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COMPANIES PRO-FORMA FINANCIAL PAPER

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Using the most recent finacial statements for Citigroup and Bank of America's financial complete the following.

Companies Pro Forma Financial Paper
Using Citigroup and Bank of America's most recent finacials. Based on the financial statement in the annual report for both of the companies you have chosen:
a) Develop a set of pro forma financials (income statement and balance sheet only) for the next fiscal year-end using the percent-of-sales method. Assume that the company's sales have increased by 15%.
b) State what additional assumptions and information that you would need to prepare a cash budget.
c) Be sure to list the underlying assumptions of your analysis and computations.
d) Recalculate the same ratios from Week Two using the Microsoft® Excel® Worksheet.
e) Describe your results and make recommendations to management.

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The response addresses the queries posted in 1241 words with references.

//Before writing about the pro forma financial paper for the two Companies Citigroup and Bank of America; we have to understand the meaning of pro forma and the major financial projections to be included. We will discuss the set of pro forma financials for both the Companies and the assumptions to be included for preparing their cash budget.//

Companies Pro-Forma Financial Paper

Pro forma is arrived from a Latin word which means "as a matter of form". It is designed to calculate and to show the future projections for financials (income statement and balance sheet) for the coming year or years. The following will show Pro-forma income statement and balance sheet using the percentage sales method for the next fiscal year for both Bank of America and Citigroup. Inc. Finance 599.xls

Additional Assumptions and Additional Information needed for the preparation of Cash Budget:

Cash budget is probably the most important tool in the process of cash management. It is a device to help a firm to plan and control the use of cash. The various purposes of cash budgets are: (1) to coordinate the timing of cash needs, (2) it pinpoints the period when there is likely to be excess cash, (3)it enables a firm which has sufficient cash to take advantage of cash discounts, (4) it helps to arrange the needed cash on the most favorable terms and helps to prevent the accumulation of excess cash.

Additional Information Required:

Ø Need to know the percentage of credit and cash sales.

Ø Need to know the percentage of credit and cash purchases.

Ø The time lag taken for all the expenses as wages, salaries, factory expenses, administrative expenses etc.

Assumptions:

Ø All the debts are paid on time.

Ø There are no bad and doubtful debtors and all the debtors pay their amount within the time allowed by the company.

Ø The time period taken ...

Solution Summary

1025 words report and excel file attached in solution

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See Also This Related BrainMass Solution

Please choose 3 terms from the following list for this paper

Review the objectives from Week Three, and discuss additional insights and questions.

Please choose 3 terms from the following list for this paper. Avoid Financial analysis.

Financial analysis
Sustainable income
Irregular items
Discontinued operations
Extraordinary items
Changes in accounting principle
Comprehensive income
Comparative analysis
Horizontal analysis
Vertical analysis
Industry averages
Ratio analysis
Liquidity ratios
Working capital
Current ratio
Inventory turnover
Receivables turnover
Other
Solvency ratios
Debt to total assets
Cash debt coverage
Times interest earned
Free cash flow
Other
Profitability ratios
Earnings per share
Price-earnings
Profit margin
Return on assets
Return on Investment (ROI)
Other
Quality of earnings
Alternative accounting methods
Pro forma income
Improper recognition
Price-earnings ratio

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