Application 6: Estimating Financing Needs
In your accounting course, you learned about the income statement that provides a record of what led to net income for the year. Just as you might develop a forecast of the future year’s budget, financial professionals forecast future income by developing a one-year forecast of the firm’s income statement, more commonly known as the pro forma income statement. Taken together with assumptions about future assets, liabilities, and retained earnings, one can estimate future long-term financing needs for the corporation.
For this Assignment, complete Problems 17-7 (one year pro forma statement) and 17-8 (total liabilities estimation and forecast of long-term debt financing need) in your course text. In addition, provide two or more suggestions on what Ambrose Inc. could do to reduce the forecasted debt financing (the managerial part of financing). Be sure to provide rationales as to why your suggestions will be effective in reducing the forecasted debt financing need.
Submit your Assignment (both your Excel and Word files) by Day 7.
General Guidance on Assignment Length:
Your Assignment will typically be 2–3 pages in length as a general expectation/estimate