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Pro-Formal 5-Year Financial Projection
Overview of the XYZ Financial Statements
Objective of this report is to provide 5-year pro-formal financial statements of the XYZ Company. The company financial statements reveal that the XYZ records net sales of the $1.74 Million at the end of the first fiscal year while the gross profit is $637, 428. Moreover, the company total operating expenses is $285,850 making the company to record the net profits $144,335. (XYZ Company, n.d).
Overview of the company balance sheet at the end of first fiscal year reveals that company total current assets are $69,525 while the company total fixed assets are $300,000. The company total assets are $369,525. Moreover, the company total liabilities are $146,000. The report provides the strategies that the company will employ to increase the total sales and the net profits with the next five years.
Strategy to Implement to Increase Sales within the Next 5 Years
The paper provides pro-formal 5-year financial plan for the company based on the following assumption:
The economy situation will remain the same or improve within the next 5 years,
There will be no recession in the country,
The interest rate will remain the same,
The corporate tax will remain the same. (Investopedia, 2013),
The company needs to boost its marketing campaign to increase the sales within the next five years. The company should use both online and offline marketing campaigns to increase the overall sales within the next 5 years. The company should use the internet to launch online marketing campaign and the print media for the offline marketing campaign.
As being revealed in the pro-formal financial statements of the company profits and loss statements in Appendix 2, the marketing expenses will increase by 50% to make the company realize its marketing objective. With increase in the company marketing campaign, the company will increase the sales by 50% in the first years, and 60% increase in the second years. Within the next 5 years, the company will increase the sales by 90% making the company to record the sales of more than $13 Million within the next 5 years.
As being revealed in Appendix 1, the increase in the sales will make the company total assets to increase from $369,525 in the first years to $1,687,772.29 in the next 5 years. The company financial success will also attract investors because the shareholder's equity will increase from $223,525 in the first year to more than $2 Million in the next 5 years.
Recommendation
The company should compare pro-formal financial statement to the actual financial statements recorded each year. The company should increase or decrease the marketing expenses based on the success recorded in sales yearly.
Reference
Investopedia (2013), Pro-Formal, Investopedia Inc.
XYZ Company (n.d). Extract from the Financial Statements. XYZ Inc.
Appendix...
ppendix 1: Pro-forma Statements for 5-Year Projections XYZ Company, INC
XYZ Company, INC.
Balance Sheet
For Year Ending December 31, 20XX
2014
2015
2016
2017
2018
2019
ASSETS
Current Assets
Cash
10525
14208,75
22023,5625
36338,8781
59959,1489
92936,6808
Accounts Receivable
27000
36450
52852,5
81921,375
135170,269
236547,97
Inventory
30000
34500
39675
45626,25
52470,1875
60340,7156
Prepaid Expenses
2000
4893,75
7585,3125
12515,7656
Total Current Assets
69525
87658,75
117926,063
168780,253
255184,918
402341,132
Fixed Assets
Property-net of depreciation
215000
268750
362812,5
489796,875
710205,469
1100818,48
Equipment-net of depreciation
80000
92000
105800
121670
139920,5
160908,575
Vehicles-net of depreciation
7812,5
10546,875
15292,9688
23704,1016
Total Fixed Assets
300000
367000
476425
622013,75
865418,938
1285431,15
Total Assets
369525
454658,75
594351,063
790794,003
1120603,86
1687772,29
LIABILITIES
Current Liabilities
Revolving lines of credit
20000
22000
24200
26620
29282
32210,2
Accounts Payable
7320,5
8052,55
Current Portion of Long-term Debt
15000
16500
18150
19965
21961,5
24157,65
Total Current Liabilities
40000
44000
48400
53240
58564
64420,4
Long-term Liabilities
Long-term debt and capital leases
45500
49140
53071,2
57316,896
61902,2477
66854,42
Loans payable to stockholders
60500
65340
70567,2
76212,576
82309,5821
88894,34
Total Long-term Liabilities
106000
114480
123638,4
133529,472
144211,83
155748,77
Total…
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