Financial Modeling Forecasted Financial Statement

Financial Modeling

Forecasted Financial Statement

Financial statements are the end products of an organization on which the investors, policy makers, creditors and other relevant people emphasize (Bierman, 2008). The primary goal of an organization is to increase the level of surplus by institutionalizing different revenue provisions (Bossaerts & Degaard, 2006). Organizations have to take numerous actions or decisions to keep the cycle of earning growing. Organizations usually make forecasted financial statements and take economic decisions based on these pro-forma statements. This particular assignment is also about forecasting the financial statement of an organization. As a researcher, I have to forecast the income statement and balance sheet of a chosen organization and the chosen organization is Southwest Airlines, which is an U.S. based Airline. The revenue of the company touched a level of U.S.$12 billion in the year 2010 while the net income of the company is U.S.$459 million. In this assignment, I have forecasted the financial figures of the chosen company for the fiscal years 2012, 2013, 2014, 201 and 2016. All the work has been done in the excel spread sheet while the description of the same has been mentioned in this word document. Apart from the forecasting of the net figures of the company, it is necessary to show ratios as well. Let's first discuss about the forecasted income statement.

Forecasted Income Statement

Income statement shows the actual worth of the company (Bossaerts & Degaard, 2006). It indicates what amount of revenue earned by the company and how much net income earned by the company. According to the forecasted income statement, the revenue of the company will be increased by 11.53% in the upcoming years like 2011, 2012, 2013, 2014, 2015 and 2016. The Total Net Revenue of the company projected for the same years are 13,499.59, 15,056.09, 16,792.06, 18,728.19, 20,887.55 and 23,295.88. The GPM of the company increased marginally Year on Year (YOY). The forecasted Gross Profit of the company will be $3,680, $4,417, $5,265, $6,238, $7,355 and $8,633. The Selling and Administrative Expense of the company is in the congestion band from 4.60% to 5.20%, which bought the net income before tax on the figures of $2,597, $3,773, $5,324, $7,401, $10,221 and $14,106. The Income tax of the company is 35% which is as per the Tax Jurisdiction of the United States (U.S.). The rate of tax is stable for the upcoming years which bought the Net Income after Tax (NIAT) at a position of $, 1688, $, 2452, $3,461, $4,810, $6,643 and $9,169 for the years 2011, 2012, 2013, 2014, 2015 and 2016 respectively. Let's now take into provision the forecasted figures of the balance sheet.

Forecasted Balance Sheet/Cash Flow

Balance sheet highlights the actual financial position of the company (Cinnamon & Larsen, 2006). Basically balance sheet is the name of balancing the total assets with the figures of shareholder's equity and liabilities. The same has been applied in this assignment. In the assets category, there are two things current assets and non-current assets. The current assets of Southwest Airline made up from Cash, Account Receivable, Inventory and other current assets.