Essay About Forecast Assumptions And Historical Data

Fin 449
Market capitalization and per share priceWe forecasted the number of shares outstanding, which came to be 398.05M based on historical data from 2011 to 2015 with an average rate of -5% and current share price of $164.11(4/30/2016).Market Capitalization:  $164.11 * 398.05 M = 65,323.99 MHistorical and Forecasted FCFEFCFE = N/I + Increase in cash – Increase in SE $ in millionsHistorical period Forecast period2011201220132014201520162017201820192020 Net income44427475804084776083685677098647967110781 Increase in cash1622016661(11536)(3533)17505(20823)16909(13462)10611(8319)Increase in shareholders’ equity53372751433039316891879411452151792042227814 FCFE1532521385(7826)101316697(22761)13167(19995)(141)(25352) Based on the historical data from GS 10-K annual reports  and the forecast assumptions, we calculated the free cash flow to equity (FCFE) by using the simplest formula where FCFe = N/I + Increase in cash – Increase in SE. In contrast, there is a  not optimistic forecast of FCFE from 2016 – 2020 —- except 2017, most FCFE forecast during forecast period are negative, which means that there is not enough  cash that can be distributed to the firm’s equity shareholders either as dividends or stock buybacks.  It will affect the investment from the GS investors because they have negative expectation on return and valuation of GS. Therefore,  it is a sign that the firm will need to raise more [a][b][c]capital.