Using the sample financial statements, create pro forma statements of five year projections that are clear, concise, and easy to read. Be sure to double check the calculations in your pro forma statements. Make assumptions that support each line item increase or decrease for your forecasted statements. Discuss and interpret the financials in relation to the initiative. Make recommendations on potential discretionary financing needs. XYZ Company, INC. Balance Sheet For Year Ending December 31, 20XX ASSETS Current Assets Cash 10,525 Accounts Receivable 27,000 Inventory 30,000 Prepaid Expenses 2,000 Total Current Assets 69,525 Fixed Assets Property—net of depreciation 215,000 Equipment—net of depreciation 80,000 Vehicles—net of depreciation 5,000 Total Fixed Assets 300,000 Total Assets 369,525 LIABILITIES Current Liabilities Revolving lines of credit 20,000 Accounts Payable 5,000 Current Portion of Long-term Debt 15,000 Total Current Liabilities 40,000 Long-term Liabilities Long-term debt and capital leases 45,500 Loans payable to stockholders 60,500 Total Long-term Liabilities 106,000 Total Liabilities 146,000 Stockholders Equity Common stock 1,000 Additional Paid-in Capital 25,000 Retained Earnings (Cum from prior years) 53,190 Retained Earnings (From current P&L) 144,335 Total Stockholders Equity 223,525 Total Liabilities and Stockholders Equity 369,525 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
