I would happily use 10 questions if you could help me.

Pro Forma Modeling

Assignment Objectives:

Generate the following at the end of a three month quarter

Balance Sheet at the end of month 3

Income Statement for the three month period

Statement of Cash Flows for the three month period

Some hints and thoughts ... it's a process

1.Start with "Production

2.Work in tandem

a.Cash Flows ... you'll need to finish this to get an interest expense number if you are borrowing

b.Income Statement

3.Ending Balance Sheet

Assumptions:

Three month time horizon

Two product lines

oProduct A

Sales Price = $70 per unit

Costs = $50 per unit

Half of costs are paid in the current period and half the following month

oProduct B

Sales Price = $100 per unit

Costs = $70 per unit

Half of costs are paid in the current period and half the following month

Beginning Inventory

o5,000 units of product "A"

o5,000 units of product "B"

oCost of sales on LIFO basis (accounting adjustment made at the end of each quarter)

Sales Schedule

oMonth 1 = 10,000 units of "A"; 10,000 units of "B"

oMonth 2 = 15,000 units of "A"; 20,000 units of "B"

oMonth 3 = 15,000 units of "A"; 25,000 units of "B"

Other Cash Outflows

oS,G&A = $150,000 per month

oQuarter end dividend of $250,000

oCAPEX expenditure of $200,000 in month 2

Other Assumptions

oSales collected

40% month of sale

30% following month

30% month after that

oBeginning A/R collected $125k in month 1 and $125k in month 2

oOpening A/P balance paid in month 1

oEven production schedule

oTarget ending inventory at end of quarter = 50% of previous month's sales

oMinimum Cash Balance = $100,000

oIncome Tax Rate = 20%

oLong-term Debt interest = 5.5%

oLine of Credit interest rate (if you need to borrow) = 30 day LIBOR (0.50%) plus 350 basis points ... interest paid on previous months ending balance.

Opening Balance Sheet:

Cash 150,000

Accounts Receivable250,000

Inventory600,000

Total Current Assets1,000,000

Fixed Assets1,750,000

Total Assets2,750,000

Accounts Payable 150,000

Line of Credit-0-

Total Current Liabilities150,000

Long-term Debt600,000

Total Liabilities750,000

Common Stock100,000

Retained Earnings1,900,000

Total Liabilities & Equity2,750,000