Analyzing Pro Forma Statements Essay

Financial statements that are prepared by a caller-out to consider the set up of potential activity is considered a pro forma statements. A financial statement shows the imageed or forecast of operating results and balance sheet, and statement of cash flows. The company XYZ Company Inc. is planning to expand their company in the next louvre years. This paper will review and discuss XYZs Companys five year plan to expand to their organization.The XYZ Companies pro forma income statement is projected for the next five years which accounts for a 10% increase in gross gross sales for each of the five years. Financial managers use Proforma statements to assist financial managers to plan accordingly in terms of the companys financial needs. By acquiring the companys future income statement and balance sheets, managers erect determine how much financing is needed and when it is needed. The Proforma analysis has become the proven tool that can be instrumental for general managers in th e planning of employment intensities, inventory and problem solving issues. Proforma can also be used for more than still a forecasting tool. It can also be used for creating mid-stream corrections, evaluate variances, gauge weaknesses, strengths and evaluating performance during the budgeting period.By forecasting Proforma statements are created to predict balances at a certain date followed by combining them with a financial statement format. Acquiring the forces that influence them, one can determined how account balances are forecasted and project how the accounts may be influenced. The following is used to illustrate the ProFormas five year projection process for XYZs Company.Revenue will increase double in the year 2011 and afterwards continue to increase 10% in the next year. Cost of revenue will be based on aggregate sales percentage. Presented is the Performa statement of the organization for the next five years. XYZ Company Inc. 20112012201321042015It has been establishe d that in the above Proforma balance sheet one has assumed that current obligation and current asset has increased in the ratio of sales. In addition, the company has taken on a loan to meet the capital expansion as well as working capitals needs.ReferenceUniversity of Phoenix, (2015) Analyzing Pro Forma Statements retrieved from https//newclassroom3.phoenix.edu/Classroom//contextid/OSIRIS44656217/context/co/view/activityDetails/activity/53c06956-87e9-4050-8ecc-815e914705e0/expan