Rawdah three-statement forecast

The engagement

The board of Rawdah Home Retail Co. (a fictional home-furnishings retailer; all figures in SAR millions) is preparing a three-year plan and wants to see how its operating targets, dividend policy and debt repayments flow through to profit, cash and the balance sheet. You have been asked to build an integrated three-statement forecast for FY2026–FY2028 that starts from Rawdah's actual FY2025 balance sheet.

The drivers agreed with management are on the Inputs tab, together with the FY2025 opening position taken from Rawdah's accounts (revenue 1,497.0, cash 87.5, borrowings 355.0, equity 495.2). Management plans to tighten working capital (inventory days down from 110 at FY2025 year-end to 105) and to repay 25 of borrowings a year.

Deliverables

Complete every white cell on the four calculation tabs. Every cell must be a formula linked to Inputs or to another statement — no typed numbers. The model will be re-tested with different assumptions, so hard-coded figures will be found.

Conventions (follow exactly)

• Layout: on every statement tab, column B is FY2025 actual and columns C, D and E are FY2026, FY2027 and FY2028.
• Revenue grows at the year's rate on Inputs from the prior year's revenue.
• COGS = revenue × (1 − gross margin). Operating expenses (excluding D&A) = revenue × opex %.
• D&A = depreciation rate × opening (prior year-end) PP&E.
• Interest expense = interest rate × opening (prior year-end) borrowings. No interest is earned on cash. (This avoids a circular reference.)
• Tax = tax rate × (EBIT − interest). Net income = EBIT − interest − tax.
• Working capital is measured on year-end balances with a 365-day year (Inputs B10): receivables = revenue × receivable days ÷ 365; inventory = COGS × inventory days ÷ 365; payables = COGS × payable days ÷ 365.
• Sign convention: income statement costs are positive numbers that are deducted. On the cash flow statement, inflows are positive and outflows negative (capex, debt repayment and dividends are negative).
• (Increase) / decrease in working capital = decrease in receivables + decrease in inventory + increase in payables (an increase in an asset is a cash outflow).
• Capex = capex % × revenue of the same year. PP&E = opening PP&E + capex − D&A.
• Dividends = payout ratio × net income of the same year, paid in that year.
• Borrowings = opening borrowings − repayment. Equity = opening equity + net income − dividends (Rawdah reports a single equity line).
• Cash = opening cash + net change in cash from the cash flow statement. Never plug cash to make the balance sheet balance.
• No rounding anywhere. Results are graded to within 0.05%.

Data source

Opening balances are Rawdah's FY2025 actual balance sheet from the case (fictional data). It balances: total assets 984.4 = liabilities and equity 984.4.