Agriculture Reference
In-Depth Information
Plate 9.3 Grain elevator
Pro forma statements, such as a statement of cash fl ows, are used to manage cash. The manage-
ment of cash is essential for all fi rms, but is particularly true for fi rms that sell seasonal products.
Photo courtesy of USDA Natural Resources Conservation Service.
fl ows from fi nancing transactions, such as contributions from owners, borrowing, and
repaying debt. The statement of cash fl ows for BF&G at the end of the accounting period
is shown in Table 9.4 .
Pro forma statements: a case study
Each of the four fi nancial statements discussed in this chapter provides a way to report his-
torical accounting information. Historical information provides information needed to ana-
lyze past fi nancial performance, but it does not provide the information needed to assess
future plans. To provide such information, fi nancial statements can be prepared for a
future period. Such statements are called pro forma statements . The sample case study
presented below is used to illustrate two pro forma statements—a balance sheet and a
statement of cash fl ows.
The Aggieland Landscaping company provides landscaping services to a wide region of
east central Texas. This company has done reasonably well since its inception fi ve years ago.
However, the owner, Ted Henderson, has a problem. He needs to replace $50,000 of depre-
ciated equipment, but he does not have the cash to pay for the new equipment. He thinks
he can sell the depreciated equipment for $5,000, but it will cost $55,000 to replace it.
 
Search WWH ::




Custom Search