MANAGEMENT CLASS

The organization considered in the present situation is Barton Incorporated. 3Three-year pro forma income statement of the organization is provided below. In course of Proforma income statement of the organization, it can be seen that the organization’sal profits will increase to a considerable level over the period of next 3three years. In year 2015, profit of the organization will be $50,000. In 2016, profit of organization shall be $120,000 and in 2017, organizational profits shall increase to $180,000.

Financial Breakeven Point

The financial breakeven point, the organization will be required to determine contribution margin per unit. The calculation for financial breakeven point of organization for the period of next three3 years is provided below. In the period ofOver the next three years, the breakeven point of the organization shall be 6667, 6818 and 7142 units. This shows that financial breakeven point of organization has been increasing over the period of next 3 years.

Investment Sources

The sources of investment to be taken into consideration in the present situation include sources such as friends, family, and banks. The organizational owners shall obtain a portion of their loan from the banks. Friends and family will provide the remaining amount of money. More than 50% of loan required by the owners will be obtained from banks or financial institutions.

Use of Financial Information

Financial information regarding profitability and revenue will be used for making strategies for future (Stavall & Maurer, 2011). If organizational revenue and profit do not reach the desired level, it is not likely that the organization will be considered successful. In such a situation, organization will make better decisions and will ensure that its efforts are directed towards enhancing level of sales.

Key Financial Ratios

The key financial ratios, which will be implemented by the organization for finding out its financial position, include ratios such as current ratio, net profit ratio and return on equity. Current ratio will help organization to find out whether it has the ability to meet its short-term debt obligations. Net profit ratio will help organization to find out the level of control it has over its expenses. Return on equity ratio will help organization to make sure that it finds out its ability to generate net income from equity capital.

References

Stavall, J. & Maurer, T. (2011). The Ultimate Financial Plan: Balancing Your Money and Life. John Wiley & Sons.

Additional support is needed from academic and industry sources.