Analyzing Pro

Analyzing Pro

  • Submitted By: vickie55
  • Date Submitted: 04/13/2014 6:04 PM
  • Category: Business
  • Words: 563
  • Page: 3
  • Views: 17






Analyzing Pro Forma Statements
FIN 571
Analyzing Pro Forma Statements
Financial and general managers benefits from the use of forecasting financial statements. Pro Forma statements provide assistance to financial managers to plan the financial needs of the company. The amount of financing is determined by estimating future balance sheets and income statements for the company. The purpose of the Pro Forma analysis is to forecast statements the company under certain conditions. The total assets should equal the amount of total liabilities and owner’s equity of the manager has to consider a corrective action (Parrino, 2012). A Pro Forma analysis is proven to be an instrument for general managers to plan inventory, employment intensity, and to solve company issues.
In the developmental stages of forecasting, managers are allowed to analyze results to identify problems and correct them. When dealing with the issues it is important for financial managers to allow time in the forecasting stage. Managers can handle issues in advance and avoid potential problems. Pro Forma statements can be used for more than forecasting. The statement can be used for managers to plan, evaluate variances, make adjustments, create corrections, detect errors, compare reports, and evaluate strengths, weaknesses, and performances, It is important for mangers to monitor these techniques in the budgeting period (Parriono, 2012).
Pro Forma statements should be accurate for legitimate assumptions. The information on a series of statements is sensitive when making assumptions about sales, and the relationship between balance sheets. The results of the analysis will show the projected outcome of the company. The statements are created to forecast with a specific balance and date, and converted into a financial statement. Account balances can be forecasted by acquiring the information that influences how the accounts will be projected. The forecasting information is usually...

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