Introduction
The intent of this assignment is for you to prepare pro forma financial statements for an organization. This information is important to you because any type of business organization needs to use these statements to project their financial performance. This information is required in order to obtain financing for the business and to be prepared for cash flow needs.
Instructions
For this assignment, you will need to use the information provided below to complete the tables as shown. Assume sales will increase by 30% in 2013. You will need to create your own Word doc or Excel spreadsheet to upload your assignment.
Income Statement
Vector Manufacturing Income Statement
2012 Actual
2013
Pro Forma
Sales revenue
$125,000
Less: Cost of goods sold
Fixed cost
$50,000
Variable cost (40% of sales)
$50,000
Gross Profit
$25,000
Less: Operating expenses
Fixed expense
$5,000
Variable expense (5% of sales)
$6,250
Operating profits
$13,750
Less: Interest expense (all fixed)
$1,000
Net profits before taxes
$12,750
Less: Taxes (15% of net profit before taxes)
$1,913
Net profits after taxes
$10,838
Balance Sheet
Use the following information and the table below to complete the 2013 balance sheet.
Minimum cash balance of $5,000 is required.
Marketable securities will remain unchanged.
Accounts receivable on average represent 45 days of sales (about 1/8 of year or 12.5%).
Ending inventory will remain unchanged.
A new machine costing $20,000 will be purchased, and total depreciation for the year is $5,000.
Purchases will represent 30% of annual sales. It will take 75 days to pay the accounts payable, so accounts payable should equal 75 days/365 days or 20.5% of the firm?s purchases.
Taxes payable will equal 25% of the firm?s tax liability as shown on the income statement (see ?taxes? on income statement).
Notes payable will be used for additional financing needs (?plug?).
No change in other current liabilities is expected.
No changes to long-term debt or common stock are expected.
Retained earnings will equal the beginning balance from 2012 plus the 2013 profit (see pro forma income statement). A $5,000 dividend payment will be made in 2013.
Vector Manufacturing Balance Sheet
12/31/12
12/31/13
Assets
Cash
$5,000
Marketable securities
$4,000
Accounts receivable
$12,000
Inventories
$15,000
Total current assets
$36,000
Net fixed assets
$50,000
Total assets
$86,000
Liabilities and Stockholders’ Equity
Accounts payable
$6,000
Taxes payable
$500
Notes payable
$6,500
Other current liabilities
$3,000
Total current liabilities
$16,000
Long-term debt
$15,000
Total liabilities
$31,000
Common stock
$35,000
Retained earnings
$20,000
Total liabilities and stockholders’ equity
$86,000
Subject Business
Previous answers to this question
This is a preview of an assignment submitted on our website by a student. If you need help with this question or any assignment help, click on the order button below and get started. We guarantee authentic, quality, 100% plagiarism free work or your money back.
Get The Answer Pro Forma
Introduction
The intent of this assignment is for you to prepare pro forma financial statements for an organization. This information is important to you because any type of business organization needs to use these statements to project their financial performance. This information is required in order to obtain financing for the business and to be prepared for cash flow needs.
Instructions
For this assignment, you will need to use the information provided below to complete the tables as shown. Assume sales will increase by 30% in 2013. You will need to create your own Word doc or Excel spreadsheet to upload your assignment.
Income Statement
Vector Manufacturing Income Statement
2012 Actual
2013
Pro Forma
Sales revenue
$125,000
Less: Cost of goods sold
Fixed cost
$50,000
Variable cost (40% of sales)
$50,000
Gross Profit
$25,000
Less: Operating expenses
Fixed expense
$5,000
Variable expense (5% of sales)
$6,250
Operating profits
$13,750
Less: Interest expense (all fixed)
$1,000
Net profits before taxes
$12,750
Less: Taxes (15% of net profit before taxes)
$1,913
Net profits after taxes
$10,838
Balance Sheet
Use the following information and the table below to complete the 2013 balance sheet.
Minimum cash balance of $5,000 is required.
Marketable securities will remain unchanged.
Accounts receivable on average represent 45 days of sales (about 1/8 of year or 12.5%).
Ending inventory will remain unchanged.
A new machine costing $20,000 will be purchased, and total depreciation for the year is $5,000.
Purchases will represent 30% of annual sales. It will take 75 days to pay the accounts payable, so accounts payable should equal 75 days/365 days or 20.5% of the firm s purchases.
Taxes payable will equal 25% of the firm s tax liability as shown on the income statement (see taxes on income statement).
Notes payable will be used for additional financing needs ( plug ).
No change in other current liabilities is expected.
No changes to long-term debt or common stock are expected.
Retained earnings will equal the beginning balance from 2012 plus the 2013 profit (see pro forma income statement). A $5,000 dividend payment will be made in 2013.
Vector Manufacturing Balance Sheet
12/31/12
12/31/13
Assets
Cash
$5,000
Marketable securities
$4,000
Accounts receivable
$12,000
Inventories
$15,000
Total current assets
$36,000
Net fixed assets
$50,000
Total assets
$86,000
Liabilities and Stockholders’ Equity
Accounts payable
$6,000
Taxes payable
$500
Notes payable
$6,500
Other current liabilities
$3,000
Total current liabilities
$16,000
Long-term debt
$15,000
Total liabilities
$31,000
Common stock
$35,000
Retained earnings
$20,000
Total liabilities and stockholders’ equity
$86,000
Subject Business
Previous answers to this question
This is a preview of an assignment submitted on our website by a student. If you need help with this question or any assignment help, click on the order button below and get started. We guarantee authentic, quality, 100% plagiarism free work or your money back.
Get The Answer