forecasting

i would like to know how u would forecast the following: SG&A, Interest charge, Tax charge, depreciation, Dividends paid, and working capital. I know it's quite a bit but any help would be useful.

you'll need to model the balance sheet, or at the very least a cash-flow and net-debt line to do depreciation and interest properly. And as part of that you'll need to have a view of capex. The company will have a stated dividend policy, so that's easy. Assume working capital doesn't change unless the co. has expressly given guidance on increasing/decreasing it. Which leaves SG&A. Depends how accurate you want to be. Either split by cost type (as far as the annual report gives details) and model by % of rev. if a variable cost or more-or-less unchanged if a fixed cost. Or just do the whole line as a % of revs. This all assumes the company hasn't given guidance that it will be explicitly targetting costs.

i've modeled a cashflow statement. for interest charge i have calculated it as the average net debt x an assumed interest rate. for depreciation im just sticking in a value that looks like the previous year's vale with a little added on top.

My problem with dividends is often the divided shown in the income statement is different than the dividend paid out on the cashflow statement

My capex is a pure assumption, i'm wondering if there is a better way, or a correct way of handling it.

kagein said:

i've modeled a cashflow statement. for interest charge i have calculated it as the average net debt x an assumed interest rate. for depreciation im just sticking in a value that looks like the previous year's vale with a little added on top.

My problem with dividends is often the divided shown in the income statement is different than the dividend paid out on the cashflow statement

My capex is a pure assumption, i'm wondering if there is a better way, or a correct way of handling it.

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If there's no explicit guidance then capex as a % of revs is probably okay. Once you have capex you can do depc'n properly as the R&A will give the detailed policy. Making it fit with the historic figs can be a pain in the **** though.

Difference in cash-flow and p&l dividends is probably timing. What the timescale for payment? You may end up modelling that 75% of Yr1's cash-flow div goes into Yr2 p&l. Unless it's near enough to just ignore.

The first stop for any forecasting is to go through all of the last couple of years RNS statements, CEO interviews, etc to check for guidance.

you were right about the dividend difference was due to a timing difference the interim dividend was paid during the year, the final dividend was paid during the next year. thanks for the guidance tip, they do divulge a lot of useful info.

It's easier for the pros. They just phone the company up and ask them!