BUS 400 Module Six Assignment Template
24-Month Pro Forma
Insert the appropriate values in each row.
Previous Fiscal Year (In
Millions)
24-Month Projections(In
Millions)
Sales
$ 365,817
$438,980
Cost of goods sold
$ 212,981
$255,577
Gross profit
$ 152,836
$183,403
Selling and administrative expenses
$ 21,973
$26,367
Research and Development expenses
$ 21,914
$26,296
Total operating expense
$ 43,887
$52,664
Income from operations
$ 108,949
$130,738
Other income/ expense (net)
$ 258
$309
Income before tax and interest
$ 109,207
$131,048
Other expense (interest)
-
-
Income before income tax
$109,207
$131,048
Income tax expense
$ 14,527
$17,432
Net income
$ 94,680
$113,616
Source : (Apple Inc. Annual report, 2021, p. 32)
Explanation of Assumptions
The table presented above gives an insight into the key financial aspects of the Apple Inc.
organization. The income statement of the business entity reflecting the income and expenses has
been used for capturing the financial figures relating to the previous fiscal year. The financial
performance of the business has served as the foundation as it has helped to make projections
relating to Apple’s new cybersecurity software that will be designed and introduced in the market
setting. The projection has been made to understand how the innovative cybersecurity software of
Apple can play a key role to influence the firm’s income-generating ability.
While working on the 24-month projections for the business organization, one of the main
assumptions that have been made is that there will be a 20 % increase in each of the areas relating to
income as well as expenditure. For example, it has been assumed that at the end of two years, the
gross profit of the business will reach $ 1,83,403 million. The introduction of the new cybersecurity
tool that is specifically designed for Apple smartphones and laptops will serve as a catalyst and
contribute to the improved profitability of the business entity. Just like, the new market offering of
the business will increase its profits, it will also lead to the rise in expenses. For example, while
working on the new cybersecurity software, the expenses relating to the research and development
function could increase from $21,914 to $26,296. Similarly, the expenses relating to the selling and
administrative aspects may also surge from $21,973 to $26,367 during the forecasted period.
However, the estimation that has been made for the 24-month period may be affected by a broad
range of factors that can impact the actual figures. For instance, in a new kind of technology is
introduced in the market that can be integrated into the cybersecurity software of the business, it
could lead to a further increase in the research and development expenses. The innovative
landscape is continuously evolving, and it is presenting businesses with both opportunities as well
as threats (Micheler et al., 2019). The need to strengthen its current IT infrastructure to
accommodate new kinds of digital technologies may increase its overall expenses as well. As such
factors are beyond the control of the business, a consistent estimation process has been adopted,
which shows that after 24 months, the firm’s net income will reach from $ 94,680 million to $
113,616 million.
References
Apple Inc. Annual report. (2021). Retrieved June 16, 2022, from
https://s2.q4cdn.com/470004039/files/doc_financials/2021/q4/_10-K-2021-%28As-
Filed%29.pdf
Micheler, S., Goh, Y. M., & Lohse, N. (2019). Innovation landscape and challenges of smart
technologies and systems–a European perspective. Production & Manufacturing Research,
7(1), 503-528.
