Analyse comptable - Philippe Giraudon, CIIA Octobre 2020

CRYSTAL BALL Case Study: Preparation of pro-forma statements and forecasts

You have to analyse CB company, midcap 100% family-owned business held by its manager
Jean Marthet and his family, whose accounts are shown below:
CB P&L 2013

Accounts
Potential restatements
Pro-forma 2014e 2015e 2016e
(Data in EUR)
Revenues 8’030’000
Purchases used -2’150’000
Other revenues 1’200’000
(licences)
Other suppliers -650’000
and external
charges
Wages -2’000’000
EBITDA 4'430’000

Depreciation -1’480’000
EBIT 2’950’000

Financial result -150’000

PBT 2'800’000
Employees profit- -304’000
sharing cost
(“Participations
des salaries”)
Taxes -748,800
Net Profit 1'747’200

CB Balance Sheet for 2013 (data in EUR)

Potential Potential
Assets Liabilities
restatements Pro- Accounts restatements Pro-
Accounts
forma forma

PPE 6'000’000 Equity 6'500’000

Inventories 4'000’000
Accounts 2'500'000 MLT Financial 4'500’000
receivable Debt
Other current 1'500’000 ST Financial 500’000
assets Debt
Cash & Cash 2'500’000 Accounts 1'000’000
equivalent payable
Other current 4'000’000
liabilities
Total Assets 16'500’000 Total 16'500’000
Liabilities

©Philippe Giraudon, PHG Finance

Analyse comptable - Philippe Giraudon, CIIA Octobre 2020

1) You want to show CB economic P&L and Balance Sheet.

When discussing with the owner-manager, you obtain the following information:
- The owner-manager pays himself EUR 500’000 (including social charges) per annum (the usual
wage of a company of such size is EUR 250’000 including social charges)
- The company has factored EUR 2’000’000 of accounts receivables
- Other supplies and external charges include EUR 240’000 of financial lease instalments on
production tools that the company intends to use over their expected life (10 years) with a total
financial lease commitment of EUR 1'680'000 as of end 2013 (= 7 years of yearly instalments)
Please specify any potential restatements you are undertaking if any.

2) The owner-manager provides you with his main forecasts for 2014e to 2016e; you
want to prepare a forecast P&L to have a clear idea of CB profitability prospects:
- Sales volumes are expected to grow by 5% per annum with a selling price per unit growing by 2%
per annum as it has been the case for the last 5 years since the products have been created
- Purchases used will remain stable as a proportion of sales and other supplies and external charges
(excluding financial lease instalments) will grow by 0.25% per annum
- Wages will grow by 1.5% per annum
- Net yearly investments will remain stable as a proportion of sales (do you think that their level is
adequate?)
- Working Capital will remain stable as a proportion of sales in the coming years
- Dividends represent from 2012 included 75% of net result (restated net result) of CB

3) What level of net financial debt (on a restated basis upon need) will the company have in 3
years considering that its ST and MLT financial debt is “bullet” with a maturity in 5 years?

4) Can you summarise on a table the 4 major assumptions of the forecasts for each year?
What about returns then for each year? Do you think then a forecast P&L is enough? You
may prepare any other forecast table you consider relevant.

5) Is the growth level of the company realistic? Can it be increased with this level of dividend
payout?

6) What list of questions would you like to ask to CB company manager, Jean Marthet, to
ensure that your financial forecasts are realistic and robust?

©Philippe Giraudon, PHG Finance