Question

How to analyze a pro forma statement?

Answer 1

- - Proforma statement Meaus It is a part of planning process, pro forma statement can help minimize the rish associated with starting & running a new business It is used int convincing lenders and investors to prouide financing for start up firm. The proforma statement must be based upon objective and reliable information in ouder to create an accurate projection of a small business's profits and financial needs for its first year and beyond. Pro-forma Analysis used for! rabeing firms Grautina cudit • acquiring compaules planning strategy Budgeting How To hathra Analise Proforma statement 1) It starts with sales for cast - which is based on fundamental factors determining firm's future. from sales also other delives other variables infirm. - 2) sales growth based on – chistoric growth rates, break down by industry, geographic segment and is it adjust for known economic changes. 3) What is coas (cost of goods sold) which is based on percentage of sales and historic percentage. 4) What is should be rate of intenst en credit, it is based on expected debt? s) what is income tan enpenses based on tan rates, applied to pretan income. 6) What is woning working capital basis Account recinable tie to sales and terms, what is the account recinable twenover.

7 In veh Inventories ligo cost of goods sold based on inventory turnover.. Acconts payable tie to purchase and team or percent of sales. 9 . Working capital ties to sales 10) Capital Expenditure die lead sales growth. 11) Depreciation is based on capital Expenditure. 12) Stock issuance /repurchase and long term debt tie to capital needs. 13) what is divided based on percent of earning ly) What is de the amount of dividend and net income percentage of retained earulings. 15) statement of Cash flows from income statement balance sheet.
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