Pro-Formal 5-Year Financial Projection Overview of the Essay

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Pro-Formal 5-Year Financial Projection

Overview of the XYZ Financial Statements

Objective of this report is to provide 5-year pro-formal financial statements of the XYZ Company. The company financial statements reveal that the XYZ records net sales of the $1.74 Million at the end of the first fiscal year while the gross profit is $637, 428. Moreover, the company total operating expenses is $285,850 making the company to record the net profits $144,335. (XYZ Company, n.d).

Overview of the company balance sheet at the end of first fiscal year reveals that company total current assets are $69,525 while the company total fixed assets are $300,000. The company total assets are $369,525. Moreover, the company total liabilities are $146,000. The report provides the strategies that the company will employ to increase the total sales and the net profits with the next five years.

Strategy to Implement to Increase Sales within the Next 5 Years

The paper provides pro-formal 5-year financial plan for the company based on the following assumption:

The economy situation will remain the same or improve within the next 5 years,

There will be no recession in the country,

The interest rate will remain the same,

The corporate tax will remain the same. (Investopedia, 2013),

The company needs to boost its marketing campaign to increase the sales within the next five years. The company should use both online and offline marketing campaigns to increase the overall sales within the next 5 years.

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The company should use the internet to launch online marketing campaign and the print media for the offline marketing campaign.

As being revealed in the pro-formal financial statements of the company profits and loss statements in Appendix 2, the marketing expenses will increase by 50% to make the company realize its marketing objective. With increase in the company marketing campaign, the company will increase the sales by 50% in the first years, and 60% increase in the second years. Within the next 5 years, the company will increase the sales by 90% making the company to record the sales of more than $13 Million within the next 5 years.

As being revealed in Appendix 1, the increase in the sales will make the company total assets to increase from $369,525 in the first years to $1,687,772.29 in the next 5 years. The company financial success will also attract investors because the shareholder's equity will increase from $223,525 in the first year to more than $2 Million in the next 5 years.

Recommendation

The company should compare pro-formal financial statement to the actual financial statements recorded each year. The company should increase or decrease the marketing expenses based on the success recorded in sales yearly.

Reference

Investopedia (2013), Pro-Formal, Investopedia Inc.

XYZ Company (n.d). Extract from the Financial Statements. XYZ Inc.

Appendix 1: Pro-forma Statements for 5-Year Projections XYZ Company,.....

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