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Pro Forma Financials for Wal-Mart

Based on the financial statement in the annual report for Wal-mart develop a set of Pro Forma financials (income statement and balance sheet) for the next fiscal year-end using the precent-of-sales method. Assume that the company's sales have increased by 15%

State what additional assumptions and information that you would need to prepare a cash budget

List the underlying assumptions of your analysis and computations

Describe your results and make recommendations to management.

Solution Preview

Pro-forma financial statements are also prepared and used by corporate managers and investment banks to assess the operating prospects for their own businesses in the future and to assist in the valuation of potential takeover targets. They are useful tools to help identify a company's core value drivers and analyze changing trends within company operations.

Pro-forma earnings describe a financial statement which has hypothetical amounts, or estimates, built into the data to give a "picture" of a company's profits if certain nonrecurring items were excluded.

Influence of Organizational goals
Organizational goals can influence preparation and evaluation considerably. For example if the organizational goals are of having higher growth than the proforma statements will also be having higher growth. The evaluation of actuals will be done as per high growth plans and will be more stricter than the stable or low growth plans.

The calculations are in the attached file

List the underlying assumptions of your analysis and computations

a) We have prepared the Proforma Income statement and Balance sheet as per the growth rate which is 15% ( As explained below)
b) Assuming every item has grown as per the percentage growth in sales

Recommendations
a) Walmart has to increase the capital as per the growth in sales
b) Its Net Income will grow if there is an increase in operational efficiency

Describe your results and make recommendations to management.
Preparation of a Cash Budget

Overview

Just as you would not purchase new furniture for your home without enough cash, or at least a solid plan to cover a personal loan from ...

Solution Summary

Based on the financial statement in the annual report for Wal-mart develop a set of Pro Forma financials (income statement and balance sheet) for the next fiscal year-end using the precent-of-sales method. Assume that the company's sales have increased by 15%

$2.19