Proforma Statements

Instructions on Pro forma assignment

Include the pro forma as an exhibit or post a pro forma in summary form with spreadsheet attached

as a separate document.

Do NOT put huge tables in your paper or you will lose points.

Failure to

include

(as a table or exhibit)

or submit your excel spread

sheet will also cause you to lose points.

You

do not

need to complete a five year cash

-

flow projection.

I've attached a pro forma example.

You must complete the remainder of Year Zero but I've started it

for you.

Five years (not five months or

60 months) should be projected.

The Score template is set up for

monthly projections: The same methodology is used for yearly budgets as for monthly, you'll just

have to make an adjustment in the periods from monthly to yearly.

If you don't create th

e full five years of P&L and Balance Sheet, you'll lose points.

Use the

statements provided under the Week 4 assignment to calculate the numbers for the assignment.

To create a pro forma, you start with the base year (year 0) statements.

Describe what

type of new

product, service or initiative you are going to implement: This should only take a paragraph or

two.

Then forecast ahead to year 1.

What will happen to sales?

Will gross profit percentage

increase? Will net operating profit increase? Take th

ose assumptions all the way through the

P&L.

Then look at the balance sheet: What will it take to make the new product service or initiative

-

higher long

-

term debt, a short

-

term revolving line of credit, infusion of capital (it doesn't matter where

it's

coming from

-

that is, don't worry about qualifying for a bank loan or obtaining Venture

Capital).

Will Accounts Receivable and/or Accounts Payable increase to ramp up to the new sales

level?

Does inventory increase or does inventory turnover increase du

e to efficiencies?

Then go on to Year 2 and repeat these steps.

As far as percentages go, you can change percentages on the P&L as much as you want

-

they

don't have to remain the same.

To answer a common question

-

Yes, you should use an excel s

preadsheet to calculate this.

Take

the numbers given and put it into one of the P&L templates and B/S templates to start.

Then submit

the excel spreadsheet along with your paper so I can see the assumptions and calculations.

There is no "wrong" answer

to your projections, as long as they're logical.

As I said before, sales

can't go from $1million to $5million and have no changes to the company's balance sheet.

But if you

put long

-

term debt high and I would have, for example, put short

-

term debt higher

-

that won't cause

you to lose points.

So don't worry too much about being perfect.

It's an exercise to get you familiar

with projections.

Instructions on Pro forma assignment

Include the pro forma as an exhibit or post a pro forma in summary form with spreadsheet attached

as a separate document. Do NOT put huge tables in your paper or you will lose points. Failure to

include (as a table or exhibit) or submit your excel spreadsheet will also cause you to lose points.

You do not need to complete a five year cash-flow projection.

I've attached a pro forma example. You must complete the remainder of Year Zero but I've started it

for you.

Five years (not five months or 60 months) should be projected. The Score template is set up for

monthly projections: The same methodology is used for yearly budgets as for monthly, you'll just

have to make an adjustment in the periods from monthly to yearly.

If you don't create the full five years of P&L and Balance Sheet, you'll lose points. Use the

statements provided under the Week 4 assignment to calculate the numbers for the assignment.

To create a pro forma, you start with the base year (year 0) statements. Describe what type of new

product, service or initiative you are going to implement: This should only take a paragraph or

two. Then forecast ahead to year 1. What will happen to sales? Will gross profit percentage

increase? Will net operating profit increase? Take those assumptions all the way through the

P&L. Then look at the balance sheet: What will it take to make the new product service or initiative -

higher long-term debt, a short-term revolving line of credit, infusion of capital (it doesn't matter where

it's coming from - that is, don't worry about qualifying for a bank loan or obtaining Venture

Capital). Will Accounts Receivable and/or Accounts Payable increase to ramp up to the new sales

level? Does inventory increase or does inventory turnover increase due to efficiencies?

Then go on to Year 2 and repeat these steps.

As far as percentages go, you can change percentages on the P&L as much as you want - they

don't have to remain the same.

To answer a common question - Yes, you should use an excel spreadsheet to calculate this. Take

the numbers given and put it into one of the P&L templates and B/S templates to start. Then submit

the excel spreadsheet along with your paper so I can see the assumptions and calculations.

There is no "wrong" answer to your projections, as long as they're logical. As I said before, sales

can't go from $1million to $5million and have no changes to the company's balance sheet. But if you

put long-term debt high and I would have, for example, put short-term debt higher - that won't cause

you to lose points. So don't worry too much about being perfect. It's an exercise to get you familiar

with projections.