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Analyzing Pro Forma Statements
FIN 571
Stacey Pitcher
April 20, 2015

Analyzing Pro Forma Statements
XYZ Company, Incorporated (“XYZ Company”) was incorporated in October 1st 2013 and started trading in early January 2014. XYZ Company specializes in growing and supplying organic foods in the Cambridge area in Massachusetts and over the last 12 months has had significant success in penetrating the Cambridge market especially as the benefits of organically produced foods gain traction in the New England area and throughout the United States. Overall, demand for organic foods in the US grew by an average of 11% in 2014 and based on a detailed analysis of the Cambridge market, XYZ Company expects demand to closely track this overall growth rate not only in 2015 but over the next five year period.
Initiative
The initiative that XYZ Company has decided to implement is a corporate expansion to meet the projected increased demand for organic foods in the Cambridge area over the next five year period. Based on a detailed analysis of the Cambridge market, XYZ Company expects demand to grow by 10% annually over the forecast period. To meet this projected demand, XYZ Company intends to expand its business by taking the following specific steps; 1. Increase its total assets including working capital needs to build up the capacity required to meet the expected increased sales; and 2. Source sufficient funding to finance the planned capacity expansion through a mix of affordable debt options and reinvestment of retained earnings.

Summary Analysis
A summary analysis of the pro forma Balance Sheet and Income Statement for XYZ Company covering the five-year projection period is attached as Appendices A and B respectively. Key highlights from the pro forma financial statements include the following; 1. Net sales will increase by 10% annually from $1,747,698 in...

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