To enhance understanding of how financial statements articulate.
To enhance understanding of how to prepare pro forma financial statements.
To enhance understanding how operational and financial changes affect the financial statements.
To enhance understanding of how operational and financial changes affect performance metrics.
"B" Expectation
Your assignment is to obtain the last two year's financial information for your organization (or a publicly traded company's (or from Guidestar) financial statements that YOU choose (hopefully everyone will have a different company) if you cannot obtain your own) and from this information (and other non-financial information) prepare three years of pro-forma income statements and balance sheets.
"A" Expectation
Your assignment is to obtain the last two year's financial information for your organization (or a publicly traded company's (or from Guidestar) financial statements that YOU choose (if you cannot obtain your own) (hopefully everyone will choose a different company) and from this information (and other non-financial information) prepare five years of pro-forma income statements, balance sheets, and statement of cash flows (complete set of financial statements).
If you are using your own organization's financial statements (or a publicly traded company) you may want to use aggregated categories (don't include all the detail) to do this assignment (e.g., have general categories cash, accounts receivable, fixed assets etc.) but don't just have one category (such as Assets) either (more detail, better grade). Make sure you provide assumptions on the Excel sheet so I can follow what you are doing. I would also put your proforma assumption numbers/percentages in a separate column so you can use formulas to link your financial statements to these numbers. Make sure you identify your assumptions.
What you need to do! Create an Excel spreadsheet that two years of historical financial statements (years x1 and x2) and five years of pro-forma financial statements (years x3, x4, x5, x6, X7) for an EE and (years x3, x4, x5) for an ME. The intent of creating the historical statements is to twofold. First, I want you to practice putting financial statements together and second I want you to use this information (and other non-financial information) to estimate future year's numbers. Next, select a few financial ratios (e.g., return on assets) you want to use examine how your organization's financial health changes over time. Last, please give me a a short narrative telling what you did, why, what you found and where you obtained your information from.
Getting Some Practice. I have included a link to a completed Excel spreadsheet of a generic organization that you can use to practice with.
Deliverable:
(1) Please submit a copy of the completed spreadsheet and (2) and provide a brief narrative (in Word) about what you did, how, and what you found.