Preview

Pro Forma

Better Essays
Open Document
Open Document
1365 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Pro Forma
FINANCIAL STATEMENT OVERVIEW
ASSIGNMENT # 3

Members: Zhishuang Liu Siyi Shang Qihui Wu Anqi Li
Context

1 Assumptions
(1) Interest Income grows at a certain rate every year.
(2) There is no issue of new shares
(3) There are tendencies of the ratios, such as net interest income margin, net income margin, return on asset, return on equity, etc., that could be used for forecasting.
(4) Simplify the accounts of Balance Sheet, Income Statement and Cash Flow Statement.

2. I/S Pro Forma
1.1 Interest Income

Graph 2-1 Interest Income

Graph 2-1 shows the total interest income of Orrstown from year 2006-2013. As it takes a longer time for small financial institutions to react on the financial crisis, the negative interest income of orrstown showed in year 2012 and 2013. Because there would be little chance of any big financial crisis in the following five years, it is reasonable to take outliers. Take the average of the annual growth rate of total interest income from 2006 to 2011, and use it as the annual growth rate of total interest income for the nest five years.

1.2 Net Interest Income Margin

Graph 2.2 Net Interest Income Margin

As is shown on Graph 2.2, the net interest income margin grew steadily from 2006-2013. Get the geometric average and Use the result as the predictor of net interest income margin for year 2014-2018.

According to the predictive values of interest income and net interest income margin, get the values of net interest income (interest income* net interest income margin) and interest expense (interest income- net interest income).

Graph 2.3 Int and Fee on Loans/ Int Income

Graph 2.4 Sub-accounts/ Int Income

Graph 2.5 Interest on deposits/ Interest Expense

Graph 2.6 Sub-accounts/ Interest Expense

Based on Graph 2-3 – Graph 2-6, consult proportions of each sub-account of interest income and interest expense in the past years and get the

You May Also Find These Documents Helpful

  • Powerful Essays

    Profitability ratios measure the company 's success over a period. These ratios help investors assess the company 's ability to repay loans. Three important ratios to assess are the profit margin ratio, the gross profit rate, and…

    • 1628 Words
    • 7 Pages
    Powerful Essays
  • Satisfactory Essays

    3505 M2 Fall 2014 Soltn

    • 3355 Words
    • 15 Pages

    e. Apply RAROC to the data on the above loan. Calculate each component of RAROC.…

    • 3355 Words
    • 15 Pages
    Satisfactory Essays
  • Better Essays

    The concept of forecasting financials is as much about calculating the data is its about understanding the data. A simple concept of calculating the larger perspective for a simple index can be the keys to understanding the direction of the company. Calculating that direction will help those who associate with the company as owners, lenders, and board members to know if the company is credit worthy, turnaround on accounts receivables, and the long term financial health of the company.…

    • 987 Words
    • 4 Pages
    Better Essays
  • Satisfactory Essays

    Financial statement information follows as of the end of each year. Compute the profit margin ratio for 2011.…

    • 685 Words
    • 4 Pages
    Satisfactory Essays
  • Powerful Essays

    d) Interest Coverage ratio for 2011 (Utilize net interest expense) 7,453 / 866 = 8.61x…

    • 1947 Words
    • 8 Pages
    Powerful Essays
  • Better Essays

    Xacc 280 Final

    • 1225 Words
    • 5 Pages

    Liquidity, solvency, and profitability are the three characteristics that will be used to see a company’s success. A simple financial statement will not demonstrate the company’s power because it is a general idea of the company’s position and does not display business developments. The company’s business developments are vital for potential investors because they determine vertical and horizontal analysis. These characteristics are also used to define the ratio analysis. Ratio analysis is dividing two numbers to get a number of percentages that can be used to compare companies in the same industry. Examining the entire company’s financial trends for a set period of time, an investor will see a factual description of the company’s financial condition. This is the financial analysis an investor desires to review prior to spending money.…

    • 1225 Words
    • 5 Pages
    Better Essays
  • Satisfactory Essays

    Elis Printing Case

    • 492 Words
    • 2 Pages

    Net increase ( I - II ) | -25,260 | -17,460 | 5,340 | -39,190 | 58,340 | -81,780 | | | | | | | | | | IV. Beginning Cash | | | 30,000 | 4,740 | -12,720 | -7,380 | -46,570 | 11,770 | V. Ending Cash ( III + IV ) | 4,740 | -12,720 | -7,380 | -46,570 | 11,770 | -70,010 |…

    • 492 Words
    • 2 Pages
    Satisfactory Essays
  • Better Essays

    It is important for every internal and external stakeholder in a company to understand if a company is being profitable or not. A company that is failing or not growing can often come from poor financial planning and analysis. The difference between failure and success come from analyzing financial information. Analyzing financial information such as balance sheet, income statement and cash flow statement companies can predict and control their future. Financial statements are the primary documents used in reporting financial information to banks, investors, suppliers and others. Along with financial information, financial ratios can help stakeholders evaluate the business performance. They can deliver a better understanding of a variety of things going on in the company. Financial information and ratios are important tools to help predict the growth of a company and to compare them to other companies.…

    • 2269 Words
    • 7 Pages
    Better Essays
  • Satisfactory Essays

    Acc 403 Case

    • 442 Words
    • 3 Pages

    The Contribution Margin Ratio for E-Company is 79%. I calculated this by dividing the contribution margin amount by total sales and then checked it by dividing the total variable costs by the unit price. The Gross Profit Ratio for E-Company is 67%. And the Operating Income Ratio is 51%.…

    • 442 Words
    • 3 Pages
    Satisfactory Essays
  • Powerful Essays

    Verizon vs Att

    • 1488 Words
    • 6 Pages

    This section will discuss ratio analysis for the following ratios: current ratio, quick (acid-test) ratio, average collection period, debt to assets ratio, debt to equity ratio, interest coverage ratio, net profit margin, and price to earnings ratio. Depending on the end user which ratio carries more importance, however, all must be familiar with ratio analysis. Details on each company's performance for each of these areas can be found in the attached ratio analysis worksheet.…

    • 1488 Words
    • 6 Pages
    Powerful Essays
  • Satisfactory Essays

    f. Calculate the total debt ratio and long-term debt ratio for each year. (Round your answers to 2…

    • 4183 Words
    • 44 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Acc291 Reflection Week 4

    • 460 Words
    • 2 Pages

    Ratio analyses are used by companies to gather information in a company’s financial statement. Ratios and numbers from a company’s current year are compared to previous years and sometimes even the economy to judge the company’s performance. There are several ratios such as profitability ratios, liquidity ratios, activity ratios, leverage ratios and market ratios that can be used to calculate financial information. In vertical analyses, each entry of the assets, liabilities and equities in a balance sheet is represented as a proportion of the total account of the financial statement. In horizontal analysis a company’s ratios are compared in the financial statements over a period of time. Horizontal analysis can be used from revenues to earnings per share.…

    • 460 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    Answer: Since the interest rate has been 4 percent for the last ten quarters, then IS curve I equals 8,800 - 25(4) - 25(r) - 25(r) - 25(4) - 20(r) - 20(4) - 20(4) - 15(4) - 15(4) - 10(4) = 8,000. IS curve II equals 8,400 - 5(4) - 5(4) - 5(4) - 5(4) -…

    • 2457 Words
    • 10 Pages
    Powerful Essays
  • Satisfactory Essays

    All the three bases are used to find the return earned with respective to sales as well as investment made. When the profit is compared with sales, it is called as the net profit margin. When the profit is compared with assets, it is called as return earned on total investment and when profit is compared with stockholders’ equity, it is called as return on equity. All these are profitability ratios and help to analyze the profitability at a particular period with respect to various bases. The trend in these ratios may not always move in the same direction. For example, return on assets may increase from one period to another, but not necessarily the return on equity. A cause for this may be due to change in capital structure and mix of debt and equity.…

    • 460 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Rate and Volume Analysis

    • 682 Words
    • 3 Pages

    Rate/Volume Analysis The following table presents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected our interest income and interest expense during the periods indicated. Information is provided in each category with respect to (1) the changes attributable to changes in volume (changes in volume multiplied by prior rate), (2) the changes attributable to changes in rate (changes in rate multiplied by prior volume), and (3) the net change. The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.…

    • 682 Words
    • 3 Pages
    Good Essays