Question

I was given a case and I have to calculate the pro forma. I need to...

I was given a case and I have to calculate the pro forma. I need to find the assumptions, my question is how do I calculate the assumptions?

Homework Answers

Answer #1

In case of a pro forma you will have to calculate financial results using certain presumptions and certain projections.

For instance you can assume that sale will grow by 10% and last year’s sales was $1000. Thus sale amount next year will be $1000*1.1 = $1100

Now you assume that that cost of goods sold will be 50% of sales as in the past, operating and other expenses was 30% of sales in past but will grow to 35% now. Hence your pro forma income statement will look like this:

Pro forma
Sales 1100
less: COGS (50% of sales) 550
Gross profit 550
less: other expenses (35% of sales) 385
Net income 165
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