Financial Modeling analysis Essay Example | Topics and Well Written Essays - 1000 words

Financial Modeling analysis - Essay ExampleA nonher assumption is advanced growth in sales for the existing stores. As reflected in the financial forecast account, Lowes will make increasing sales for the first years, overtop the pick-up and maintain a continuous growth of sales till the fifth year. Since the company will bring new products to metropolitan dweller, it will make to a greater extent sales within the two year. In the third year, 2003, Lowes will try to adjust for the long-term investment decision hence leading to magnetic inclination in sale. However, after adjusting its resources effectively, it will pick up and its sale will be expected to progressively grow.Lowes is planning to reach more headmaster customer using its online website. This means it will be collecting cash instantly thus as reflected by the high receivable turnover rates. In addition to that, it is assumed that Lowes will need huge financing if they have a goal of reaching metropolitan markets. In assuming a high receivable turnover rate, the company will minimize debtor ratio and will therefore have more cash at conk for the investment purpose. In addition to that, the model assumes a more that 100% inventory and P&E turn over. Though such a turnover rate may seem unachievable, it is important to set it so that Lowes can achieve its goal of competing with Home Depot. The model finally assumes a unvarying rate in other current liabilities / sale entity. For the company to be able to plan working capital, they need to have a rate that does not change.Financial forecast model developed by Value Line Publishing shows a higher 5 year average gross adjustment of approximately 30.52% as compared to Lowes model whose 5 year average gross margin is 29.3%. this simply means that VLPs model is focused in seeing Home Depot to make more earning for every dollar it spend is sales while Lowes modes is focused to seeing