Creating Income Statement Projections
Not what you're looking for?
All historical information remains the same (through Year X-1).
Use this new set of assumptions:
Revenue growth:
30% Year X
30% Year X + 1
1% improvement in Gross Margin for Year X E (from year X-1). No further change in the Gross Margin for Year X+1.
1% improvement in Selling in Year X E. Same level in Year X+1 E.
G&A remains constant on a common size basis.
$10,000 increase in R&D in X E.
Same R&D level in Year X+1 E.
Basic Shares outstanding - 3,000,000.
A new section of the existing plant is constructed for $300,000. This new construction is depreciated over 30 years using the straight line method. All other depreciation remains the same for the years X E and X+1 E.
The plant is financed with a $300,000 10 year bond with a fixed interest payment of 10% annually.
The Company, for the first time, grants 500,000 options to various members of management with an exercise price of $1.00. These options are granted on the first day of Year X E.
There are no other options, warrants or convertible securities.
The average stock price for Year X E and Year X+1 E is projected to be $5.00.
All other interest payments, interest income and tax rates remain the same.
I have attached an Excel file for the solution.
Purchase this Solution
Solution Summary
This solution shows how to create projections in an income statement using MS Excel.
Purchase this Solution
Free BrainMass Quizzes
Academic Reading and Writing: Critical Thinking
Importance of Critical Thinking
Business Ethics Awareness Strategy
This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.
Organizational Leadership Quiz
This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.