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FYI-
Tasker has approved my assumptions for the cash flow statement so we are free to answer the questions. ********************************************** Mark D. Guinney, CFA Consultant Watson Wyatt Investment Consulting 345 California Street, Ste. 1400 San Francisco, CA 94104 (415) 733-4487 ph. (415) 733-4190 fax ____________________Forward Header_____________________ Subject: Re: Home Depot case question(s) Author: tasker@haas.berkeley.edu (Sarah Tasker) Date: 02/06/2001 2:09 PM Mark - I apologize for the delay in responding. I had to fly back East due to a family illness and had problems accessing my email from there. Your assumptions are fine. As to your previous email, I think the additional B/S data on pp 9-47 and 9-48 gives you what you need for prior years. Hope that helps - sorry again for the delay! Sarah Tasker At 06:45 PM 2/4/01 -0500, you wrote: <Professor Tasker: < <I've constructed a pro forma cash flow statement for the next fiscal year for <Home Depot. I wanted to solicit your input to see if I'm making some incorrect <assumptions. I've included my work in the attached spreadsheet (applicable work <is shaded in gray). The assumptions that I'm questioning are as followed: < <Instead of estimating net income I calculated EBIT; I did this since interest <expense is a variable that could change given financing needs undertaken <Taxes paid are difficult to calculate; I used previous years taxes from the <income statement and increase it by 30% (assumed growth rate); the tax credits <the company enjoyed from previous years are difficult to assume <At a minimum, I assumed that the company would have to pay for PPE on the order <of last year's depreciation plus 30%; I would consider this maintanence of <assets as opposed to purchase of new assets, construction, etc. <I calculated an additional PPE expense for 9 new stores and subtracted out the <$28 million in "construction in progress" from the previous year's balance sheet <(I assumed that this line item was construction for the new 9 sites) < <These are my main adjustments that I wanted to get some validation either way so <my group doesn't base our strategy and answers on incorrect assumptions. < < < <********************************************** <Mark D. Guinney, CFA <Consultant <Watson Wyatt Investment Consulting <345 California Street, Ste. 1400 <San Francisco, CA 94104 <(415) 733-4487 ph. <(415) 733-4190 fax <Attachment Converted: "c:\eudora\attach\HD.xls" < ---------------------------- Forwarded with Changes --------------------------- From: tasker@haas.berkeley.edu (Sarah Tasker) at Internet Date: 2/6/01 2:09PM -0500 To: Mark Guinney at ~WW_SFO Subject: Re: Home Depot case question(s) ------------------------------------------------------------------------------ -
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