PFP Maxima II: Pro Formas for Professionals. (Software Review) (The CPA & The Computer) (Evaluation)by Warner, Paul D.
The financial statements in PFP Maxima II can be formatted automatically to suit almost any type of company--from manufacturing, distributing, and servicing to professional or general commercial. The statements can also be formatted automatically for either an incorporated or unincorporated company. After the commands are entered, formatting is completed in about a minute.
PFP Maxima II can prepare multi-year forecasts for as many years as required. The model will automatically bring the prior year's balance sheet forward to the current year and, when all the years have been completed, create a sumamary.
PFP Maxima II is divided into two sections--"Setup" and "Results." Data is inputted into each section.
The "Setup" section consists of eight parts, which are--
SECTION A - WORKSHEET IDENTIFICATION
B - STATEMENT FORMAT C - INCOME TAX D - MANAGEMENT BONUS E - OPERATING LOAN F - TERM LOANS G - CASH FLOW ASSUMPTIONS H - INDEX
The "Results" section is comprised of the following financial statements and schedules:
SCHEDULE 1 - PROJECTED BALANCE SHEET
1A - RATIO ANALYSIS(*)
2A TO 2G - COST OF SALES
2 - PROJECTED INCOME STATEMENT
3 - OVERHEAD PROJECTION
4- CASH FLOW PROJECTION
5 - PROJECTED OPERATING LOAN / SURPLUS CASH SCHEDULE(*)
5A - PROJECTED LETTERS OF CREDIT OUTSTANDING(*)
6 - PROJECTED ACCOUNTS RECEIVABLE SCHEDULE(*)
7 - PROJECTED ACCOUNTS PAYABLE SCHEDULE(*)
8 - PROJECTED INVENTORY SCHEDULE(*)
* No data input required.
Data can be entered in the "Results" section in any cell that doesn't contain a formula. Input fields appear in green or blue on the screen.
Most of the 1-2-3 commands used in this model are automated. For example, to print any report in PFP Maxima II, press ALT P and follow the instructions on the screen. To save the worksheet, press ALT S. To create a window, press ALT W, and so on. (In 1-2-3 for Windows, press the CONTROL key instead of the ALT key.)
PFP Maxima II requires 2 megabytes of RAM to run under 1-2-3 for Windows, and 640K plus expanded memory to rum under 1-2-3 for DOS.
On-Screen Guidance. To help safeguard against accidental data entries, data entry messages are contained in a hidden cell format in column E in the balance sheet, each cost of sales schedule, projected income statement, overhead projection, and cash flow projection. The messages appear in the control panel when the cursor is placed in column E.
Changing Account Names. Account names may be changed, however, corresponding account names on other statements do not change automatically. They must be changed manually.
Macros. In PFP Maxima II, thirteen macros have been created to automate virtually all of the commands used in the model. In addition, three macros are used to format the financial statements. The three macros used to format the financial statements are one-time macros--once they have been executed they cannot be reversed or executed again.
When a macro is executing, the 1-2-3 macro command indicator, "CMD," appears at the bottom of the screen. In addition, the word MACRO may appear in the top right corner in place of the READY indicator.
If a macro is lengthy, the cursor will be sent to a message screen advising you to walt until the operation is completed. Macros in PFP Maxima II complete their routine within a few seconds to about three minutes.
Macros that affect Allways formatting will cause the screen to flicker as the instructions are being performed. Regrettably, there is no programming mechanism in Allways to freeze the screen during execution.
Here's a listing, of the 13 macros:
ALT I--INSERT ROW
ALT N--INTEREST CALCULATION
ALT Q--QUIT WINDOW
ALT R--REMOVE ROW
ALT S--SAVE WORK
ALT T--INSERT ONE-TWELFTH OF TOTAL AMOUNT IN EACH MONTH
ALT U--CALCULATE OVERHEAD ITEM AS A PERCENT OF TOTAL SALES
ALT V--INSERT VALUES IN EACH MONTH
ALT W--WINDOW CREATE (HORIZONTAL)
ALT X--XTRACT TERM LOAN DATA
ALT Y--BRING PRIOR YEAR BALANCE SHEET FORWARD
ALT Y--CREATE MULTI-YEAR SUMMARY
ALT Z--ZERO SUPPRESSION
When ALT N is pressed, interest is calculated on the monthly loan and/or surplus cash balances shown in schedule 5 (projected operating loan/surplus cash schedule). The interest amounts are then transferred to schedule 3 (projected overhead) and the worksheet is recalculated.
This calculation is circular, therefore, the transfer and recalculation are performed three times. If there should be a difference between the interest amounts shown on schedules 3 and 5 after ALT N is pressed, ALT N must be used again. Note: ALT S- Save Worksheet - automatically repeats ALT N when the worksheet is saved.
To print PFP Maxima II, press ALT P and follow the prompts on screen. If using 1-2-3 release 2.3 or higher, one of the options presented is to print legal-sized reports on letter-sized paper. The model can be printed using either a dot-matrix or laser printer. You can print in Allways, WYSIWYG or regular 1-2-3.
The macro--ALT T--will spread the total amount entered in column G, the total column, in one-twelfth increments over the projection year. Note: All overhead accounts are initially formatted with ALT T, except the interest accounts, which are automatic entries.
The ALT U macro will distribute the overhead item as a percentage of total sales each month.
When F9 is pressed, the total monthly sales is multiplied by the percentage selected and the results are entered into each monthly overhead column. The total for the year is the sum of the monthly overheads.
The ALT V macro enables you to manually insert amounts in each monthly column. It inserts a total formula in column G, the total column, totaling the 12 monthly columns.
The ALT X macro is used to copy term loan data from the term loan calculator file (PFP-TR3) to this file.
The ALT Y macro is used to help create multi-year forecasts. When ALT Y is pressed, two menu options appear: BRING PRIOR YEAR BALANCE SHEET FORWARD and CREATE MULTI-YEAR SUMMARY. The macro will bring each year's balance sheet forward automatically. When all years have been completed, a summary is generated automatically.
The ALT Z macro suppresses zeros. It is useful when you want to create a blank worksheet without any zeros showing.
Sales and Cost of Sales. There are sufficient alternatives to handle most sales and cost of sales combinations. PFP Maxima II can process data for models without cost of sales, and models based on direct costing concepts. Seasonal sales and cost of sales patterns can be handled via percentages, units of sale, or fixed amounts. The program provides for up to seven products or product lines. Changes in inventory levels are provided for.
Income Tax. The tax rate schedule for your state and local taxes may be entered, if desired. Make sure the federal rates shown are current.
Management Bonuses. Four options are provided for handling management bonuses. These include-
* reducing profits to a specified level,
* bonus calculated as a percentage of pre-tax profits,
* bonus calculated as a percentage of pre-tax profits above a certain level, and
* no management bonus.
PFP Maxima II does not calculate management bonuses based on profits after deducting the management bonus.
Bank Credit Line. Five credit line options are provided, as follows:
* A credit line ceiling limit, e.g., 5,000,000;
* A limit based on monthly levels of accounts receivable;
* A limit based on monthly levels of inventory;
* A limit based on monthly levels of accounts receivable and inventory; and
* A limit based on monthly levels of accounts receivable and a percentage of accounts payable.
Fixed assets can be factored into any of the above except for the ceiling limit.
Loans. Two term loans are included in the basic model. Additional ones can be handled by retrieving an additional Lotus model that is linked to the basic model. PFP Maxima II provides three loan repayment options:
* Constant payment;
* Fixed principal plus interest; and
* Monthly interest plus intermittent principal payment.
Cash Flow Assumptions. Cash flow assumptions are provided for the following items:
* Opening inventories by product (product line);
* Materials purchasing patterns by product (product line);
* Annual sales increase (decrease) percentage;
* Production labor payment patterns by product (product line);
* Accounts receivable collection pattern;
* Opening accounts receivable on an aged basis;
* Overhead payment pattern;
* Interest cost payment pattern;
* Purchases payment patterns for regular and seasonal purchases; and
* Direct cost payment pattern.
Other Features. Account names can be changed, items grouped, added or deleted. Detailed instructions are included in the manual. The manual includes a detailed checklist that can be used to determine the reasonableness of the results.
Preparing a Financial Forecast
Since PFP Maxima II will probably be used on an infrequent basis, each time it is used will usually involve some learning or re-learning time. Because of this, a step-by-step tutorial is provided. It takes up approximately eight pages and is accompanied by a print out of the completed tutorial. It took me about two hours to work through the complete tutorial and to check the results.
"What-If" Analysis. Once the initial model has been completed, "What-if" analyses can be performed in any area where variable entries are made. Here are some examples:
What if interest rates increase by X percentage points? What if cash flow assumptions for accounts receivable improve by X percent? What if cost of sales decreases by X percent? What if the seasonal sales pattern changes? What if sales increase by X percent? And so on.
Accountants in public practice may wish to attach Accountant's Comments to their report. If so, this reference can be indicated on each page. PFP provides both Forecast and Projection wording.
I found PFP Maxima to be an easy way to prepare and complete a forecast model with extensive supporting schedules. If you are familiar with Lotus, this is the easiest way to get into financial forecasting models. I found the telephone help accurate and prompt.
Pendock Mallorn Ltd. 245 8th Ave., Suite 340 New York NY 10011 (800) 567-4500
PFP Express does not contain all the features of Maxima II.
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