Business Finance Pro Forma Statements of the Company

4. I'm here to tell you about the pro forma statements of the company.

First it's the income statement

5. The question is: Assume Garden State has determined that its optimal cash balance is 5% of sales and that funds in excess of this amount will be invested in marketable securities which, on average, will earn 7% interest. Based on your forecasted FS, will GS be able to invest in marketable securities in 93 and 94? If so, what is the amount of excess funds GS should invest in MS? Do your financial forecasts reveal any developing conditions that should be corrected? (Lên slide đừng viết tắt nhé)

The first answer is that GS will be able to invest in MS (lúc đấy slide đưa ra chữ ''YES'')

         as we take a closer look at the forecasted sales in 93 and 94 here, we are having 5% of those sales are 22069 and 25379. And looking at Cash and marketable securities from our pro forma balance sheets, we would have 73000 in 93 and 95000 in 94, that's 16,6% and 18,74%, much bigger comparing to its optimal cash balance 5%. Which means we have 51000 and 69000 of excess funds to put on marketable securities

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nếu e làm được cái bảng kia thành 1 bảng mới đẹp thì tốt!

         In the financial forecast however, did reveal some developing condition that should be corrected. If the company use some of their excess funds to pay for its short-term loans, which means the company current ratio would rise, same thing would happen to ROE and profit margins. Then our forecasts would look more credible to the bank, and this would help in the negotiation with them.

6. Base on the forecasts developed earlier, would GS be able to retire all of the outstanding short-term loans by December 31,1993?

The answer is yes as we've calculated the company's Quick ratio

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