# 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.

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

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