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Financial Analysis, Planning and Forecasting Theory and Application

Financial Analysis, Planning and Forecasting Theory and Application. Chapter 23. Long-Range Financial Planning – A Linear-Programming Modeling Approach. By Cheng F. Lee Rutgers University, USA John Lee Center for PBBEF Research, USA. Outline. 23.1 Introduction 23.2 Carleton’s model

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Financial Analysis, Planning and Forecasting Theory and Application

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  1. Financial Analysis, Planning and ForecastingTheory and Application Chapter 23 Long-Range Financial Planning – A Linear-Programming Modeling Approach By Cheng F. Lee Rutgers University, USA John Lee Center for PBBEF Research, USA

  2. Outline • 23.1 Introduction • 23.2 Carleton’s model • 23.3 Brief discussion of data inputs • 23.4 Objective-function development • 23.5 The constraints • 23.6 Analysis of overall results • 23.7 Summary • Appendix 23A. Carleton’s linear-programming model: General Mills as a case study • Appendix 23B. General Mills’ actual key financial data

  3. 23.2 Carleton’s model

  4. 23.2 Carleton’s model

  5. 23.2 Carleton’s model

  6. 23.2 Carleton’s model

  7. 23.3 Brief discussion of data inputs Table 23.3

  8. 23.3 Brief discussion of data inputs Table 23.3 Cont.

  9. 23.3 Brief discussion of data inputs Table 23.4

  10. 23.3 Brief discussion of data inputs Table 23.4 Cont.

  11. 23.4 Objective-function development (23.1) where

  12. 23.4 Objective-function development (23.2) (23.3) (23.3a)

  13. 23.4 Objective-function development (23.4) (23.5)

  14. 23.4 Objective-function development (23.6) (23.7a) (23.7b)

  15. 23.5 The constraints • Definitional constraints • Policy constraints

  16. 23.5 The constraints Fig. 23.1 Structure of the optimizing financial planning model. (From Carleton, W. T., C. L. Dick, Jr., and D. H. Downes, "Financial policy models: Theory and Practice," Journal of Financial and Quantitative Analysis (December 1973). Reprinted by permission.)

  17. 23.5 The constraints (23.8) (23.9) Because General Mills has no preferred stock or extraordinary items, AFC= ATP:

  18. 23.5 The constraints

  19. , 23.5 The constraints ,

  20. 23.5 The constraints Table 23.5 (a)

  21. 23.5 The constraints .

  22. 23.5 The constraints Table 23.5 (b)

  23. 23.5 The constraints To get the interest payment on long-term debt

  24. 23.5 The constraints

  25. 23.5 The constraints AFC1+0.00441DL1=149.17 (23.10a) AFC2+0.00441DL2=173.45 (23.10b) AFC3+0.00441DL3=198.22 (23.10c) AFC4+0.00441DL4=226.05 (23.10d)

  26. 23.5 The constraints (23.11) where

  27. 23.5 The constraints (23.12a) (23.12b)

  28. 23.5 The constraints (23.13) where

  29. 23.5 The constraints

  30. 23.5 The constraints

  31. 23.5 The constraints

  32. 23.5 The constraints

  33. 23.5 The constraints

  34. 23.5 The constraints (23.10e) (23.10f) (23.10g) (23.10h) (23.10i)

  35. 23.5 The constraints (23.14)

  36. 23.5 The constraints .

  37. 23.5 The constraints

  38. 23.5 The constraints (23.15a) (23.15b) (23.15c) (23.15d)

  39. 23.5 The constraints (23.16) (23.17a) (23.17b)

  40. 23.5 The constraints (23.17c) (23.17d) (23.18a)

  41. 23.5 The constraints (23.18b) (23.18c)

  42. 23.5 The constraints

  43. 23.5 The constraints (23.17f)

  44. 23.5 The constraints

  45. 23.5 The constraints

  46. 22.5 The constraints

  47. 23.5 The constraints (23.17o)

  48. 23.5 The constraints Table 23.6

  49. 23.5 The constraints

  50. 23.5 The constraints (23.17t)

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