# Econ Kikuba 1

Content type
User Generated
Subject
Accounting
Type
Homework
Rating
Showing Page:
1/5
Surname 1
Students Name
Instructor
Course
Date
A PRO FORMA FORECAST
A pro forma is a forecast financial report mainly used to determine the anticipated measure in the
future events or possibly any changes in business merit in future. Businesses rely on this technic
in planning and deciding on the fate of their business in coming years considering both short
term and long term. There is some assumed condition which planners view which the business
might depend on them such as sales and capital investment which have the tendency to change
with time. A well calculated pro forma provide business with the required resources for future
expansion (Lau, Too Kya et al.).
Make assumptions
Future sales revenue. Sales play the most important factor in generating forecasts, other
items have constant relation hence they are dependent to sales, observe the sales trends for the
past given years and determine the future sale by finding out the average percentage change of
sales in past years.
To- sale ratios. Determining the ratio of items which are proportional to sales such as cost-
to-sales ratio for the past years. By dividing the items by the sales to determine their future trend.
Additional items. Some items in the statement do not change as a result of change in sales.
They are independent of sales. They depend on other factors of the business rather than sales.

Showing Page:
2/5
Surname 2
Sales have no effect on their future effect on performances. These include interest rates (Britton,
Anne, and Christopher Waterston).
A forecast of Netflix, Inc., and Amazon.com, Inc.’s revenue, costs, and estimated cash
flows into the next five years.
Sale revenue
Calculate the average percentage change in sales over the past 3 years
2012-2013 4.24 -2.31×100 = 45.5
4.24
2013 - 2014 3.35-2.31 ×100 = 45.0
2.31
Average percentage is 45%
Sales revenue for the coming 5 years
S
1
=s
0
(1+g)
2015 3.35 (1+0.45) =4.86
2016 4.86 (1 + 0.45) =7.04
2017 7.04(1+ 0.45) = 10.21
2018 10.21 (1 + 0.45) =14.81
2019 14.81 (1 + 0.45) = 21.47
Costs
Find the ratio of costs to sales

Showing Page:
3/5

End of Preview - Want to read all 5 pages?
Access Now
Unformatted Attachment Preview
Surname 1 Student’s Name Instructor Course Date A PRO FORMA FORECAST A pro forma is a forecast financial report mainly used to determine the anticipated measure in the future events or possibly any changes in business merit in future. Businesses rely on this technic in planning and deciding on the fate of their business in coming years considering both short term and long term. There is some assumed condition which planners view which the business might depend on them such as sales and capital investment which have the tendency to change with time. A well calculated pro forma provide business with the required resources for future expansion (Lau, Too Kya et al.). Make assumptions Future sales revenue. Sales play the most important factor in generating forecasts, other items have constant relation hence they are dependent to sales, observe the sales trends for the past given years and determine the future sale by finding out the average percentage change of sales in past years. To- sale ratios. Determining the ratio of items which are proportional to sales such as costto-sales ratio for the past years. By dividing the items by the sales to determine their future trend. Additional items. Some items in the statement do not change as a result of change in sales. They are independent of sales. They depend on other factors of the business rather than sales. Surname 2 Sales have no effect on their future effect on performances. These include interest rates (Britton, Anne, and ...
Purchase document to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

### Review

Anonymous
Great! Studypool always delivers quality work.

Studypool
4.7
Indeed
4.5
Sitejabber
4.4