FIN 571 Week 4 Individual Assignment An
Pro Forma Statements
Mutaher Hussain
FIN/571
November 30, 2014
Susanne Elliott
Introduction
It is essential for industries to be capable to evaluate their economic and financial condition and enhance their approaches to meet the market demands. The task of financial analysts is to utilize diverse estimating and capital budgeting procedures to justify the company’s behavior and be responsible for forthcoming decisions. A balance sheet is one of the most effective and highly used cash flow examination tool used by financial analysts. General and financial managers can both take advantage of the forecasting financial statements. Proforma statements help financial managers to formulate plans accordingly, in terms of the business’s financial requirements. How much financing is desired and when it is necessary can be decided by obtaining an estimate of the company’s future balance sheet accounts and income statement.
Short term and long term strategies of XYZ Company
XYZ Company should take benefit of short term and long term prospects and employ these into its financial policies. Most importantly, XYZ Company should make a plan to control its working capital. The working capital is the quantity of cash a business has to run its trade. Proper management of the company’s working capital will benefit the company to meet its financial objective and develop in the future. XYZ Company’s financial statements demonstrate that overhead expenses and selling expenses must be decreased. Though, the net income for XYZ Company has been progressively growing, this is a beneficial indication for the company’s future growth.
The five year prediction of XYZ Company’s sales displays an upsurge of 15%, 10%, 25%, and 50% in each of the years. The gross profit also improved from $697,428 to $3,494,500 over the five year period. Revenue will increase twice in year 2013, after that revenue will increase 10% in the coming year. Cost of revenue will be based on sales percentage
Mutaher Hussain
FIN/571
November 30, 2014
Susanne Elliott
Introduction
It is essential for industries to be capable to evaluate their economic and financial condition and enhance their approaches to meet the market demands. The task of financial analysts is to utilize diverse estimating and capital budgeting procedures to justify the company’s behavior and be responsible for forthcoming decisions. A balance sheet is one of the most effective and highly used cash flow examination tool used by financial analysts. General and financial managers can both take advantage of the forecasting financial statements. Proforma statements help financial managers to formulate plans accordingly, in terms of the business’s financial requirements. How much financing is desired and when it is necessary can be decided by obtaining an estimate of the company’s future balance sheet accounts and income statement.
Short term and long term strategies of XYZ Company
XYZ Company should take benefit of short term and long term prospects and employ these into its financial policies. Most importantly, XYZ Company should make a plan to control its working capital. The working capital is the quantity of cash a business has to run its trade. Proper management of the company’s working capital will benefit the company to meet its financial objective and develop in the future. XYZ Company’s financial statements demonstrate that overhead expenses and selling expenses must be decreased. Though, the net income for XYZ Company has been progressively growing, this is a beneficial indication for the company’s future growth.
The five year prediction of XYZ Company’s sales displays an upsurge of 15%, 10%, 25%, and 50% in each of the years. The gross profit also improved from $697,428 to $3,494,500 over the five year period. Revenue will increase twice in year 2013, after that revenue will increase 10% in the coming year. Cost of revenue will be based on sales percentage
References: Parrino, R., Kidwell, D. S, & Bats, T.W. (Author) (2012). Fundamentals of Corporate Finance (2nd ed) Hoboken, NJ: Wiley: Cost of Capital [Video file]. Available from University of Phoenix website: http://edugen.wiley.com/edugen/courses/crs6420/simulations/Videos/Concept_Review_Video/cost_of_capital/cost_of_capital.html