Pro formasMaster

aakash1984

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Pro Forma Financial Statements :

Pro Forma Financial Statements Frank Demmler

Sample Project:

Structure :

Structure Statements Profit and loss Balance sheet Cash flow Time horizon - 5 years Monthly for first year at least Quarterly for the next two years Annually for the last two years © Frank Demmler 2008 - all rights reserved 3

Start up requirements :

Content :

Sales forecast :

Sales forecast Categories of sales Units of what’s being sold by category Average price per unit within category How many customers can you attract? In what time buckets? © Frank Demmler 2008 - all rights reserved 6

Cost of sales & gross profit :

Personnel plan :

Start Up :

6 Months :

12 Months :

24 Months :

Slide 13:

Rules of thumb :

Rules of thumb Personnel cost represent between 2/3 and 3/4 of all SGA expenses Operating income of greater than 30-40% in the out years (years 4 & 5) means you’re naive or you’ve been smoking something funny Industry averages - it the extremely rare company which can differ by orders of magnitude from industry average relationships with sales once the company is up an running © Frank Demmler 2008 - all rights reserved 14

Hypothetical high tech company :

Process :

Process In the beginning Build it up from a micro level What specific people will you need? When? What specific customers will you get? In the out years Be consistent with industry ratios In between How do you transition from one to another? © Frank Demmler 2008 - all rights reserved 16

Cash requirements :

Cash requirements What does the first cut tell you about your cash needs? How reasonable do they seem in terms of the overall scope of the business? finding sources to provide it? What are some of the key things driving them? Are there alternatives to equipment purchases? Are there ways to delay certain spending? Are you really removing perceived risk in a cost-effective manner? © Frank Demmler 2008 - all rights reserved 17