Directions

Scenario: You have been hired as a financial analyst at Morgan Corporation. Your responsibilities are to assist in the construction and interpretation of the financial statements and communicate on the overall results of the company. You will be reporting to the senior management team of Morgan.

During your first few weeks with the company, you have heard about big plans for a new product line. In the past, Morgan has always sold sporting goods and equipment. However, management wants to begin selling clothing and other apparel items starting this year.

Morgan is expecting you to accomplish three specific items in the near future:

- Create comparative financial statements for 2010 and 2011. (ALREADY COMPLETED THIS STEP)

- Perform select ratio analysis on these financial statements (ALREADY COMPLETED THIS STEP)

I need these completed:

1. Take assumptions from management for this new clothing line and construct a Pro Forma Income Statement for 2012. Basically, you want to give management an idea of what the company could look like after 2012 from a sales and profit perspective if their assumptions prove correct. Remember that pro forma statements forecast the future.
2. You are encouraged to be creative. However, be sure to follow good financial statement format.

Part 1: Create a Pro Forma Income Statement

• Using the 2011 Income Statement you completed, take the current year 2012 assumptions from management to construct a Pro Forma Income Statement in Excel.
  • Your goal here is to show management what the Income Statement for 2012 will look like based on these assumptions.
• After completing your Pro Forma Income Statement, you will compose a final report to management in Word. Discuss the anticipated results of the company in 2012.
• See attached Rubric for grading criteria.

Part 2: Reflection

• Reflecting on this process develop and attach a reflection with a minimum of 300 words explaining what you learned from completing this project.
• Assess whether financial statements and ratios are easier to understand because of this assignment