Question
After much consideration, the company is seriously considering moving ahead with the expansion.Using the following projections and the template in Appendix A build a Pro-forma
After much consideration, the company is seriously considering moving ahead with the expansion.Using the following projections and the template in Appendix A build a Pro-forma Income Statement for each quarter of the expansion.
J & J Sports Inc. has estimated the following additional results for the first two years of expansion.
Expected revenues for the first two years are as follows.
oSales for the 1st quarter of Year 3 are projected at $650,000.
Year 1 ('000s)
Year 2 ('000s)
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
50.00
90.00
160.00
200.00
280.00
350.00
440.00
550.00
The Company quarterly purchases (COGS) from suppliers = 50% of the next quarter's forecasted sales.
General and administrative expenses (wages, taxes, office etc.) are estimated to be $10,000 in Year 1 - Q1 and 20% of sales thereafter.
Sales salaries and commissions are estimated to be 8% of sales.
The company tax rate is 35% and they currently have a quarterly interest expense of $2,500.
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