Then you forecast total asset turnover.

And again, I just took the historical average as a starting point.

Then we're gonna go down here to the saw-tooth calculation.

So what this will do for

you is it will calculate the total assets using the total assets turnover ratio.

You get a little bit of saw-toothing going on, or at least uneven growth.

Then we figure out what's the growth rate over this horizon,

what's the growth rate over this horizon.

Apply that to total assets to get a much smoother growth in total assets.

Once we get a smoother growth then what I take is the historical average of

the common size ratios for

the balance sheet to forecast out each of the line items.

And so it'll look like this.

Where every line item in the balance sheet is the assumption for

the cash to total assets ratio times the total assets I forecasted during the year.

The total assets all come from the saw-tooth calculation and then we forecast

an income statement where we start with sales growth and then each line item

is the forecasted ratio of the line item to sales times whatever the sales is.

Once you get the balance sheet income statement, you can go through and

take a look at the formulas.

But it basically allows you to put together a statement of cash flows.

And also, ratios.

So you can go look at these ratios into the future,

to see if your pro forma financial statements makes sense.

So again, this is just a base case.

What you can do on your own is change anything in the assumptions tab,

and it will recalculate everything automatically in the spreadsheet.