Pro Forma Cash Flow (appendix 3)
Quarter 1
Beginning Cash Balance
Revenues
- Rebates
- Production
- Research and Development
- Advertising
- Sales Force Expense
- Sales Office Expense
- Marketing Research
- Shipping
- Inventory Holding Cost
- Excess Capacity Cost
- Income Taxes
+ Interest Income
- Interest Charges
+ Licensing Income
- Licensing Fees
+ Other Income
- Other Expenses
= Net Operating Cash Flow
Fixed Production Capacity
= Total Investing Activities
Increase in Common Stock
+ Borrow Conventional Loan
- Repay Conventional Loan
+ Borrow Emergency Loan
- Repay Emergency Loan
- Deposit 3 Month Certificate
+ Withdraw 3 Month Certificate
= Total Financing Activities
Cash Balance, End of Period
Quarter 2
Quarter 3
Quarter 4
0
912,000
852,000
1,069,497
Receipts and Disbursements from Operating Activities
0
0
449,700
2,096,450
0
0
0
0
0
0
498,105
1,298,946
0
120,000
0
60,000
0
0
149,899
311,774
0
0
178,579
218,361
0
340,000
236,000
347,000
88,000
0
40,000
40,000
0
0
14,116
41,481
0
0
10,287
0
0
0
105,218
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
-88,000
-460,000
-782,503
-221,112
Investing Activities
0
600,000
0
0
0
600,000
0
0
Financing Activities
1,000,000
1,000,000
1,000,000
1,000,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1,000,000
1,000,000
1,000,000
1,000,000
912,000
Starting Inventory
+ Production
= Available Inventory
0
0
0
- Cost of Goods Sold
= Ending Inventory
0
0
852,000
1,069,497
1,848,384
Cost of Goods Sold
0
0
102,866
0
498,105
1,298,946
0
498,105
1,401,812
0
0
395,239
102,866
1,401,812
0
endix 3)
Quarter 5
1,848,384
erating Activities
4,129,500
0
2,441,934
Quarter 6
2,738,520
Quarter 7
7,924,183
Quarter 8
16,152,431
Quarter 9
41,577,998
Quarter 10
118,690,752
Quarter 11
350,579,386
460,237
558,914
407,000
40,000
76,707
6,038
0
0
0
0
0
0
0
0
-3,009,864
12,390,000
0
7,310,100
1,000,000
400,000
899,467
467,000
40,000
111,933
6,038
0
331,279
0
0
0
0
0
0
1,824,183
37,170,000 111,510,000
0
0
21,930,300 65,790,900
1,000,000
1,000,000
400,000
400,000
1,240,020
1,580,573
527,000
587,000
40,000
40,000
147,159
182,385
6,038
6,038
0
0
1,827,052
6,445,106
0
0
0
0
0
0
0
0
0
0
0
0
10,052,431 35,477,998
1,100,000
1,100,000
1,100,000
1,100,000
1,100,000
1,100,000
1,100,000
1,100,000
1,100,000
1,100,000
1,100,000
1,100,000
1,100,000
1,100,000
5,000,000
0
0
0
0
0
0
5,000,000
5,000,000
0
0
0
0
0
0
5,000,000
5,000,000
0
0
0
0
0
0
5,000,000
5,000,000
0
0
0
0
0
0
5,000,000
5,000,000
0
0
0
0
0
0
5,000,000
5,000,000
0
0
0
0
0
0
5,000,000
5,000,000
0
0
0
0
0
0
5,000,000
2,738,520
7,924,183
16,152,431
41,577,998
118,690,752
350,579,386 1,046,795,660
0
2,441,934
2,441,934
60,378
7,310,100
7,370,478
301,890
21,930,300
22,232,190
905,670
65,790,900
66,696,570
2,717,010
197,372,700
200,089,710
8,151,030
24,453,090
592,118,100 1,776,354,300
600,269,130 1,800,807,390
2,381,556
60,378
7,186,200
184,278
21,558,600
673,590
64,675,800
2,020,770
194,027,400
6,062,310
582,082,200 1,746,246,600
18,186,930
54,560,790
334,530,000 1,003,590,000 3,010,770,000
0
0
0
197,372,700
592,118,100 1,776,354,300
1,000,000
1,000,000
1,000,000
400,000
400,000
400,000
1,921,126
2,261,679
2,602,232
587,000
587,000
587,000
40,000
40,000
40,000
182,385
182,385
182,385
6,038
6,038
6,038
0
0
0
20,429,999
62,515,412
188,902,385
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
112,590,752
344,479,386 1,040,695,660
Quarter 12
1,046,795,660
9,032,310,000
0
5,329,062,900
1,000,000
400,000
2,942,785
587,000
40,000
182,385
6,038
0
568,194,038
0
0
0
0
0
0
3,129,894,854
1,100,000
1,100,000
5,000,000
0
0
0
0
0
0
5,000,000
3,135,994,854
73,359,270
5,329,062,900
5,402,422,170
5,238,739,800
163,682,370
Pro Forma Income Statement (appendix 1)
Quarter 1
Revenues
- Rebates
- Cost of Goods Sold
= Gross Profit
Research and Development
+ Advertising
+ Sales Force Expense
+ Sales Office Expense
+ Marketing Research
+ Shipping
+ Inventory Holding Cost
+ Excess Capacity Cost
+ Depreciation
= Total Expenses
Operating Profit
Quarter 2
0
0
0
0
0
0
0
0
88,000
0
0
0
0
88,000
Quarter 3
Gross Profit
0
449,700
0
0
0
395,239
0
54,461
Expenses
120,000
0
0
149,899
0
178,579
340,000
236,000
0
40,000
0
14,116
0
10,287
0
105,218
0
25,000
460,000
759,098
Quarter 4
2,096,450
0
1,401,812
694,638
60,000
311,774
218,361
347,000
40,000
41,481
0
0
25,000
1,043,616
-88,000
+ Licensing Income
- Licensing Fees
+ Other Income
- Other Expenses
= Earnings Before Interest and Taxes
-460,000
-704,637
-348,979
Miscellaneous Income and Expenses
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
-88,000
-460,000
-704,637
-348,979
+ Interest Income
- Interest Charges
= Income Before Taxes
0
0
-88,000
0
0
-460,000
0
0
-704,637
0
0
-348,979
0
0
0
0
0
0
0
0
0
-88,000
0
-460,000
0
-704,637
0
-348,979
-9
-23
-23
-9
- Loss Carry Forward
= Taxable Income
- Income Taxes
= Net Income
Earnings per Share
Pro Forma Balance Sheet (appendix 2)
Quarter 1
Cash
+ 3 Month Certificate of Deposit
+ Finished Goods Inventory
912,000
0
0
Quarter 2
Quarter 3
Current Assets
852,000
1,069,497
0
0
0
102,866
Quarter 4
1,848,384
0
0
+ Net Fixed Assets
= Total
Conventional Bank Loan
+ Emergency Loan
+ Common Stock
+ Retained Earnings
= Total
0
912,000
0
0
1,000,000
-88,000
912,000
Long Term Assets
600,000
575,000
1,452,000
1,747,363
Debt
0
0
0
0
Equity
2,000,000
3,000,000
-548,000
-1,252,637
1,452,000
1,747,363
550,000
2,398,384
0
0
4,000,000
-1,601,616
2,398,384
ppendix 1)
Quarter 5
Quarter 6
Quarter 7
Quarter 8
Quarter 9
Quarter 10
4,129,500
0
2,381,556
1,747,944
12,390,000
0
7,186,200
5,203,800
37,170,000
0
21,558,600
15,611,400
111,510,000
0
64,675,800
46,834,200
334,530,000
0
194,027,400
140,502,600
1,003,590,000
0
582,082,200
421,507,800
3,148,534
460,237
558,914
407,000
40,000
76,707
6,038
0
25,000
4,722,430
1,000,000
400,000
899,467
467,000
40,000
111,933
6,038
0
70,833
2,995,271
1,000,000
400,000
1,240,020
527,000
40,000
147,159
6,038
0
70,833
3,431,050
1,000,000
400,000
1,580,573
587,000
40,000
182,385
6,038
0
70,833
3,866,829
1,000,000
400,000
1,921,126
647,000
40,000
217,611
6,038
0
70,833
4,302,608
1,000,000
400,000
2,261,679
707,000
40,000
252,837
6,038
0
70,833
4,738,387
-2,974,486
2,208,529
12,180,350
42,967,371
136,199,992
416,769,413
0
0
0
0
-2,974,486
0
0
0
0
2,208,529
0
0
0
0
12,180,350
0
0
0
0
42,967,371
0
0
0
0
136,199,992
0
0
0
0
416,769,413
0
0
-2,974,486
0
0
2,208,529
0
0
12,180,350
0
0
42,967,371
0
0
136,199,992
0
0
416,769,413
0
0
0
0
0
0
0
0
0
0
0
0
0
-2,974,486
331,279
1,877,250
1,827,052
10,353,297
6,445,106
36,522,265
20,429,999
115,769,993
62,515,412
354,254,001
-33
24
135
475
1,507
4,495
nses
endix 2)
Quarter 5
2,738,520
0
60,378
Quarter 6
Quarter 7
Quarter 8
Quarter 9
Quarter 10
11,649,361
0
184,278
33,354,821
0
673,590
101,498,000
0
2,020,770
309,049,566
934,540,612
6,062,310
18,186,930
1,625,000
4,423,898
1,554,167
13,387,806
1,483,333
35,511,744
1,412,500
104,931,270
1,412,500
316,524,376
1,412,500
954,140,042
0
0
0
0
0
0
0
0
0
0
0
0
9,000,000
-4,576,102
4,423,898
9,000,000
-4,652,973
4,347,027
9,000,000
-4,729,844
4,270,156
9,000,000
-4,806,715
4,193,285
9,000,000
-4,806,715
4,193,285
9,000,000
-4,806,715
4,193,285
Quarter 11
Quarter 12
3,010,770,000
0
1,746,246,600
1,264,523,400
9,032,310,000
0
5,238,739,800
3,793,570,200
1,000,000
400,000
2,602,232
767,000
40,000
288,063
6,038
0
70,833
5,174,166
1,000,000 R&D+100w
400,000
2,942,785
340,553
827,000
60,000
40,000
323,289
35,226
6,038
0
70,833
5,609,945
1,259,349,234
3,787,960,255
0
0
0
0
1,259,349,234
0
0
0
0
3,787,960,255
0
0
1,259,349,234
0
0
3,787,960,255
0
0
0
0
188,902,385
1,070,446,849
568,194,038
3,219,766,217
1,394
4,189
Quarter 11
Quarter 12
2,813,850,098
8,454,614,904
54,560,790
163,682,370
1,412,500
2,869,823,388
1,412,500
8,619,709,774
0
0
0
0
9,000,000
-4,806,715
4,193,285
9,000,000
-4,806,715
4,193,285
Financial history
The appendix 4 and appendix 5 are income statement and balance sheet of Pro
Incorporated for the last five quarters. In the first two quarter, Pro Incorporated
mainly allocate their initial funds to develop products and invest in doing the market
research. From quarter 3 to quarter 5, Pro Incorporated continued develop new
products, enter new markets, and hire company to do the market research. For now,
they have four products and access to three markets. Therefore, it is reasonable
that Pro Incorporated are not really earning profit at this moment. In addition, the
past operating results (appendix7) shows our sales in quarter 4 and quarter 5 have a
extremely increasing. Pro Incorporated believe that their revenue will keep increasing
and gaining profit in a long term.
Financial objective
The three-year financial plan is shown in appendix 8. It shows that Pro Incorporated
have the potential to earn a big profit in the next three years. At the end of the fourth
year, Pro Incorporated predict to realize about 26.73 billion dollars profit for their
company. Furthermore, as shown in appendix 1 to 3, which estimate the projected
income statement, balance sheet, and cash flow from quarter 5 to quarter 12. By the
end of quarter 12, Pro Incorporated will make about 3.2 billions dollars of net income,
same as the cash balance in this period. In the quarter 12, Pro Incorporated production
will reach 5.3 billions, and the ending inventory will be 163.7 million. Besides that,
the break even point in sales units is 11,077 units and 27,277,112.5 dollars in year 2.
The number compare to the projected earning and production in year 2, which is
165.2 revenue and the production about 5.3 billion dollars. For this reason, Pro
Incorporated will definitely be able to break even and make profit in this period.
The company decide to choose stock as their type of investment. Stock is the type of
investment that a unit of ownership in a company which is bought and sold on a stock
exchange. Pro Incorporated believed that will brings to their investors a larger profit
instead of using bond. At the same time, the company decide to set a 5% investment
return rate for their investor. For example, in the quarter 12, investors will able to earn
at most a 16,098,831 dollars profit for their investment in Pro Incorporated. As they
have a big amount of profit, this return can be considerable.
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