proforma income statement
Reviewing the previous quarter’s financial statements will provide you with data to construct pro forma financial statements for Starbucks and make some basic projections. This week, you will be charged with constructing two pro forma financial statements and addressing some questions about your projections. The two financial statements will include an Income Statement and Balance Sheet.
To begin your assignment, download the
Financial Forecasting Template
.
Part 1
Use
Yahoo! Finance (Links to an external site.)
or the
EDGAR | Company Filings (Links to an external site.)
database to download the last 10Q from Starbucks into excel. Use the downloaded data to complete the Income Statement and Balance Sheet on the appropriate tabs in the Financial Forecasting Template. Assume the following:
- Sales will increase for the next quarter by the same percentage increase from the previous quarter to the last reported quarter. For example, if sales increased 8% from the last quarter to the current reported quarter, you will use 8% as the sales increase for your pro formas.
Calculate the expenses to determine what will change and what will remain the same.
Note: Not all costs are associated with the cost of sales. It will be up to you to determine which line items need to be increased and which ones need to be left alone. This will require you to distinguish between fixed and variable costs. For a reminder of the difference between fixed and variable costs, please watch the video
Business Costs (Fixed Costs and Variable Costs) Explained (Links to an external site.)
.
Within each line item expense explain your rationale, as well as provide a brief summary.
Part 2
Then, calculate a quarterly variance analysis using the Variance Analysis tab of the Financial Forecasting Template (the same template you used for Part 1). Complete the following in your variance analysis:
- In the Excel template, insert the line items.
- In Column C, (Q4, 20NN) enter the previous quarter’s numbers as the budget.
- In Column D, (Q1, 20NN) enter the current quarter’s actual numbers.
- In Column E, the spreadsheet will calculate the dollar difference between the budget and actual numbers.
- In Column F, the spreadsheet will calculate the percentage change.
- In Column G, analyze and speculate the rationale for the variances.
I have the data and the template
Proforma Income Statement
| PROFORMA INCOME STATEMENT |
Proforma Balance Sheet
| PROFORMA BALANCE SHEET |
Variance Analysis
| VARIANCE ANALYSIS | |||||||||||||
| EXAMPLE | LINE ITEM | Q4, 2 | 0 | Q1, 20NN Kevin Kuznia: This column are the actual results. In other words, it is the final amount that was reported. |
AMOUNT | PERCENT VARIANCE Webster, Amanda: This is variance. It is how much in a percent you are over or under. |
POTENTIAL RATIONALE FOR VARIANCE Webster, Amanda: Explain the plausiable reasons why there is a variance. |
||||||
| Interest Expense | $ (25.90) | $ (75.00) Kevin Kuznia: This amount is in millions of dollars. Note that this is negative. This is because it appers as a credit on the income statement. In other words, the company made money on interest expenses rather than paying money on interest. Be sure to carefully review if an item is a credit or debit. |
$ (49.10) | 189.58% | Due to raising interest rates, the company was able to earn more money from interest bearing investments. | ||||||||
| Assignment | |||||||||||||
| The highlighted cells have prepopulated formulas and will calculate automatically for you. | |||||||||||||
| Enter your line item | ERROR:#DIV/0! |
Sheet1
| name | ttm | 3/31/2 | 0 | 6/30/20 | difrence | % change | pro forma projection | 12/31/19 | 9/30/19 | 6/30/19 | 3/31/19 | 12/31/18 | 9/30/18 | 6/30/18 | 3/31/18 | |||||||||||||||||||||||||||||||||||
| TotalRevenue | 544,101,000 | 173,461,000 | 96,415,000 | 77,046,000 | 44.416900629 | 139239554.741412 | 128,888,000 | 145,338,000 | 98, | 468,000 | 106,802,000 | 140,166,000 | 122,141,000 | 171,571,000 | 364,245,000 | |||||||||||||||||||||||||||||||||||
| OperatingRevenue | 482,941,000 | 153,093,000 | 86,123,000 | 66,970,000 | 43.7446519436 | 54,123,000 | 116,658,000 | 127,068,000 | 88,418,000 | 91, | 989,000 | 121,775,000 | 94,333,000 | 150,748,000 | 348,9 | 25,000 | ||||||||||||||||||||||||||||||||||
| CostOfRevenue | 439,478,000 | 142,949,000 | 72,513,000 | 70,436,000 | 49.2735171285 | 76,345,000 | 106,207,000 | 117,810,000 | 75,026,000 | 86,966,000 | 113,257,000 | 91,620,000 | 163,576,000 | 304,769,000 | ||||||||||||||||||||||||||||||||||||
| GrossProfit | 104,623,000 | 30,512,000 | 23,902,000 | 6,610,000 | 21.6636077609 | 62,894,555 | 22,681,000 | 27,5 | 28,000 | 23,442,000 | 19,836,000 | 26,909,000 | 30,521,000 | 7,995,000 | 59,476,000 | |||||||||||||||||||||||||||||||||||
| OperatingExpense | 175,501,000 | 54,052,000 | 35,899,000 | 18,153,000 | 33.5843262044 | 51,044,000 | 34,504,000 | 41,131,000 | 36,670,000 | 34,0 | 22,000 | 41,792,000 | 52,887,000 | 39,069,000 | operating expenses would are bound to vary from the last quarter as its projected to be decreasing | |||||||||||||||||||||||||||||||||||
| SellingGeneralAndAdministration | 103,477,000 | 34,271,000 | 18,998,000 | 15,273,000 | 44.5653759739 | 26,097,000 | 24, | 110,000 | 27,303,000 | 21,099,000 | 18,480,000 | 21,613,000 | 23,228,000 | 28,814,000 | selling administrations would are bound to vary from the last quarter as its projected to be decreasing | |||||||||||||||||||||||||||||||||||
| GeneralAndAdministrativeExpense | general expenses would are bound g vary from the last quarter as its projected to be decreasing | |||||||||||||||||||||||||||||||||||||||||||||||||
| SalariesAndWages | ||||||||||||||||||||||||||||||||||||||||||||||||||
| OtherGandA | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DepreciationAmortizationDepletionIncomeStatement | 57,659,000 | 14,486,000 | 14,300,000 | 186,000 | 1.2839983432 | 13,900,000 | 14,673,000 | 14,199,000 | 13,718,000 | 15,668,000 | 16,842,000 | 19,979,000 | 10,767,000 | 11,110,000 | ||||||||||||||||||||||||||||||||||||
| DepreciationAndAmortizationInIncomeStatement | ||||||||||||||||||||||||||||||||||||||||||||||||||
| OtherOperatingExpenses | 14,365,000 | 5,295,000 | 2,601,000 | 2,694,000 | 50.8781869688 | 10,274,000 | -3,805,000 | -97,000 | -1,300,000 | 200,000 | 18,892,000 | -855,000 | ||||||||||||||||||||||||||||||||||||||
| OperatingIncome | -70,878,000 | -23,540,000 | -11,997,000 | -11,543,000 | 49.0356839422 | -11879000 | -28,363,000 | -6,976,000 | -17,689,000 | -16,834,000 | -7,113,000 | -11,271,000 | -44,892,000 | 20, | 407,000 | |||||||||||||||||||||||||||||||||||
| OtherIncomeExpense | 11,519,000 | 10,715,000 | -2,338,000 | 13,053,000 | 121.8198786748 | -7,544,000 | 10,686,000 | 391,594,000 | 9,889,000 | -18,133,000 | -2,833,000 | 48,631,000 | -2,306,000 | other income expense may also vary but the fact is its presumed to decrease in the next quarter. | ||||||||||||||||||||||||||||||||||||
| GainOnSaleOfSecurity | 6,755,000 | -1,292,000 | 62,000 | -1,354,000 | 104.7987616099 | 3,217,000 | 3,476,000 | 400,939,000 | 9,407,000 | |||||||||||||||||||||||||||||||||||||||||
| EarningsFromEquityInterest | 52,098,000 | 16,612,000 | 2,586,000 | 14,026,000 | 84.4329400433 | 25,283,000 | 7,617,000 | 3,640,000 | 5,309,000 | -426,000 | -635,000 | 60,599,000 | 3,3 | 32,000 | ||||||||||||||||||||||||||||||||||||
| SpecialIncomeCharges | -46,328,000 | -5,823,000 | – | 4,783,000 | -1,040,000 | 17.860209514 | -35,722,000 | – | 1,102,000 | -4,319,000 | -142,851,000 | -1,900,000 | -8,252,000 | -4,472,000 | ||||||||||||||||||||||||||||||||||||
| ImpairmentOfCapitalAssets | 8,466,000 | 3,851,000 | 135,931,000 | 6,088,000 | 4, | 100 | ||||||||||||||||||||||||||||||||||||||||||||
| WriteOff | 14,957,000 | 1,708,000 | -3,075,000 | -180.0351288056 | ||||||||||||||||||||||||||||||||||||||||||||||
| OtherSpecialCharges | 31,371,000 | 4, | 115,000 | 27,256,000 | 6,920,000 | 911,000 | 2,164,000 | 372,000 | ||||||||||||||||||||||||||||||||||||||||||
| GainOnSaleOfBusiness | ||||||||||||||||||||||||||||||||||||||||||||||||||
| OtherNonOperatingIncomeExpenses | -1,006,000 | -74,000 | -203,000 | 129,000 | -174.3243243243 | -217000 | -322,000 | -407,000 | -11,883,000 | -508,000 | -8 | 60,000 | -298,000 | -3,716,000 | -1,166,000 | |||||||||||||||||||||||||||||||||||
| PretaxIncome | -59,359,000 | -12,825,000 | -14,335,000 | 1,510,000 | -11.7738791423 | -16,540,000 | -35,907,000 | 3,710,000 | 373,905,000 | -6,945,000 | -25,246,000 | -14,104,000 | 3,739,000 | 18,101,000 | ||||||||||||||||||||||||||||||||||||
| TaxProvision | 286,000 | 53.3333333333 | 84,000 | 214,000 | 429,000 | 137,000 | 128,000 | 121,000 | ||||||||||||||||||||||||||||||||||||||||||
| EarningsFromEquityInterestNetOfTax | ||||||||||||||||||||||||||||||||||||||||||||||||||
| NetIncomeCommonStockholders | -98,389,000 | -21,450,000 | -23,335,000 | 1,885,000 | -8.7878787879 | -22392500 | -46,260,000 | -7,343,000 | 362,715,000 | -17,565,000 | -115,455,000 | -18,984,000 | 42,873,000 | 26,809,000 | ||||||||||||||||||||||||||||||||||||
| NetIncome | -70,394,000 | -15,576,000 | -17,461,000 | -12.1019517206 | -16518500 | -38,137,000 | 781,000 | 370,839,000 | -9,441,000 | -107,332,000 | -10,860,000 | 50,997,000 | 34,933,000 | |||||||||||||||||||||||||||||||||||||
| NetIncomeIncludingNoncontrollingInterests | -59,645,000 | -12,885,000 | -14,363,000 | 1,478,000 | -11.4707023671 | -13624000 | -36,022,000 | 3,626,000 | 373,691,000 | -6,970,000 | -105,028,000 | -8,832,000 | 60,506,000 | 35,028,000 | ||||||||||||||||||||||||||||||||||||
| NetIncomeContinuousOperations | -25,675,000 | -14,241,000 | 3,611,000 | 17,980,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| NetIncomeDiscontinuousOperations | -79,353,000 | 5,409,000 | 56,895,000 | 17,048,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| NetIncomeExtraordinary | ||||||||||||||||||||||||||||||||||||||||||||||||||
| NetIncomeFromTaxLossCarryforward | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MinorityInterests | -10,749,000 | -2,691,000 | -3,098,000 | -15.1244890375 | -2894500 | -2,115,000 | -2,845,000 | -2,852,000 | -2,471,000 | -2,304,000 | -2,028,000 | -9,509,000 | -95,000 | |||||||||||||||||||||||||||||||||||||
| PreferredStockDividends | 27,995,000 | 5,874,000 | 5874000 | 8,123,000 | 8,124,000 | |||||||||||||||||||||||||||||||||||||||||||||
| OtherunderPreferredStockDividend | ||||||||||||||||||||||||||||||||||||||||||||||||||
| AverageDilutionEarnings | 2,250,000 | -6,750,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
| DilutedNIAvailtoComStockholders | -93,889,000 | -44,010,000 | 364,965,000 | -122,205,000 | 45,123,000 | 29,059,000 | ||||||||||||||||||||||||||||||||||||||||||||
| BasicEPS | -0.28 | -0.31 | -10.7142857143 | -0.295 | -0.12 | 5.67 | -0.26 | 0.63 | 0.39 | |||||||||||||||||||||||||||||||||||||||||
| DilutedEPS | 4.55 | 0.54 | 0.35 | |||||||||||||||||||||||||||||||||||||||||||||||
| BasicAverageShares | 77,444,000 | 76,232,000 | 1,212,000 | 1.5650018078 | 76838000 | 62,168,000 | 64,019,000 | 67,747,000 | 67,975,000 | 67,932,000 | 67,913,000 | |||||||||||||||||||||||||||||||||||||||
| DilutedAverageShares | 80,259,000 | 83,694,000 | 83,670,000 | |||||||||||||||||||||||||||||||||||||||||||||||
| TotalExpenses | 614,979,000 | 197,001,000 | 108,412,000 | 88,589,000 | 44.9688072649 | 152706500 | 157,251,000 | 152,314,000 | 116,157,000 | 123,636,000 | 147,279,000 | 133,412,000 | 216,463,000 | 343,838,000 | ||||||||||||||||||||||||||||||||||||
| NetIncomeFromContinuingAndDiscontinuedOperation | ||||||||||||||||||||||||||||||||||||||||||||||||||
| NormalizedIncome | -41,505,710 | -11,325,210 | -14,014,670 | 2,689,460 | -23.747550818 | -12669940 | -14,408,350 | -2,616,298.11 | -28,769,158.13 | -13,155,240 | 76,302,230 | -14,882,000 | 2,071,503.08 | 22,327,105.96 |
Summary
In summary, company would try reducing the expenses and the related costs to iincrease the amount of income for the projected quarter. the total revenue for the quarter are projected to increase with 44.42% for the quarter. the projected sales amount would be 139239554.7.
The income projection for the company would be 16518500 which is slightly lower compared to the the last quarters amount.