Deliverable 5 – Forecasting Methods and Applications

Attachments

Sheet1

Income Statement
All numbers in thousands
Revenue 2018 2017 2016 2015 2014
Total Revenue 806,338 766,083 529,515 450,557 486,280
Cost of Revenue 206,052 187,289 131,070 102,571 121,020
Gross Profit 600,286 578,794 398,445 347,986 365,260
Operating Expenses
Research Development 116,445 99,205 78,269 69,791 59,880
Selling General and Administrative 262,699 220,728 166,110 151,651 383,240
Total Operating Expenses 379,144 319,933 244,379 221,442 443,120
Operating Income or Loss 221,142 258,861 154,066 126,544 (77,860)
Income from Continuing Operations
Total Other Income/Expenses Net 13,432 7,603 8,011 418 504
Net Income 207,710 251,258 146,055 126,126 (78,364)
Source: Congressional Budget Office
Assumptions specific to Company
Category Assumption
Total Revenue Management projects revenue to continue same trend as previous 5 years
Cost of Revenue Management is implementing cost savings programs that should reduce the cost of revenue to approximately 2016 levels as a percentage
Research Development Management believes that new products are the life blood of the company and will continue with it current trend of R& D expenses
Selling General and Administrative Management projects that all other expense increases will be in line with Inflation

3-Year IS Forecast

FORECASTED DATA HISTORIC DATA
All numbers in thousands 2021 2020 2019 2018 2017 2016 2015 2014
Revenue
Total Revenue $ 806,338 $ 766,083 $ 529,515 $ 450,557 $ 486,280
Cost of Revenue $ 206,052 $ 187,289 $ 131,070 $ 102,571 $ 121,020
Gross Profit $ 600,286 $ 578,794 $ 398,445 $ 347,986 $ 365,260
Operating Expenses
Research Development $ 116,445 $ 99,205 $ 78,269 $ 69,791 $ 59,880
Selling General and Administrative $ 262,699 $ 220,728 $ 166,110 $ 151,651 $ 383,240
Total Operating Expenses $ 379,144 $ 319,933 $ 244,379 $ 221,442 $ 443,120
Operating Income or Loss $ 221,142 $ 258,861 $ 154,066 $ 126,544 $ (77,860)
Income from Continuing Operations
Total Other Income/Expenses Net $ 13,432 $ 7,603 $ 8,011 $ 418 $ 504
Net Income $ 207,710 $ 251,258 $ 146,055 $ 126,126 $ (78,364)
PROJECTIONS 2021 2020 2019 2018 2017 2016 2015 2014 AVERAGE PERCENT
Revenue YOY ERROR:#DIV/0! ERROR:#DIV/0!
Cost of Revenue YOY 2016 ERROR:#DIV/0! ERROR:#DIV/0!
Research Development YOY ERROR:#DIV/0! ERROR:#DIV/0!
SG&A Trend Inflation rates or PCE price index 2.1 2.1 2.1 2.1000 2%
Total other income/expenses ERROR:#DIV/0! ERROR:#DIV/0!

Graphs

Summary Table 1.
CBO’s Projections of Key Economic Indicators for Calendar Years 2018 to 2028

Annual Average

Actual,
2017

2018

2019

2020

2021–
2022

2023–
2028

Percentage Change From Fourth Quarter to Fourth Quarter

Gross Domestic Product
Reala

2.6

3.3

2.4

1.8

1.5

1.7

Nominal 4.5 5.2 4.5 3.9 3.7 3.9
Inflation

PCE price index

1.7

1.8

2.0

2.1

2.1

2.0

Core PCE price indexb 1.5 1.9 2.1 2.2 2.1 2.0

Annual Average
Unemployment Rate (Percent) 4.4 3.8 3.3 3.6 4.4 4.8
Payroll Employment (Monthly change, in thousands)c 181 211 182 62 25 57
Interest Rates (Percent)

Three-month Treasury bills

0.9

1.9

2.9

3.6

3.7

2.8

Ten-year Treasury notes 2.3 3.0 3.7 4.1 4.1 3.7

Summary Table 1.

CBO’s Projections of Key Economic Indicators for Calendar Years 2018 to 2028

Annual Average

Actual,

2017

2018

2019

2020

2021–

2022

2023–

2028

Percentage Change From Fourth Quarter to Fourth Quarter

Gross Domestic Product

Reala

2.6

3.3

2.4

1.8

1.5

1.7

Nominal 4.5 5.2 4.5 3.9 3.7 3.9

Inflation

PCE price index

1.7

1.8

2.0

2.1

2.1

2.0

Core PCE price indexb 1.5 1.9 2.1 2.2 2.1 2.0

Annual Average

Unemployment Rate (Percent) 4.4 3.8 3.3 3.6 4.4 4.8

Payroll Employment (Monthly change, in thousands)c 181 211 182 62 25 57

Interest Rates (Percent)

Three-month Treasury bills

0.9

1.9

2.9

3.6

3.7

2.8

Ten-year Treasury notes 2.3 3.0 3.7 4.1 4.1 3.7

CategoryAssumption

Total RevenueManagement projects revenue to continue same trend as previous 5 years

Cost of Revenue

Management is implementing cost savings programs that should reduce the cost of revenue

to approximately 2016 levels as a percentage

Research Development

Management believes that new products are the life blood of the company and will continue

with it current trend of R& D expenses

Selling General and Administrative

Management projects that all other expense increases will be in line with Inflation

CBO’s Projections of Key Economic Indicators 2023-20282021-20222020201920182017

Annual Average GDP Percentage1.71.51.82.43.32.6

Nominal Inflation4.55.24.53.93.73.9

PCE Price Index22.12.121.81.7

Core PCE Price Index22.12.22.11.91.5

Unemployment Rate (Percent)4.84.43.63.33.84.4

Payroll Employment (Monthly change, in thousands)572562182211181

Interest Rates (Percent)2.83.73.62.91.90.9

Ten – year Treasury notes3.74.14.13.732.3

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