Summary: Analyzing Pro Forma Statements

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Analyzing Pro Forma Statements FIN/571 0ct 18, 2014 Analyzing Pro Forma Statements This project is to analysis of the pro forma financial statements. Pro forma statements are projected or forecast financial statements as a result of long-term financial planning. The financial statements are based on the inputs and assumptions such as a certain percent of sales model in which most of the entries vary directly with the level of sales. The attached excel spreadsheet includes pro forma statements for the next five years. Sales revenue will be increased at twenty percent over the next five years. However based on the information over the next five years, the company will not need external funds. The accuracy of pro forma statements is contingent…show more content…
Looking at the data net sales increased over the five period from $2,097,000.00 to $5,218,007.04 increase $3,121.007. Totaling gross profit went from 816,000.00 to $2,030,469.12 increase of $1,214,469.10. In the above pro forma balance sheet, it has been established that one has assumed that current gross profit has increased in the ratio of gross profits. A reduction in any of the following selling expenses or administration expense will allow the company to retain more of its earnings and profit margin, and therefore will increase its need for external funding. The dividend disbursement rate is 25 percent of earnings, and the balance in retained earnings at the end of 2012 was $1,436,833.09. During the developing stages of the forecasting, a manager is permitted to analyze the results; thus, recognizing potential hot spots and handling the issues accordingly. When carrying out a Pro forma Analysis, the financial manager can handle future issues weeks or months in advance. This outlook allows the manager to achieve set goals and make the most of the analysis, long before the opportunity expires (Parrino et al, 2012).This pro forma is a positive because all number are increasing in

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