Summary Of Pro Forma Income Statement, Pro Forma Balance Sheet, And Capital Budget
PRO FORMA INCOME STATEMENT
The Pro forma income and loss statement of Little Rascal’s Day Care center shows the outlook of coming five years from 2018-2022. The year 2018 is accounted for a total income of $905,542. The total operating expenses in 2018 are projected at $801,136.82. The year is projected to yield a net income of $104,404.91. The next year 2019 will be the year of expansion in which 1-acre land will be purchased, and the facility of Pittsburg will be expanded by 2000 ft along with the updating of the playground. The company has projected growth rate of 5% in its revenue yielding a total income of $950,819. After deducting of $862,238 operating expenses, the net income is projected at $88,579. The financing required for this expansion plan will be raised from the retained earnings of this year. This is the reason of decline reported in 2019’s net income. After expansion, the Day Care is expected to be able enough to hire three new teachers which also raise the number of clients to 8 infants and 10 toddlers yielding incremental revenue of $56160 from infant clients and $58,650 from toddler clients. The projection of an increase in the number of clients after the expansion is kept conservative; it has potential to increase more. The total net income for the year 2020 is expected to be near $144,568. The year 2021 is expected to witness 5% growth in its revenue yielding a net income of $152,990. And the year 2022 is projected to witness net income of $167,045 after $1060224. 07 deduction of operating expenses.
PRO FORMA BALANCE SHEET
The Pro forma statement of financial position of Rascal’s Day Care Centre shows a conservative projection of 5% growth rate in its assets. The Center is expected to have current assets of $905,542 in the year 2018 and $10,000 of fixed assets. The liabilities portion of the center is huge depicting its total dependence on debt financing. The 0.88 debt ratio shows the portion of assets, sourced from bank loans. The equity portion of the center in 2018 is recorded as $ 116,707. In 2019, the equity rises to $ 122,542.35, and the liabilities are projected at $ 862,238.84. The company is expected to have current assets of $$950, 819 in 2019. The year 2020 is expected to raise the current assets to $1113, 170 and total assets to $1124, 195. The liabilities portion still accounting for 90% of the sources of financing. The debt ratio has increased to 0.94 from 0.88 showing increasing dependence on the banks, and creditors of the Day Care Center.
CAPITAL BUDGET CASH FLOW
The cash flow statement of Rascal’s Daycare center shows the capital outlays more comprehensively. The statement shows the owner capital is increasing from $911,092 in 2018 to $1107, 438 in 2020. The total value of cash from operations for the five years is the same as the total income showing that the center deals majorly in cash. There is no cash inflow from financing or investing activities in the five years. The cash outflows from operations show the operating expenses incurred on business. The financing cash outflow shows the annual interest payment for the land purchase loan of $10,000 at 8% per years, for the 20-year loan of $ 359,020 for expansion at 4% interest rate, and for playground up gradation loan of $7107 at 6% interest rate.
The Net cash flow has increased in the five years only declining in 2019 because of the purchase of land and expansion plan. The ending cash balance shows that it increased in 2019, then declined in 2020, and kept on increasing in years 2021 and 2022.
Work Cited
Carlberg, Conrad George. Business Analysis with Microsoft Excel. Que Publishing, 2002.
Pinson, Linda. Anatomy of a Business Plan. Aka Associates, 2008.
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