P1.B.6 Top-Level Planning & Analysis

Question 1

What is a Proforma Income Statement?

P1.B.6 Top-Level Planning & Analysis

Answer 1

1. Represents company’s expected profit for the period
2. Historical expenses are converted into % of net sales
3. % are then applied to forecasted sales levels in a particular period

Question 2

What is a Proforma Balance Sheet?

P1.B.6 Top-Level Planning & Analysis

Answer 2

1. Factors in future projections
2. Assumes same capital structure as current year to determine amount of additional funds needed
3. After determining funding needs, can determine source of funding, ie: internal/external

Question 3

What is a Proforma Cash Flow Statement?

P1.B.6 Top-Level Planning & Analysis

Answer 3

1. Identifies future sources and uses of cash.

2. Helps manage deficit

Question 4

What is a Proforma Financial Statements?

P1.B.6 Top-Level Planning & Analysis

Answer 4

1. Future outlook of company’s performance, financial position and cash flows
2. Includes presumptions about hypothetical conditions that occurred or may occur.