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Foundations of Business Computing: Project Income Statement of Maxs Grocery Mart - Assignment Example

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The purpose of this assignment is to critically analyze the accounting data of Max’s Grocery Mart business. After the preparation of various financial statements, the assignment presents an outline of advisable accounting decisions concerning the organization's business profitability.
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Foundations of Business Computing: Project Income Statement of Maxs Grocery Mart
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Download file to see previous pages The data of the accounting period 2006 are taken as the base, upon which the projections for 2007, 2008 and 2009 are based. The bank has demanded to prepare Pro forma Income Statement for three years on the basis of the likely growth and other important parameters of the firm. The statements are prepared to project the future likely growth of the firm. The growth rates estimated are 7.25, 7.75 and 8.25 annually. The projected income statement exhibits that at a 7.25% growth rate, the firm will be able to achieve $ 477175 net income. Similarly, for the years 2008 and 2009, the projected net income is $479400 and $481624 respectively. Mr. Feronti is also asked to prepare projected income statement to reflect the changes in sales at various rates. The income statement is also prepared to reflect the impact on the net income of the increase in workers hourly rate from $12 to $14 and Mr. Feronti’s salary is reduced from 15% to 8% of Gross Profit. The impact of an increase in the number of workers from 17 to 19 is also projected through an income statement.
Max’s Grocery Mart is a family-owned business that has been experiencing stable growth since its inception. Mr. Leroy Feronti, the owner of the business now wants to expand the business by renovating the grocery mart building with a bank loan. To finance the business expansion, Mr. Feronti has approached a bank. The bank wants Mr. Feronti to prepare Pro forma Income Statement for three years to substantiate the loan allocation as a formality. The pro forma financial statements are usually prepared in line with the likely changes in the financial affairs of a firm. Mr. Feronti prepared the statements taking into account the various changes that are likely to incur in his business.  ...Download file to see next pages Read More
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