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Pro Forma

In: Business and Management

Submitted By rwilkinson1980
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Analyzing Pro Forma Statements
Christopher Radko has been in business for thirty years making blown glass Christmas ornaments. They have expanded their line to include snow globes and cookie jars and even a line of jewelry. I propose that Christopher Radko market a new product to their collectors; a home décor line that showcases their style. This line would include throw pillows, rugs, paintings and tabletop accent pieces.
Pro Forma statements are hypothetical assumptions of a company for a time span, in this case five years. Taking an already successful company and adding to the line can be both a good idea and tricky because the customer base can split two ways. They can either decide that they love the addition and buy it or become upset at the perception that the company is changing its product line. A pro forma statement can include and exclude whatever the company feels is relevant or irrelevant; onetime expenses are usually not used in pro forma statements either. The pro forma guidelines are not as strict as generally accepted accounting principles. The calculations that were arrived to for Christopher Radko show how the line would be beneficial if it included a new home décor line. It is worth mentioning that the net income does not reflect one time buys therefore the pro forma statement does not reflect that information. While it was not shown in the attached pro forma statement there are companies that write off merchandise to in attempt to manipulate their outcomes. The point of the pro forma statement is to give a better and clearer view of the operations within the company. The Christopher Radko company in my pro forma statement continued to make money and did not suffer a significant loss on the new line.

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