...The Pro-forma income statement is provided for investors to gain insight on the future performance of Quintessential Pharmaceuticals, Inc. Our research analysis indicated a clear increase in the demand for generic and specialty drugs. According to Drug Trend Report, there is a 17.8% average increase in specialty drugs purchase. As the average increase in utilization of specialty drugs increases at an average rate of 6.8% (Drug Trend Report, n.d.). An aging U.S. population, a greater life expectancy with the assistance of increase healthcare expenditures will lead to a greater demand for specialty drugs (www.marketwatch.com). According to the breakeven analysis, the financial break-even point indicates the amount of financial risk is low for the organization. (Specialty Pharmaceuticals Market in US Trends and 2018 Forecasts Analysis, 2015). Business Strategy From the financial analysis, there is a...
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...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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...Riley Supply 1. Prepare one indirect cash flow statement (operating-investing-financing) for 2004-2005 and a second one for 2005-2006. Do not aggregate any accounts. 2. Calculate common-size income statement for each year. 3. Calculate all financial ratios (use “A Basis Set of Financial Ratios”) for each year. You will always be expected to have all ratios and cash flows statements for all years of data. Coming to class without all if these completed means that you are unprepared for quizzes and class discussions. 4. Identify the major factors influencing Riley’s cash flow. Use the cash flow statements together with the ratios and common-size statements. 5. What is the length of Riley’s cash conversion cycle? Does it take a long time for Riley to go from spending cash to receiving cash? Why? 6. What are the implications of Riley’s cash flow for the financing needs of the firm? Westmoreland Inc. 1. Examine the beginning financial statements (2005) and the pro forma statements (2006 projected) for Westmoreland (Exhibit 1). Do complete ratio, common-size income statement and cash flow statement analyses with these data. The pro forma statements reflect management’s opinion about what will happen in the future. Incorporated into these statements is their business plan. 2. What is Westmoreland’s condition in 2005? 3. What are the key assumptions that are built into Westmoreland’s pro formas? At this point, do not focus on what did happen in...
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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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...Student Project Activity – Week 1 A. Week 1: Section 1.0 Executive Summary B. TCOs Addressed: TCO 10: Given a description of a new business, new product, service or project develop, present and defend the budget. C. Project Activity Overview – Scenario / Summary: You have been asked to create a budget proposal for one of these businesses: Papa Geo’s Restaurant, The Cutting Edge Landscaping, or Wireless World Electronics Retail Store. This week you will begin working on the proposal by drafting the Executive Summary. Use the Budget Proposal Template.docx. D. Deliverables: Save the first paragraph of Section 1.0 Executive Summary Draft as YourName_Project_WK1.docx and upload to the Week 1 Project Dropbox. E. Project Tasks: Task 1: | Download the Budget Proposal Template.docx from DocSharing. | Task 2: | Download the Course Project Description.docx. from DocSharing. | Task 3: | Review the three different business scenarios. | Task 4: | Select the business for which you will create a budget proposal. | Task 5: | Draft the first paragraph of the Section 1.0 Executive Summary. | Task 6: | Save the Draft and submit to the dropbox. | F. Grading Criteria | Description | Suggested Points | The business is briefly described in one paragraph. | 3 | The business description is in your own words. | 3 | The business description appears in the Executive Summary section...
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...What is the purpose of a Pro Forma income statement? How would you use the information from the Pro Forma income statement? Provide an example. According to businesstown.com, Pro Forma income statements are “an important tool for planning future business operations. If the projections predict a downturn in profitability, you can make operational changes such as increasing prices or decreasing costs before these projections become reality.” Pro Forma income statements are used to let investors know a company’s operating results, conforming to investopedia.com, “Pro Forma financial statements take out one-time charges to smooth earnings.” In addition, “Pro-forma earnings describe a financial statement that has hypothetical amounts, or estimates, built into the data to give a "picture" of a company's profits if certain nonrecurring items were excluded.” (investopedia.com) The information from a Pro Forma income statement can be used through: * To give investors a clearer view of company operations - This applies to the nature of a business. investopedia.com explains that “Companies in certain industries tend to use pro-forma reporting more than others, as the impetus to report pro-forma numbers is usually a result of industry characteristics. For example, some cable and telephone companies almost never make a net operating profit because they are constantly writing down big depreciation costs.” (businesstown.com) But; * For companies that do not include cash charges...
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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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...Wireless World Budget Proposal For 2010-2015 BUSN-278 Fall 2010 Professor Rebecca Boling Annie Hogan DeVry University ------------------------------------------------- Table of Contents Section | Title | Subsection | Title | Page Number | 1.0 | Executive summary | | | 3 | 2.0 | Sales Forecast | | | 3 | | | 2.1 | Sales Forecast | 3 | | | 2.2 | Methods and Assumptions | 3 | 3.0 | Capital Expenditure Budget | | | 4 | 4.0 | Investment Analysis | | | 4 | | | 4.1 | Cash flows | 4 | | | 4.2 | NPV Analysis | 4-5 | | | 4.3 | Rate of Return Calculations | 5 | | | 4.4 | Payback Period Calculations | 6 | 5.0 | Pro Forma Financial Statements | | | 6 | | | 5.1 | Pro Forma Income Statement | 6 | | | 5.2 | Pro-Forma Cash flow Statement | 6 | | | 5.3 | Pro-Forma Balance Sheets | 7 | 6.0 | Works Cited | | | 7 | * * * * Wireless World is a retail store that sells strictly wireless products developed and geared towards busy individuals who need their product to match their on-the-go lifestyle. The products sold here include phones, notebooks, netbooks, eReaders, iPads, and other similar wireless products. The target demographic for Wireless World includes adults ranging from early twenties to late forties who lead very active and organized lifestyles. Our target market has an interest in wireless gadgets and the potential they hold. This store will be located in a large shopping center called Millenia...
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...Analyzing Pro Forma Statements FIN 571 Stacey Pitcher April 20, 2015 Analyzing Pro Forma Statements XYZ Company, Incorporated (“XYZ Company”) was incorporated in October 1st 2013 and started trading in early January 2014. XYZ Company specializes in growing and supplying organic foods in the Cambridge area in Massachusetts and over the last 12 months has had significant success in penetrating the Cambridge market especially as the benefits of organically produced foods gain traction in the New England area and throughout the United States. Overall, demand for organic foods in the US grew by an average of 11% in 2014 and based on a detailed analysis of the Cambridge market, XYZ Company expects demand to closely track this overall growth rate not only in 2015 but over the next five year period. Initiative The initiative that XYZ Company has decided to implement is a corporate expansion to meet the projected increased demand for organic foods in the Cambridge area over the next five year period. Based on a detailed analysis of the Cambridge market, XYZ Company expects demand to grow by 10% annually over the forecast period. To meet this projected demand, XYZ Company intends to expand its business by taking the following specific steps; 1. Increase its total assets including working capital needs to build up the capacity required to meet the expected increased sales; and 2. Source sufficient funding to finance the planned capacity expansion through a mix of affordable...
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...------------------------------------------------- Jones Electrical Distribution In the past several years, Jones Electrical Distribution is profitable, but it is in the condition of cash shortage. With its 2007’s sales go up, Jones need borrow more money to help its rapid development. Then he got a maximum line of credit $350,000. With our analysis report, we help Jones to choose whether to take advantage of 2% trade discount, we can observe that Jones’credit line will be $318,000 without discount, not $387,000 with this 2% discount. Problems Statement Jones Electrical Distribution’s current condition is not only cash shortage but also under rapid sales grows’ effect. Why this profitable firm needs to increase its borrowing, what kinds of strategies Jones Electrical Distribution will choose, and what his estimate of the loan needs is. These are the problems we will talk about bellows. Data Analysis 1. According to the balance sheet and sources and uses statements (appendix 1), we can see that the line of credit payable increases every year, because Jones needs more and more funds to support the needs of working capital and invest to long-lived assets such as plant, property and equipment to support higher sales levels. We can see that Jones used its profits (changed in Net Worth), cash and short-term debt to support the needs of working capital and the increase of inventory (probably to support higher sales levels). The reduction in long-term debt is a use of funds...
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...The Cutting Edge Landscaping Budget Proposal For 5 Years ------------------------------------------------- Table of Contents Section | Title | Subsection | Title | Page Number | 1.0 | Executive summary | | | 3 | 2.0 | Sales Forecast | | | 3 | | | 2.1 | Sales Forecast | 3 | | | 2.2 | Methods and Assumptions | 3 | 3.0 | Capital Expenditure Budget | | | 4 | 4.0 | Investment Analysis | | | 4 | | | 4.1 | Cash flows | 4 | | | 4.2 | NPV Analysis | 5 | | | 4.3 | Rate of Return Calculations | 5 | | | 4.4 | Payback Period Calculations | 5 | 5.0 | Pro Forma Financial Statements | | | 6 | | | 5.1 | Pro Forma Income Statement | 6 | * 1.0 Executive Summary 1.0 Executive Summary * * The Cutting Edge Landscaping is a business that offers specialized crafting and manicuring of lawns in the Miami, Florida area. We bring experience and the option for our customers to customize the lawn of their dreams with the help of our design team. Products offered include: regular lawn servicing, water gardens, fountains, local and exotic plants and flowers. We will give our customers the best curb appeal in Miami. Our professionals will also service light irrigation repair and cleanup post severe inclement weather. * * In the budget plan, we will detail how we intend manage our cash flows while increasing our clients and build a profitable business. * * This budget reflects the operational growth for the first...
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...Case Study #2 Tulsa Memorial Hospital CPT Hoffman and MAJ Ochoa 1. Using the historical data as a guide, construct a pro forma (forecasted) profit and loss statement for the clinic’s average month for all of 2014 assuming the status quo. With no change in volume (utilization), is the clinic projected to make a profit? The below pro forma profit and loss statement states that the clinic is currently operating at a loss of $3,173 per month, considering that subtraction of fixed and variable costs. The contribution margin per month totals $48,138 or divided out equals to $35.67 per visit. The hospital is not sustaining itself at this point or even paying for its fixed costs. Pro Forma Average Month: | | | | | | | | Number of visits | | 1,350 | | | | | Net revenue | | | $54,888 | | | | | Salaries and wages | | $13,542 | Physicians fees | | 18,000 | Malpractice insurance | | 3,215 | Travel and education | | 602 | General insurance | | 843 | Subscriptions | | 0 | Electricity | | | 1,077 | Water | | | 139 | Equipment rental | | 105 | Building lease | | 12,500 | Other operating expenses | | 8,038 | Total operating expenses | | $58,061 | | | | | Net profit (loss) | | ($3,173) | | | | | Gross margin (%) | | -5.8% | Total Revenue | | $ 54,888.00 | Total variable costs (1350*5) | $ 6,750.00 | Total CM | | | $...
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...Integrated Financial Analysis Urban Outfitters URBN Stephanie Stowers Table of Contents Executive summary 3 Company Overview 7 HISTORICAL FINANCIAL STATEMENT ANALYSIS 14 RATIO ANALYSIS 16 THREE-YEAR PRO-FORMA 18 SUMMARY OF VALUATION 20 MD&A AND TRANSPARENCY 22 CORPORATE GOVERENCE 22 CONCLUSION 24 REFERENCES 25 Executive Summary Urban Outfitters, Inc. is a lifestyle retail company that operates retail-clothing stores. It operates through two reportable business segments: Retail and Wholesale. The Retail segment consists of Urban Outfitters, Anthropologie, Free People, Terrain, Leifsdottir and BHLDN brands, whose merchandise is sold directly through stores, catalogs, call centers and web sites. The Wholesale segment consists of two divisions: Free People and Leifsdottir. The Free People division designs, develops and markets young women's contemporary casual apparel. The Leifsdottir division designs, develops and markets sophisticated women's contemporary apparel, including dresses, tops, bottoms, as well as shoes and accessories. The company was founded by Richard A. Hayne and Scott A. Belair in 1970 and is headquartered at 5000 South Broad Street, Philadelphia, Pennsylvania 19112-1495, Phone: 1- 215-454-5500. Urban Outfitters is an Apparel Retailer in the consumer services sector with a projected Revenue of $2,441,876.80, Net Income of $265,353.48 and an estimated...
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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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...Financial Analysis and Forecast Report Drexel D Brown American InterContinental University Financial Management (FINA310-1602B-02) 5/8/2016 Financial Analysis and Forecast Report Introduction In the financial aspect of accounting and forecasting many mathematical computations are utilized to form data sheets that assist managers and shareholders evaluation of the firm’s current/future financial position. Financial data is also analyzed to allow internal and external comparison of the past and present performances to weigh future decisions on profitability potential against uncertainty and or risk. The financial data provided by Micro Chip Computer Corporation will be analysis to weigh past performances and determine future profitability. Financial Data Chart, Calculations, and Analysis In determining Micro Chip’s year-to-year percentage annual growth total net sales per fiscal period, we utilized the equation: (Next Year’s Net Sales – Last Year’s Net Sales) / Last Year’s Net Sales * 100. MICRO CHIP COMPUTER CORPORATION'S FINANCIAL DATA ANALYSIS | Fiscal Yrs. | FY2008 | FY2007 | FY2006 | FY2005 | FY2004 | Net Sales average | Net sales | $8,334 | $6,141 | $9,181 | $11,933 | $11,062 | $9,332 | Growth/Decline (rounded) | 36% | -33% | -23% | 8% | ---- | | Calculations: (2008 net sales of $8,334 - $6,141 of 2007 net sales) = $2,193/$6,141*100 = .357 or 36% growth in this operating period; 6,141 - 9,181/9,181 = -.3311 or -33% 2007-2006 depicts a decline...
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