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Pro Forma Statement Analysis Paper

877 Words4 Pages

Introduction Financial statements are a formal record or report of how a company is progressing. The activities of a company can define how it will proceed in the present and the future and is critical for the leadership of the company to understand these reports. This report helps determines the ability of how a company can generate the cash that is needed to operate and function, while showing how a business can pay back its debt. Financial statements provide a way for a company to track the results and show any issues and they can put a focus and attention on business transactions. Pro forma statements are typically used to determine the issues that might happen. These statements are focused on business plans and proposal, while consistently evaluating cash requirements. These statements have the ability to weed out that information that is …show more content…

The increase projected was for 18% in sales each year for the next five years. Analysis of the Pro Forma statement indicates that revenue will increase from the current level of $2,062,284 to $3,0193,89 by the end of the projected year five. After adjusting appropriately, for increased cost to produce sales and taxes on the increased income, we will increase from the present level of $309,665 to $453,281 by the end of year five. The Current Assets accounts of Cash, Accounts Receivable, Inventory, and Prepaid Assets are also projected to increase. Cash is projected to increase from the current amount of $10,525 to $18,883 by the end of the projected year five. Accounts Receivable will increase from the current amount of $27,000 to $46,646 by the end of year five. As a result of increased sales the extra cash will be used supplemented by loans to purchase new equipment and fixed

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