A pro forma Income Statement must be prepared in MS Excel, using a minimum projection of three years, as based on pro forma projections discussed in Chapter 18. You need to include the most recent income statement for your company that is part of the 10-K. This information can then be used to calculate the fair value of the companys stock price, as based on the stock valuation formulas discussed in Chapters 7 and 20. All assumptions and formulas used for the pro forma projections and the companys fair value must be included at the end of your model. Once a fair value is reached, this can be compared to a recent quote of the companys stock price to determine whether or not the company is fairly valued at its most recent trading price. A separate attachment provides an example of how this should be constructed.

Earnings Model Projections and Assumptions:

-Pro forma sales growth is 15% per year

-Common Size values are calculated as a percentage of sales, unless noted otherwise

-DPS is calculated as Dividends / 100 Million Shares Outstanding

-Dividends are expected to grow at a constant rate of 20% after pf2022

-The required return is 10%

-The value of this company is calculated as P0 = D1 / (1 + r) + D2 / (1 + r)^2 + D3 / (1 + r) ^3 +P3 / (1 + r) ^3 Where P3 = D3 / r - g

Using the Projections from XYZ Corporation's Earnings Model,

P0 = $2.52 / (1+0.10) + $2.90 / (1+0.10) ^2 + $3.34 / (1.10)^3 + $36.70 / (1.10) ^3 Where P3 = $3.34 / 0.20 - 0.10

P0 = $2.29 + $2.40 + $2.51 + $27.57 P0 = $34.77

-Once an estimated value is established, there are three possible valuation scenarios when it is compared to a recent quote, as follows:

Earnings Model Value XYZ Most Recent Quote (Three Scenarios)

P0 = $34.77 Scenario 1) $25, Undervalued

P0 = $34.77 Scenario 2) $50, Overvalued

P0 = $34.77 Scenario 3) $35, Fairly Valued

EVERYTHING NEEDED TO COMPLETE THE TASK IS BELOW (Including an example):

Here are the data of Qualcomm Inc. company to be used for the Pro Forma Statement projection for 3 years : (Values are in Millions except DPS)

Revenues/Sales: 9,824 Million Interest: 317 Million

Cost of Goods Sold: 4,367 Million Income before taxes: 1,366 Million

Depreciation: 698 Million Taxes: 2,088 Million

EBIT: 1,650 Million Net income: 1,731 Million

Dividends: 1,502 Million Retained earnings: 4,466 Million

Dividends per share (DPS): $0.62

Heres an example of whats expected from this task:

here's the 10k of the qualcomm in (2019) to be used to prepare the proforma for 3 years. hope it helps.

pdf: https://investor.qualcomm.com/sec-filings/annual-reports/content/0001728949-19-000072/0001728949-19-000072.pdf

XYZ Corporation Earnings Model Income & Pro Forma Income Statements 12/31/19 and PF 12/31/20 to 12/31/22 (Values in Millions of Dollars) 2018CS 2020PF 2021PF 2022PF 2019 $2,875 Sales Cost of Goods Sold Depreciation EBIT Interest Income Before Taxes Taxes, 35% Net Income $2,500 ($750) ($250) $1,500 ($150) $1,350 ($473) $878 100.0% 30.0% 10.0% 60.0% 6.0% 54.0% 18.9% 35.1% $3,306 ($992) ($331) $1,984 ($198) ($288) $1,725 ($173) $1,553 ($543) $1.009 $3,802 ($1,141) ($380) $2,281 ($228) $2,053 ($719) $1,335 ($625) $1.160 Dividends Retained Earnings ($219) $658 25.0%* 75.0% ($252) $25Z ($290) $870 ($334) $1,001 Dividends Per Share (DPS) $2.19 $2.52 $2.90 $3.34 -Dividends and RE are calculated as a percentage of Net Income XYZ Corporation Earnings Model Income & Pro Forma Income Statements 12/31/19 and PF 12/31/20 to 12/31/22 (Values in Millions of Dollars) 2018CS 2020PF 2021PF 2022PF 2019 $2,875 Sales Cost of Goods Sold Depreciation EBIT Interest Income Before Taxes Taxes, 35% Net Income $2,500 ($750) ($250) $1,500 ($150) $1,350 ($473) $878 100.0% 30.0% 10.0% 60.0% 6.0% 54.0% 18.9% 35.1% $3,306 ($992) ($331) $1,984 ($198) ($288) $1,725 ($173) $1,553 ($543) $1.009 $3,802 ($1,141) ($380) $2,281 ($228) $2,053 ($719) $1,335 ($625) $1.160 Dividends Retained Earnings ($219) $658 25.0%* 75.0% ($252) $25Z ($290) $870 ($334) $1,001 Dividends Per Share (DPS) $2.19 $2.52 $2.90 $3.34 -Dividends and RE are calculated as a percentage of Net Income