Analyzing Pro Forma Statements
Analyzing Pro Forma Statements
FIN 571
Kent Kelly
February 2, 2015
Suzanne Elliot
Financial statements that are prepared by a company to consider the effects of potential activity is considered a pro forma statements. A financial statement shows the projected or forecast of operating results and balance sheet, and statement of cash flows. The company XYZ Company Inc. is planning to expand their company in the next five years. This paper will review and discuss XYZ’s Company’s five year plan to expand to their organization. The XYZ Companies pro forma income statement is projected for the next five years which accounts for a 10% increase in gross sales for each of the five years. Financial managers use Proforma statements to assist financial managers to plan accordingly in terms of the company’s financial needs. By acquiring the company’s future income statement and balance sheets, managers can determine how much financing is needed and when it is needed. The Proforma analysis has become the proven tool that can be instrumental for general managers in the planning of employment intensities, inventory and problem solving issues. Proforma can also be used for more than just a forecasting tool. It can also be used for creating mid-stream corrections, evaluate variances, gauge weaknesses, strengths and evaluating performance during the budgeting period. By forecasting Proforma statements are created to predict balances at a certain date followed by combining them with a financial statement format. Acquiring the forces that influence them, one can determined how account balances are forecasted and project how the accounts may be influenced. The following is used to illustrate the ProForma’s five year projection process for XYZ’s Company.
Income Statement: 2011, % Ratio to the Sales|2011|2012|2103|2014|2015
Revenue (net): $1,747,698|100.0%|$2,097,238|$2,306,961|$2,537,657|$2,791,423| $3,070,566
Gross Profit:
FIN 571
Kent Kelly
February 2, 2015
Suzanne Elliot
Financial statements that are prepared by a company to consider the effects of potential activity is considered a pro forma statements. A financial statement shows the projected or forecast of operating results and balance sheet, and statement of cash flows. The company XYZ Company Inc. is planning to expand their company in the next five years. This paper will review and discuss XYZ’s Company’s five year plan to expand to their organization. The XYZ Companies pro forma income statement is projected for the next five years which accounts for a 10% increase in gross sales for each of the five years. Financial managers use Proforma statements to assist financial managers to plan accordingly in terms of the company’s financial needs. By acquiring the company’s future income statement and balance sheets, managers can determine how much financing is needed and when it is needed. The Proforma analysis has become the proven tool that can be instrumental for general managers in the planning of employment intensities, inventory and problem solving issues. Proforma can also be used for more than just a forecasting tool. It can also be used for creating mid-stream corrections, evaluate variances, gauge weaknesses, strengths and evaluating performance during the budgeting period. By forecasting Proforma statements are created to predict balances at a certain date followed by combining them with a financial statement format. Acquiring the forces that influence them, one can determined how account balances are forecasted and project how the accounts may be influenced. The following is used to illustrate the ProForma’s five year projection process for XYZ’s Company.
Income Statement: 2011, % Ratio to the Sales|2011|2012|2103|2014|2015
Revenue (net): $1,747,698|100.0%|$2,097,238|$2,306,961|$2,537,657|$2,791,423| $3,070,566
Gross Profit: