Getting Started Pro Forma Financial Statements

Pro forma financial statements are a convenient and easily understood means of summarizing much of the relevant information for a project. To prepare these statements, we will need estimates of quantities such as unit sales, the selling price per unit, the variable cost per unit, and total fixed costs. We will also need to know the total investment required, including any investment in net working capital.

To illustrate, suppose we think we can sell 50,000 cans of shark attractant per year at a price of $4 per can. It costs us about $2.50 per can to make the attractant, and a new product such as this one typically has only a three-year life (perhaps because the customer base dwindles rapidly). We require a 20 percent return on new products.

pro forma financial statements

Financial statements projecting future years' operations.

Ross et al.: Fundamentals of Corporate Finance, Sixth Edition, Alternate Edition

IV. Capital Budgeting

10. Making Capital Investment Decisions

© The McGraw-Hill Companies, 2002

PART FOUR Capital Budgeting

The Force Of Fulcrums

The Force Of Fulcrums

Learning About The Force Of Fulcrums Can Have Amazing Benefits For Your Life And Success! How simple shifts in your thinking will make you rich forever! If you wish to grow beyond your current state of being, you'll need to learn about the fulcrum precept. A fulcrum is the pivot point for a lever. Therefore, whenever you wish to properly utilize leverage, then, you'll need to place the fulcrum in the right place. Many people have never heard if this and have no idea how to go about figuring out where they are or how to change it.

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