...Analyzing Pro Forma Statements FIN 571 September 11, 2014 Introduction This paper is the analysis of pro forma financial statements. Pro forma statements are forecasted or projected financial statements as a result of financial planning. The financial statements are based on the inputs and assumptions such as 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. This company decided to invest in the purchase of new equipment to help increase sales. The resulting projections are the focus of this paper. Analysis of pro forma statements will determine if the company requires any external financing to support its planned initiatives. Assumptions supporting each line for forecasted statements This paper covers a five year plan with the basic assumptions for the pro forma statements that the equipment purchase initiative will increase sales by 12% for the first two years, and then 5% for the next three years. The cost of sales including purchases, production and labor, and ending inventory will vary with sales, while beginning inventory comes from prior year ending inventory. Depreciation will increase by $40K for the additional equipment in year one. Fixed assets will not vary from year to year, except for $200K increase in equipment expected in the first year to support sales growth. Retained earnings for the prior year comes from previous year, and...
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...Orrstown Financial Analysis Report -----Pro forma forecasting Contents 1 Intoduction 1 2 Balance Sheet Pro Forma 2 2.1 Asset Forecasting 2 2.2 Liabilities Forecasting 4 2.3 Equity 5 3 Income Statement Pro Forma 6 4 Statement of Cash Flow Pro Forma 11 5 Financial Ratios Pro Forma 12 Abstract Based on the former two analysis reports, this assignment focuses on forecasting financial statements for 2013-2017. Every subject in Balance Sheet, Income Statement, and Statement of Cash Flow is predicted by using pro forma analysis. Before that, several assumptions are made for the convenience of forecasting. Furthermore, financial ratios for the upcoming five years are also calculated with the numbers provided in the three pro forma financial statements. Key words: Pro forma, financial statements forecasting 1 Intoduction The method that is using in this assignment is called pro forma financial analysis. Pro forma is the forecast financial statements based on either anticipated future events or potentially changing business performance in upcoming periods. This is in contrast to regular financial statements that are financial summaries on a business's past. Businesses use pro forma statements to assist in their planning activities, both short term and long term. Normally, a pro forma forecasting will cover three to five years into the future; and five-year pro forma can provide a fuller view into how a business might fare under various assumptions. The...
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...Objective……………………………………………………….…………1 Company Background……………………………………………………1 Ratio Analysis…………………………………………………………….1 Pro Forma Analysis……………………………………………………….3 Sensitivity Analysis……………………………………………………….3 Recommendations for Management………………………………………4 Summary of Case Study…………………………………………………..4 Appendix………………………………………………………………….5 Objective This paper will seek to analyze the financial statements of the O.M Scott & Sons Company during the years 1957-1961, in order to provide readers with a thorough understanding of the various factors that may influence the future success of this business. Additionally, recommendations based on an analysis of their financial statements will be offered for the management of O.M Scott & Sons to implement in the following years. Company Background Headquartered in Ohio, the O.M Scott & Sons Company has operated in the lawn care industry since 1868 and has grown into a successful business with a positive outlook. In fact, management within the company set an ambitious goal of increasing annual growth rate in sales and profits to 25% in the year 1959. According to management, one of the main factors limiting O.M Scott & Sons companies’ growth was the inability for their dealers to carry a sufficient amount of stock for customers. However, company officials feel that their use of a trust receipt program and other decisions will benefit the company’s current financial standing. Ratio Analysis An evaluation of the profitability, turnover control, and...
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...Analyzing Pro Forma Statements Kaleah S. Daniels FIN/571 Analyzing Pro Forma Statements Pro forma statements are prepared to forecast financial results that are based on anticipated future projects or events. It is design to show projection of revenues, cash flows deducting the estimated expenses or costs for a particular business plan. Pro forma statements assist financial managers to plan accordingly, in terms of the company’s financial needs. How much financing is needed and when it is needed can be determined by acquiring an estimate of the company’s future balance sheet accounts and income statement. Hence, the purpose of the Pro forma analysis is to forecast the company’s financial statements under a particular condition (Parrino et al., 2012). XYZ Company, INC. is planning for business expansion in the coming years. This paper will discuss and analyze pro forma statements of five year projections created. The company’s income statement displays that the break in the current year occurred when; “Net sales equals $1,747,698, Gross profit equals $697,428 and Total operating expenses equals $285,850” (UOP, 2014). XYZ’s “management expects sales to increase by 10 percent for the coming year. Assuming that the financial statement accounts vary directly with changes in sales and that management has no financing plan at this time” (Parrino, 2012, pg. 613). Using the data from the current statement (income & balance sheet) we are able to calculate, 1) Projected...
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...and Development (R&D) Issues | | |Management Information Systems (MIS) Issues | OBJECTIVES After studying this paper, you should be able to do the following: |1. |Explain market segmentation and product positioning as strategy-implementation tools. | |2. |Discuss procedures for determining the worth of a business. | |3. |Explain why pro forma financial analysis is a central strategy-implementation tool. | |4. |Explain how to evaluate the attractiveness of debt versus stock as a source of capital to implement strategies. | |5. |Discuss the nature and role of research and development in strategy implementation. | |6. |Explain how management information systems can determine the success of strategy-implementation efforts. | PAPER OVERVIEW Strategies have no chance of being implemented successfully when organizations do not market goods and services well, when firms cannot raise needed working...
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...Describe How to Compile an Operating Budget Calisse R. Browne Regis University Abstract This paper describes how to compile an operational budget from the article “Hospital Nursing Costs, Billing, and Reimbursement” including the relationship of the budget to the four major financial statements and GAAP principles. Compile an Operational Budget from the article “Hospital Nursing Costs, Billing, and Reimbursement” An operational budget for a hospital nursing department forecasts this unit’s contribution to the income statement (Gapenski, 2012, p. 234). The operational budget has volume assumptions, revenue assumptions, cost assumptions, and a pro forma profit and loss statement. For nursing departments, volume assumptions drive variable cost assumptions such as labor. The revenue assumptions and the pro forma profit and loss statement typically are not applied as nurses are billed as a fixed cost as part of the hospital’s room rate. Typically, the volume assumptions are based on patient location and tied to the Diagnosis Related Group (DRG) weighting, which distributes nursing care expenses across three categories of care such as routine, intermediate, or intensive (Welton, Fischer, DeGrace, Zone-Smith, 2006). The study documented in “Hospital Nursing Costs, Billing, And Reimbursement” found patient location a less accurate indicator of nursing costs when compared to nursing intensity, indicating the patient location methodology does not link nursing care costs...
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...are familiar with for this paper. Note: Do not use a company from a previous assignments or discussions. Use the Internet or Strayer Library to research the following components of the global company that you have chosen: • - Company Profile (History & Analysis) • - Product(s) • - Financial Status • - Market Position • - Analysis of current global operating environments • - Integrated marketing communication (IMC) Strategy • - Strengths and Weaknesses Analysis • - Sustainable Competitive Advantage(s) enjoyed by the firm • - Sources of funds for the project • - Pro-Forma Balance Sheet & Income Statement for five (5) years • - Cash-Flow Statement Note: You may also use the following resource for your research:§Financial profiles for global companies: (http://news.morningstar.com/stockReturns/CapWtdIndustryReturns.html) Write an eight to ten (8-10) page paper in which you: 1. 1. Choose a country into which the company you selected may expand. Note: Ensure that the country you chose is currently not doing business with the selected company in any capacity (e.g., exporting, FDI, or contract manufacturing). 2. Develop a brief profile of the country that you have chosen. The summary should include: a) Geographic and historical data regarding international business b) Political and legal environment for conducting international business c) Business customs and practices d) Economic environment e) Socio-economic analysis...
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...Phuket Beach Hotel Case Analysis Phuket Beach Hotels (PBH) management has been approached by Planet Karaoke Pub (PKP) to lease a vacant space within the hotel. Management is intrigued by the offer because the space is currently not being used. Due to the recent success of karaoke pubs management is also considering creating a pub which they would call Beach Karaoke Pub (BKP). Finally, there is a possibility that the best option will be to seek an entirely different user type where the Karaoke Pub crowd may alienate 25% of the hotel patrons with young children. This paper seeks to use capital budgeting analysis tools; net present value, internal rate of return, equivalent annual annuity and profitability index to definitively say which project has the best financial viability. The data used to generate the key decision metrics were provided by PBH management and are as follows. Planet Karaoke Pub -Four-year lease, monthly 170,000.00 baht for the first 2 years and 5% increase 2 additional years -Upfront costs to PBH range between 770,000.00 baht and 1,000,000.00 baht with zero salvage -Pro-rata allocation of the common area maintenance fee is 55,000 baht -10,000.00 baht will be charged for common area maintenance fees Beach Karaoke Pub -Up-front investment will range between 800,000.00 baht and 1,200,000.00 baht -Furniture, Fixtures and Equipment will cost 900,000.00 baht -Estimated total sales in the first year are 4...
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...BUDGETING Introduction and main points A comprehensive (master) budget is a formal statement of management’s expectations regarding sales, expenses, volume, and other financial transactions of the organization for the coming period. Simply put, a budget is a set of pro forma (projected or planned) financial statements. It consists of a pro forma income statement, pro forma balance sheet, and cash budget. A budget is a tool for both planning and control. At the beginning of the period, the budget is the plan or standard; at the end of the period it serves as a control device to help management measure its performance against the plan so that the future performance may be improved. International Paper, a large forest-products company, uses key budgets, including sales and expense projections, as the starting point for the developing business strategies. Prior to development of the budget, certain questions must be asked and certain assumptions must be made. What will be the inflation rate be? Where is the competition headed? Will suppliers increase prices? Will costumer tastes change? You also must explore the financial alternatives available for you. For instance, what will occur if you raise your selling price? What will be the effect if one variable (e.g., advertising) is changed? It is important to realize that with the aid of computer technology, budgeting can be used as an effective device for evaluation of “what-if”...
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...Final Exam – August 2013 Part 1 – Analysis of Netflix 1. and 2. Brief Overview of Netflix’s Business Model In order to better understand Netflix’s business model, there are 3 topics discussed at here: 1) the current business model analysis based on Alex Osterwalder’s methodology; 2) the history of Netflix’s business model which will give us more insights of what happened to Netflix in the past, and where it will go in the future; 3) the challenges and issues of current business model. Current business model The following is the current business model canvas of Netflix. As we can see above, Netflix’s revenue comes from subscription fee. The quality of video content is very important for success of Netflix’s business model. Netflix also extend the span of devices which support streaming. The growth of international subscription is one of the key success factors measured by wall-street. History of Netflix’s business model At the same time, to understand the history of Netflix’s business model is also very important. Figure 1Numbe of Subscription Figure 1Numbe of Subscription At the time of 1997 when Netflix was found, it offers online movie rentals. At 1999, Netflix launches the subscription service, offering unlimited rentals for one low monthly subscription. Before 2007, Netflix uses mail to delivery DVD to customers. At 2007, Netflix introduces streaming, which allows members to instantly watch television shows and movies on their personal computers....
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...small business case. As mentioned previously, these steps provide candidates with a systematic approach for addressing a case involving business-level strategic issues. Applying this approach effectively is one of the important competencies that candidates will learn in the CMA Canada Professional Programs. The starting point for solving a business problem is to analyze the current situation and identify the problems that need to be addressed. A major component of the situational analysis is to take a close look at the environments within which an organization finds itself. One of the methods commonly used in such an environmental analysis is “SWOT” (an acronym for Strengths, Weaknesses, Opportunities and Threats), which considers the strengths and weaknesses in the internal environment as well as the opportunities and threats in the external environment. Candidates can refer to the required reading Situational Analysis Tools mentioned below for more information on how to go about doing a SWOT analysis. The next major step is to identify the issues and analyze various alternatives for addressing the major issues. In this case, a shortage of available cash is a major issue and needs to be addressed. Therefore, one of the main topics for this assignment is cash flow management, i.e. managing the movement of money into and out of a business. Many supervisors and/or managers who oversee functions such as accounts receivable, accounts payable, and finance are directly involved in cash...
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...1.1 ORIGIN OF THE TERM PAPER This term paper has been made as a part of our course Security Analysis and Portfolio Management (Course code # 4242), Mrs. Jafrin Sultana has assigned us this term paper in order to gain some practical knowledge about how to conclude on investment decision and analysis on the basis of various valuation approaches. The perspective of such a term paper is to make us familiar with the key factors of security market that affect the users in decision making. For this purpose we have used the annual reports of Bangladesh lamps ltd, and try to analyze and understand the overall capital market components according to our best effort. 1.2 OBJECTIVES OF TERM PAPER This term paper is based on “financial analysis & stock valuation of Bangladesh lamps ltd”. The objective of this term paper is to provide present situation of the Bangladesh lamps ltd, corporate structure, industry performance, stock valuation, SWOT analysis, ratio and risk analysis and financial statement analysis of the company. More precisely we can identify the objective of this report as follows: * To provide the overall industry performance within our selected industry * To acquire experience of a real organization to supplement theoretical knowledge. * To know about how the academic issues taught in our educational institutions come to practical ground in an organization. * To get familiar with the organizational structure and financial aspect of our selected...
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...Note: What I'm trying to make you do is THINK! To read things carefully. To make judgements for yourself without your parents/teachers telling you what to do. This is an INDIVIDUAL project and therefore, anyone who cheats will be given an F in the course. Marine Corp. slogan: The weak quit when they experience pain, the strong quit only when the mission is accomplished. Hawaiian: ho'oikaika Collaborating with Others: * I would like to know if we can work on the case with another student to make things a bit easier and more productive, but still hand in separate copies. If you wish to discuss the case with another student that's fine. However, if you are "borrowing his spreadsheet" and modifying it slightly and/or "lifting his analysis" but putting it in your own words the answer is NO!! It's always easier to work in a group but there is too much free ridership. I HATE remoras (a tiny fish that gets a free ride and free eats but sticking to the belly of a shark). Also, you already know the grade you'll be getting if your report and spreadsheet resemble another student's. I don't make idle threats. In Class Example: * I was wondering whether you were going to post a completed version of the Financial Planning Spreadsheet on the net. As far as posting a completed version of the Financial Planning Spreadsheet on the net, it is already in your Financial Modeling book written by yours truly on page 83. Errata Update: * On page 1, towards the bottom of the page...
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...The Institute of Chartered Accountants in Australia GAAP-based financial reporting: measurement of business performance charteredaccountants.com.au Professor Stephen Taylor, The University of New South Wales, Sydney, Australia The Institute of Chartered Accountants in Australia The Institute of Chartered Accountants in Australia (the Institute) is the professional body representing Chartered Accountants in Australia. Our reach extends to more than 53,000 of today and tomorrow’s business leaders, representing some 43,000 Chartered Accountants and 10,000 of Australia’s best accounting graduates who are currently enrolled in our world-class post-graduate program. Our members work in diverse roles across commerce and industry, academia, government, and public practice throughout Australia and in 107 countries around the world. We aim to lead the profession by delivering visionary thought leadership projects, setting the benchmark for the highest ethical, professional and educational standards and enhancing and promoting the Chartered Accountant brand. We also represent the interests of members to government, industry, academia and the general public by actively engaging our membership and local and international bodies on public policy, government legislation and regulatory issues. The Institute can leverage advantages for its members as a founding member of the Global Accounting Alliance (GAA), an international accounting coalition formed by the world’s premier accounting...
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...Analysis of Financial Statements (MBA) Project Instructions Project writing is not a difficult task at all. However, it is an art by which the writer represents his point of view in a way that it looks professional, clear and comprehensive, and finally leaves a long lasting impression on the reader. Ethics of project writings: Project writing has some ethics which must have to be followed by the writer in order to make a professional project. Emphasis on these ethics will make you learn how to write a project in a professional manner. Ethics of project writing include making a main page, writing a preface, giving an acknowledgement, making a table of contents, putting executive summary, giving an introduction to the project, mentioning the contents of the project, concluding it, including all the tables and annexure, and finally writing a bibliography. What this project involves: The idea is to concentrate on doing a full analysis of one firm. Since I suspect that you may have other courses or jobs, what is required here is somewhat less than a full analytical workup. You will be applying some of the financial principles we have discussed in class. A comprehensive outline is given below to make the project. 1. Select a company of your choice as a first step and apply principles that are mentioned below. (I understand that some data will not be available for the firms. However, you have to assume missing figures based on your understanding and our class discussions...
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