7-2 Project Submission

BUS 400 Module Six Assignment Template 24-Month Pro Forma

	Previous Fiscal Year	24-Month Projections
Sales	$2,500,000	$3,200,000
Cost of goods sold	$1,300,000	$1,550,000
Gross profit	$1,400,000	$1,650,000
Selling expenses	$450,000	$550,000
Administrative expenses	$350,000	$350,000
Total operating expense	$740,000	$900,000
Income from operations	$605,000	$750,000
Other income	$50,000	$60,000
Income before tax and interest	$655,000	$810,000
Other expense (interest)	$73,000	$80,000
Income before income tax	$585,000	$730,000
Income tax expense	$156,000	$190,000
Net income	$429,000	$540,000

Explanation of Assumptions

The 24-month financial projections are based on several key assumptions. Sales projections were developed by analyzing historical sales data, considering market trends, and factoring in expected growth rates (CFI Team, n.d.). The cost of goods sold is estimated to increase proportionally with the anticipated growth in sales volume while maintaining the current cost structure. Selling and administrative expenses are projected by considering current operating expenses, expected inflation rates, and any planned investments in marketing and administration. These assumptions collectively form the basis for income from operations and other income projections, while interest expenses are calculated based on current debt levels and prevailing interest rates. Applicable tax rates and tax planning strategies determine income tax expenses. These assumptions provide a reasonable basis for the 24-month financial projections, with the understanding that actual results may vary due to unforeseen circumstances and market fluctuations.

References

CFI Team. (n.d.). Financial Forecasting. Corporate Finance Institute. https://corporatefinanceinstitute.com/resources/financial-modeling/financial-forecasting-guide/