Decide upon an initiative you want to implement that would increase sales over the next five years, (for example, market another product, corporate expansion, and so on).
Using the sample financial statements, create pro forma statements of five year projectionsthat 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.
Write a 350 – 700 word analysis of the company’s short term and long term financing needs and determine strategies for the company to manage working capital.
For this week homework please take the XYX financials and apply your assumptions. The concepts in Chapter 19 regarding proforma financial statements are what this exercise is looking to accomplish. If you were to market a new product would it increase your sales by 5% a year for five years. If so you would apply this increase to all applicable accounts that vary directly with sales.
For the balance sheet you can take the percent of sales for each balance sheet item and its ratio to sales and apply these to all assets and liabilities except LTD and equity. Your final plug number will be your need for financing on the liabilities.
Please try and follow the Blackwell exhibit 19.5 given in the chapter as this is exactly what this exercise is looking for you do. I would recommend using Excel to do your projections as this would be easiest to calculate your changes however you can submit this in any format.
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