1. Financial Statements - Forecast
Need? – crucial for management decisions
Systematic projection – expected actions of management – budgets, schedules, financial statements
Working plan – statistics, ratios, relationships, funds flows, conditions, decisions, activities
Coordinated thinking – future – same goals
Reduces emergency decisions, surprises
Sets standards of performance – measure, control
Anticipate upcoming financial needs, surprises

2. Financial Statements - Forecast
Pro Forma statements – future
Sales – beginning point – lots of research, effort, money – accurate as possible

3. Pro forma income statement
First statement projected – used for others
Cost behaviors – variable, fixed, etc.
Depreciation – newly purchased assets, interest – new debt
Estimate revenues, expenses, net income
Required financing
Pro forma balance sheet
Projections do not balance – indicates financing need – plug figure

4. Pro forma statement of cash flows
Projections of cash disbursements and cash received
Three categories – operating, financing, investing

5. Christy’s Lemonade Stand
Increase sales by 25%
Cogs – 25%
Labor – give brother a raise - $2.25
Cash – minimum $5
Inventory – 10% of sales
Thinking of buying a wagon - $13
Depreciation – double
Will give Christy - $6

14. Assignment: Scamper Industries - Forecasting Case
Read Chapter 13