Analyzing Pro Forma Statements

XYZ Company, INC. Profit and Loss Statement Year Ended December 31, 20XX

% Sales 1,750,450

Returns and allowances 2,752 Net Sales 1,747,698 100.0

Cost of Sales Beginning Inventory 50,000 Purchases 610,162 Production Labor 420,108 Ending Inventory 30,000

Total Cost of Sales 1,050,270 60.1

Gross Profit 697,428 39.9

Selling Expense Wages 75,000 Commissions 25,000 Marketing 25,000

Total Selling Expenses 125,000 7.2

Operating Expense Salaries 225,000 Payroll taxes 29,000 Benefits 27,000 Office Supplies 500 Postage 250 Professional Fees 2,000 Telephone 850 Utilities 950 Training & Education 250 Miscellaneous 50

Total Operating Expense 285,850 16.4

Operating Profit—EBITDA 286,578 16.4

Other Income (Expense) Interest (9,650) Depreciation (12,000) Amortization (2,500)

Total Other Income (Expense) (24,150)

Total Pre-tax Profit 262,428 15.0

Income Tax Allowance 118,093

Net Profit 144,335 8.3