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Financial Management: Creating Pro Forma Statements

Consider the following simplified financial statements for the Fire Corporation (assuming no income taxes):

Income Statement Balance Sheet
Sales $ 46,900 Assets $ 22,700 Debt $ 6,700
Costs 41,140 Equity 16,000
Net income $ 5,760 Total $ 22,700 Total $ 22,700

The company has predicted a sales increase of 18 percent. It has predicted that every item on the balance sheet will increase by 18 percent as well.

Create the pro forma statements and reconcile them.

Pro forma income statement Pro forma balance sheet
Sales $ Assets $ Debt $
Costs Equity
Net income $ Total $ Total $

What is the plug variable?
The plug variable is in the amount of $ .

Solution Preview

Sales $ 46,900 Assets $ 22,700 Debt $ 6,700
Costs 41,140 Equity 16,000
Net income $ 5,760 Total $ 22,700 Total $ 22,700

Pro forma income statement Pro forma balance sheet
Sales $ ...

Solution Summary

The expert creates pro forma statements for financial management.

$2.19