1. Budget Planning, Implementation and Monitoring Second Step: Building the Projections – Corporate Approach Chris Droussiotis September 2011 Lecture Series #2

2. 2 Table of Contents Top to Bottom / Bottom to Top Line ( Government Approach ) Revenue Growth & Operating Assumptions Striving for Cash Flow / Profit Performance measurements These slides could be obtain via the Instructor’s Web page at www.celeritymoment.com www.celeritymoment.com

3. 3 Top to Bottom Line Drivers Revenue Drivers – Growth Assumptions (increase/decrease) Historical averages Future assumptions / views Demand and Supply: Volume Vs Price – “Volume” concept “Same Store Sales” “Acquisitions / “New Stores” – “Price” concept Market Conditions / Pass-through concepts Revenue Segments (subsidiaries, product/services, geographical, departments)

4. 4 Top to Bottom Line Drivers Cost / Expense Drivers – Direct Expenses / Gross Profit Cost of Revenue as % of Revenue – Material / Labor / Overhead Cost per Unit / Hourly Wages – Indirect Expenses / EBIT or EBITDA Margins Operating Assumptions as % of Revenues – Selling / General / Administrative – Utility Expenses – Depreciation Expenses (% of Revenue / Based on Assets and Average Life) – Interest Expense New or Existing Debt – Taxes / Tax Rate

5. 5 Bottom to Top Line Approach Cost Drives Revenue – Gross Margin / Operating Margin – EBITDA / Net Income REVENUE Price

6. 6 Operating Assumptions / Drivers

7. 7

8. 8

9. 9 Results

10. 10 Results

11. 11 Results

12. 12 Performance Measurements

13. 13 Performance Measurements Solvency Ratios – Managing Debt – Leverage Ratio / Debt Capacity – Coverage Ratio / Adequate coverage of Obligations Profitability Ratios – Cost efficiencies / Cost Rationalization – Revenue Drivers / Acquisition Growth Rationale – Striving for Higher Margin Business Activity Ratios – Inventory Management – Working Capital Management