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Forecasting Balance Sheet and Income Statements

XieCorp is a pc solutions provider that is looking to expand its operations. Currently it has $500K (K=thousand) to invest in an upgrade in facilities. The goal is the hire additional staff to acquire new customers. Last year 20XX XieCorp made $13M (M=million) in total revenues. Their expenses were 65% of revenue and they were taxed at a rate of 16%.

CEO, Jonathan DoeMan wants to finance $1.5M over 5 years for the expansion of the company which cost $2M. He has been informed the cost of money for this financing is 6.2%. This expansion will result in an increase in annual revenue of $850K per year in years 1-3 and an increase of 1.4M per year in years 4-6.

Mr. DoeMan also wants to invest 50% of the company's annual profit in a money market account which assumes a rate of 8% compounded semi-annually.


Assume XieCorps revenue will continue at the level provided, create a basic income statement showing the impact of the additional revenue along with the additional expenses listed above by year over a 5 year period. Showing net income/profit for each year.

Solution Preview

I have prepared an Excel spreadsheet with the required income statement. In case you don't have Excel, I have also posted the spreadsheet in pdf format.

Notice that the numbers are in Thousands of dollars. (This is to reduce the number of zeros). I've put the equations used ...

Solution Summary

Given the assumptions and requirements of the problem, the required balance sheets and income statements are provided in Excel spreadsheet and .pdf formats. A brief explanation is given for how the figure in each line the financial statements is calculated.