual income 1-5 5819.598
d
Continuing value year +6 35886.94
e
Total PV of residual income 1-6 41706.54
Add: Beginning book value of equ 5109
Total present value of equity 48571.12
Share outstanding 749.3
Estimated value per share 64.822
Current share price 50.15
g
Scenario 1 g 2%
Re 8.50%
Year + 0 1 2 3 4 5 6
Required income 434.265 453.9692 515.141 560.6991 647.462 765.3901
Residual income 838 1,050 1,306 1,703 2,240 2,180
PV factors 0.921659 0.849455 0.782908 0.721574 0.665045
Scenario 2 g 4%
Re 6.50%
Year + 0 1 2 3 4 5 6
Required income 332.085 347.1529 393.9314 428.7699 495.118 585.2983
Residual income 940 1,156 1,428 1,835 2,392 2,418
PV factors 0.938967 0.881659 0.827849 0.777323 0.729881
64.822 1% 2% 3% 4% 5%
6%
6.50%
7%
7.50%
8%
8.50%
9%
9.50%
10%

Wahlen, Baginski & Bradshaw 2007 2008 2009 2010 2011

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Financial Statement Analysis Package (FSAP): Version 7.

The FSAP User Guides appear in column I to the right.

Analyst Name: Wahlen, Baginski & Bradshaw

BALANCE SHEET DATA

Common stock + Additional paid in capital 146 41

Revenues 10,707 11,700

Net Income 0 0 0 947 1,248

Statutory tax rate 35.0% 35.0%

FINANCIAL DATA CHECKS

Enter Balance Sheet Data:

FSAP automatically computes the amount of total current assets.

FSAP automatically computes the amount of total assets.

FSAP automatically computes the amount of total current liabilities.

FSAP automatically computes the amount of total liabilitries.

FSAP automatically computes the amount of total shareholders' equity.

FSAP automatically computes the amount of gross profit.

FSAP automatically computes the amount of operating profit.

FSAP automatically computes the amount of cash flow from operations.

FSAP automatically computes the net change in cash.

readsheets within FSAP.

sets for different firms.

rm assets for different firms.

abilities for different firms.

current liabilities for different firms.

recurring operating expenses for different firms.

operating income for different firms.

or negative number as appropriate.

ative number as appropriate.

ome statement accounts.

preciation plus amortization expense.

the preceding cells.

The FSAP User Guides appear in column J to the right.

Analyst Name: Wahlen, Baginski & Bradshaw

RETURN ON ASSETS (based on reported amounts):

RETURN ON ASSETS (excluding the effects of nonrecurring items):

RETURN ON COMMON EQUITY (based on reported amounts):

RETURN ON COMMON EQUITY (excluding the effects of nonrecurring items):

PERSISTENT OPERATING PERFORMANCE (excluding the effects of nonrecurring items):

STOCK MARKET-BASED RATIOS:

Revenues 100.0% 100.0%

Other comprehensive income items -0.1% -0.1%

YEAR TO YEAR GROWTH RATES:

Other comprehensive income items 37.5%

Liabilities and Equities:

Common stock + Additional paid in capital 0.0% 2.3% 0.6%

Assets: YEAR TO YEAR GROWTH RATES:

Liabilities and Equities:

Common stock + Additional paid in capital -71.9%

Level 1 RETURN ON ASSETS

Level 2 PROFIT MARGIN FOR ROA ASSET TURNOVER

Level 3 2010 2011 2012 2010

RETURN ON COMMON SHAREHOLDERS' EQUITY

2010 2011 2012

Effects of exchange rate changes on cash 0 0 -5 -1

The Analysis worksheet in FSAP automatically computes a wide array of fin

See the preceding FSAP User Guides on ROA.

See the preceding FSAP User Guides on ROCE.

15.0% Operating income as a percent of revenues after excluding the effects of no

13.7% Year-on-year growth rate in revenues.

56.3% Gross profit margin as a percent of revenues.

98.4% Comprehensive income as a percent of net income.

1.90 Current assets divided by current liabilities.

30.5 Total revenues divided by the average balance in accounts receivable.