Twelve Month Pro Forma Budgeted Income Statement

Considering your Cloud Ware Company, compare the November ending
Profit and Loss Statement with the end of December Profit and Loss
statement. This work should be done in Excel.

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Compare the November Balance Sheet with the balance sheet as of
December 31st. After analyzing the statements, answer the following
questions:

  • What is the financial situation of the company as of November 30?
  • Did the financial situation improve, remain the same, or start to decline through the month of December?
  • What areas of strength exist in the company? What are the company’s weaknesses?
  • What are some areas where the company has opportunities for growth for the company’s financial situation?
  • To help you justify the above answers, financial ratios should be
    calculated. At minimum, the following ratios should be calculated and
    used to support your arguments:

    • Debt to Equity Ratio (Total
      Liabilities/Equity) This ratio provides a look at how much the creditors
      have put into the company compared to how much the owners have put into
      the company.
    • Current Ratio (Current Assets/Current
      Liabilities) This provides a look at whether the business has enough
      current assets to pay their current liabilities.
    • Profit Margin (Net Income/Sales) This provides a measure of how much profit is earned on each dollar of sales.

You have decided to request a bank loan to expand your Cloud Ware
business and the lender has asked for a one-year projection of revenue
and expenses. To request the loan, you will need to create a Pro Forma
one year budgeted income statement broken down over 12 months. You will
need to look at the actual ending financial statements for October,
November, and December and use this data to help create the forecast for
the next fiscal year of business.

Using financial ratios will be
critical in supporting your argument for the loan and be aware that most
bankers or lenders will not even consider a loan prospect without
addressing, for example, the impact of additional debt on your debt to
equity ratio.

Note: Excel must be used for creating the analysis and budget
and must include formulas for all mathematical calculations including
adding, subtracting and sums of columns or groups of cells.

Save your assignment as a Microsoft Excel document.