I am working on an assignment in which I need to put together a pro forma balance sheet. At the end of the assignment, I need to find the predicted values of accounts for the upcoming year. In 2011, Notes Payable was 11.28 million; Long Term Bonds were 7 million; Common Stock was 12 mill; and Retained Earnings were 26.12 million. How do I find the predicted values for 2012?
To find the predicted values for 2012, you will need to consider various factors that could affect each account. One common approach is to use historical growth rates, industry trends, and other relevant factors to estimate how each account is expected to change over time.
Here's a general guideline on how to approach predicting the values for each account:
1. Notes Payable: Start by examining the historical trend of Notes Payable over the past few years. If there has been consistent growth or decline, you can use that information to estimate the expected change for 2012. Additionally, consider factors such as interest rates and the company's borrowing strategy.
2. Long-Term Bonds: Similar to Notes Payable, analyze the historical trend of Long-Term Bonds to identify any growth or decline patterns. Additionally, consider market conditions, interest rates, and the company's financing strategy.
3. Common Stock: Common Stock is typically issued by a company to raise capital. Consider factors such as the company's growth prospects, any planned stock issuances, industry trends, and investor sentiment to estimate the expected change in Common Stock for 2012.
4. Retained Earnings: Retained Earnings represent the cumulative profits of a company that have been reinvested rather than distributed as dividends. Consider the company's historical dividend policy, profitability forecast, any significant transactions (such as acquisitions or divestitures), and industry trends to estimate the expected change in Retained Earnings for 2012.
Keep in mind that predicting values for financial accounts involves some level of uncertainty, and it is important to consider multiple factors and assumptions. It may also be helpful to consult financial analysts, industry reports, or the company's management for additional insights.
Please note that this is a general approach, and the specific methodology and assumptions will depend on the nature of your assignment and any additional information provided.