Operation Management

A pro forma income statement is similar to a historical income statement, except it projects the future rather than tracks the past. Pro forma income statements are an important tool for planning future business operations. The initiative I would like to implement is focused marketing and advertising to increase the sales figures for coming five years. Following is the current financial data of the company chosen:

XYZ Company, INC.

Balance Sheet

For Year Ending December 31, 20XX

ASSETS

Current Assets

Cash 10,525

Accounts Receivable 27,000

Inventory 30,000

Prepaid Expenses 2,000

Total Current Assets 69,525

Fixed Assets

Property—net of depreciation 215,000

Equipment—net of depreciation 80,000

Vehicles—net of depreciation 5,000

Total Fixed Assets 300,000

Total Assets 369,525

LIABILITIES

Current Liabilities

Revolving lines of credit 20,000

Accounts Payable 5,000

Current Portion of Long-term Debt 15,000

Total Current Liabilities 40,000

Long-term Liabilities

Long-term debt and capital leases 45,500

Loans payable to stockholders 60,500

Total Long-term Liabilities 106,000

Total Liabilities 146,000

Stockholders Equity

Common stock 1,000

Additional Paid-in Capital 25,000

Retained Earnings (Cum from prior years) 53,190

Retained Earnings (From current P&L) 144,335

Total Stockholders Equity 223,525

Total Liabilities and Stockholders Equity 369,525

XYZ Company, INC.

Profit and Loss Statement

Year Ended December 31, 20XX

%

Sales 1,750,450

Returns and allowances 2,752

Net Sales 1,747,698 100.0

Cost of Sales

Beginning Inventory 50,000

Purchases 610,162

Production Labor 420,108

Ending Inventory 30,000

Total Cost of Sales 1,050,270 60.1

Gross Profit 697,428 39.9

Selling Expense

Wages 75,000

Commissions 25,000...