Person X is a director of a Manufacturing warehouse is working as part of a strategic planning group tasked with laying out the future direction of the company. ?Person X has compiled some information about the company from which he would like to come up with future estimates and trends... i.e. develop a Pro-Forma Income Statement for years six through 10.? ?

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Information

From the sales department, (Person X) found the following sales and price information. ?The price has steadily decreased by 3% over the last five years.?

?	1	2	3	4	5
Unit Sales	310	721	932	1065	1108
Price	$1,000.00	$970.00	$940.90	$912.67	$885.29

From accounting and production, Person X received the following cost and expense information. ?He was also informed that the average taxes were 29%.?

	1	2	3	4	5
COGS	$148,800.00	$393,089.20	$461,168.51	$482,285.98	$475,233.53
G&A	$55,023.00	$109,456.00	$137,998.00	$138,032.78	$148,023.45
Selling Exp.	$52,310.86	$78,345.32	$80,004.23	$82,041.56	$78,997.49
Depreciation	$24,000.00	$38,000.00	$32,000.00	$26,000.00	$20,000.00
Interest	$15,000.00	$14,569.00	$14,034.00	$13,456.00	$12,954.00

Person X received information on depreciation and interest expenses for the ensuing 5 years.?

	6	7	8	9	10
Depreciation	$18,000.00	$17,000.00	$16,000.00	$16,000.00	$16,000.00
Interest	$12,532.00	$11,980.00	$11,611.00	$11,178.00	$10,792.00

The estimations included in the pro-forma statements are critical for the company since many direct investment decisions must be made to meet anticipated sales growth. ?The IS generated will become the backbone of the financing decisions and cash flow planning for management.?

Answer rating: 100% (QA)

To develop a ProForma Income Statement for years six through 10 we will use the sales and price info... View the full answer