We're going to build our debt and equity forecast for Burberry and we'll start with long-term debt in the balance sheet tab as you can see here. This is actually a slightly underwhelming item in this model for Burberry and that's because long-term debt is associated with a financial contract from a previous m&a deal for the China business. If we have a look at the financial statements on page 145, we can see some extra detail on this here and it tells us that the contract expires in 2020 which is beyond our forecast period in this model. So our assumptions are going to show no debt repayments or issuance during the forecast period however, we're still going to include this assumption in our debt line as it gives us the ability to change the assumption at some point in the future if we suddenly decided that Burberry needs to raise some new debt, so let's build our long-term debt forecast.

Now that this step is completed. We're ready to build our equity calculations. However for this we need dividends. So let's have a look in the income statement where we can build our dividend forecasts. You can see here that we're going to forecast dividends using a growth rate assumption. This is actually quite a punch assumption of 10% growth per year. It's often best just to go with an assumption and then revisit this once your model is complete to make sure that it actually makes sense. So let's build our dividend per share forecasts.

To forecast actual dividends. We're going to need a share count number because we're multiply this by the dividends per share. Let's have a look back at our assumptions to see what we've got. You can see we've been given an assumption here for basic shares outstanding and that's really important when we're doing our dividend calculations that we use basic shares outstanding because companies only pay dividends on actual shares outstanding at the payment date. So we don't want any diluted share count calculations for this. So we've got all the information that we need to build our forecast for dividends and for equity. So let's go back to the balance sheet and build our calculation. And we're going to build our equity calculation in the usual way.

Now that we've built our equity calculation we can put this into the balance sheet. So let's do this now.

Here we've now forecast the balance sheet as far as we can go the next step in our model build would be to forecast the cash flow statement and use this to calculate cash and short-term debt and then use this to calculate interest and Pop That Into the income statement. I'm going to leave you to do this on your own and then you can check your answer against the solution file. Good luck.