BUS 400 Project Guidelines and Rubric

1

24-Month Pro Forma Financial Projection

Rosa Ortiz

02/14/2026

Income Statement

Table 1

Income Statement: Previous Fiscal Year and 24-Month Projections

Income Statement	Previous Fiscal Year	24-Month Projections
Sales	$5,000,000	$7,800,000
Cost of Goods Sold	$3,000,000	$4,290,000
Gross Profit	$2,000,000	$3,510,000
Selling Expenses	$800,000	$1,100,000
Administrative Expenses	$600,000	$750,000
Total Operating Expense	$1,400,000	$1,850,000
Income from Operations	$600,000	$1,660,000
Other Income	$50,000	$60,000
Income Before Tax and Interest	$650,000	$1,720,000
Other Expense (Interest)	$100,000	$120,000
Income Before Income Tax	$550,000	$1,600,000
Income Tax Expense (25%)	$137,500	$400,000
Net Income	$412,500	$1,200,000

Explanation of Assumptions

The 2-year forecasts are anchored on the previous success of the firm in the previous financial year and the growth that is likely to be experienced following the introduction of a new product. It is projected that the sales will increase by approximately 56 percent over a duration of two years, as a result of increased market demand, expansion of the customer segments, and better marketing techniques. Industry comparison reveals that an annual growth of up to 20-30 percent is characteristic of a company with new products, and this suggestion is rather plausible (Damodaran, 2023).

Cost of goods sold(COGS) is approximated to be 55 percent compared to 60 percent of the sales in the previous fiscal year. This reduction is a pointer to economies of scale that are expected and improved supplier contracts. Selling expenses will be higher as it will need to conduct advertisement campaigns, digital marketing programmes, and expansion of the sales team. The administrative cost will grow at a moderate rate as the operations grow; however, cost control will be maintained to maintain efficiency.

The interest cost will increase marginally since short-term financing of the product development and product launch may be undertaken. In order to project it, the corporate tax rate will be established at 25 percent, which is in line with the federal laws and regulations on corporate taxes (U.S. Securities and Exchange Commission [SEC], 2023). Overall, the forecasts indicate that the company is very profitable since the net income will grow nearly three times within 24 months. These are assumptions that are in sync with the industry standards and are favourable to the business growth, financially.

References

Damodaran, A. (2023). Applied corporate finance (5th ed.). Wiley.

Kulu, E. (2025). In-Space Economy in 2025–Analysis and Deep Dives into In-Space Transportation and Reentry Vehicles.

U.S. Securities and Exchange Commission. (2023). Form 10-K annual report guidelines.

Wolfson, P. (2025). Expanding technological horizons for treatment and staging early oesophageal cancer (Doctoral dissertation, UCL (University College London)).