Principles of Managerial Finance

120 PART 1 Introduction to Managerial Finance

TABLE 3.13 Vectra Manufacturing’s Balance Sheet,

December 31, 2003

Assets Liabilities and Stockholders’ Equity

Cash $ 6,000 Accounts payable $ 7,000

Marketable securities 4,000 Taxes payable 300

Accounts receivable 13,000 Notes payable 8,300

Inventories  (^1)  (^6) , (^0)  (^0)  (^0)  Other current liabilities  (^3) , (^4)  (^0)  (^0) 
Total current assets $39,000 Total current liabilities $19,000
Net fixed assets $ (^5)  (^1) , (^0)  (^0)  (^0)  Long-term debt $18,000
Total assets $

9

0

,

0

0

0

Stockholders’ equity
Common stock $30,000
Retained earnings $ (^2)  (^3) , (^0)  (^0)  (^0) 
Total liabilities and
stockholders’ equity $

9

0

,

0

0

0

TABLE 3.14 2004 Sales
Forecast
for Vectra
Manufacturing
Unit sales
Model X 1,500
Model Y 1,950
Dollar sales
Model X ($25/unit) $ 37,500
Model Y ($50/unit)  (^9)  (^7) , (^5)  (^0)  (^0) 
Total $

1

3

5

,

0

0

0

Sales Forecast
Just as for the cash budget, the key input for pro forma statements is the sales
forecast. Vectra Manufacturing’s sales forecast for the coming year, based on
both external and internal data, is presented in Table 3.14. The unit sale prices
of the products reflect an increase from $20 to $25 for model X and from $40
to $50 for model Y. These increases are necessary to cover anticipated increases
in costs.
Review Question
3–13 What is the purpose of pro forma statements?What inputs are required
for preparing them using the simplified approaches?