Excel Case: Baylor Electronics

Pro Forma Income Statement

Case Overview

Since its founding twenty years ago, Baylor Electronics continued to grow and evolve with the

times. The family$-$owned business has survived many transitions and is currently experiencing a

steady growth. Blake Baylor, the founder and past CEO, stepped aside two years ago and handed

over the company to Jake Baylor, his son. Jake wants to expand his family's business by adopting

modern enterprise systems. The million$-$dollar company under Blake was very successful but it was

product focused. The company worked hard to deliver great quality products for its customers. The

company did this while charging a premium for its services. He could charge high fees because there

were very few competitors. The market is now crowded, and the net income in $2022$ dropped from

fifty$-$three percent to thirty$-$three percent of sales.

There is no doubt in Jake$$s mind that the profitability of the company can be improved by the

deployment of modern enterprise systems. The enterprise system deployment is going to be very

expensive. The new CEO has to decide if the company can afford the project and estimate how much

money can he afford to spend on the enterprise system. He will need a bank loan for this project. Mr$.$

Baylor needs your help in preparing documents required for procuring a bank loan.

Before approaching his local bank, Jake needs to prepare a pro forma financial statement. If Mr$.$

Baylor decides to go forward with the project, he will use the pro forma financial statement as part

of his loan application. He has retained your group to prepare it for him. Preparation of the pro forma

income statement requires you to design a worksheet with assumptions and information sections,

properly format the worksheet, construct formulas, perform economic analysis, and generate charts.

Details for Baylor$$s Pro Forma Income Statement

Having recently completed a first analysis of the business, Jake feels that one of the keys to the

business's future would be the improvement of the efficiencies of the organization. Currently, the

company has $260$ full$-$time employees. The enterprise software would cost around $ $15,000,000.$ If

he decides to pursue the ERP deployment project, Jake will use the pro forma income statement as

part of his loan application package.