Hasbro has changed its marketing strategy in last two years they now concentrate on solid

performing toys and moved away from highly risky promotional, faddish toys. Overhead
trimmed, inventories written down and excess capacity plants were closed. G.I. Joe, board games
(Monopoly) and preschool games were being concentrated upon.

In 1988 Hasbro’s changed strategy Hasbro has three major strengths for the next several years.
First company had recently announced the purchase from Cleco of two operations that produced
ride on toys and furniture for children. Second, Hasbro received license from the hit movie who
framed roger rabbit? which appealed to both children and adult. Third, Hasbro was rumored to
enter into the high tech market with a toy its developer called NEMO which is a video game.

Sales Forecast

We start with a forecast of what drives much of our financial activity; namely sales. Therefore, the
first forecast we have prepared is the Sales Forecast. In order to estimate sales, we have looked at
past sales histories and various factors that influence sales. For example, marketing research may
reveal that future sales are expected to stabilize. Hasbro can meet growing sales because of
increase in production capacities and there is a general economic slowdown resulting in falling
sales. Therefore, we have analyzed several factors in arriving at our sales forecast.

Percent of Sales

We now need to estimate account changes because of estimated sales. One way to estimate and
forecast certain account balances is with the Percent of Sales Method. By looking at past
account balances and past changes in sales, we can establish a percentage relationship. For
example, all variable costs and most current assets and current liabilities will vary as sales
change. We have calculate growth rates for all major items reported in the historic income
statements and balance sheet by subtracting the past year's value from the next year's value and
dividing it by the past year's value. Added the growth rates estimated for the past years and
divide by the number of years to obtain the average growth rate in each item than estimated the
projections for the revenues and costs for the next year by multiplying the prior year value by the
average growth rate. We have used this average growth rate as an assumption for future growth
rate. We have repeated the process for estimating the projected revenue for the next five years.