Before developing a pro forma income statement, one must first prepare a sales projection.
Discussion 1
Before developing a pro forma income statement, one must first prepare a sales projection. Explain why this first step is so critical based on your reading. Then, review the quarterly report for Deere & Company you downloaded for the Week 1 Analyzing the Statement of Cash Flows discussion. Describe how it addresses the sales results, and then outline the issues this company faces regarding sales projections.
John Deere link: https://investor.deere.com/home/
Discussion 2
As you explored in your textbook, financial leverage refers to the amount of debt used in the capital structure of a business. The degree of financial leverage measures the effect of a change in the earnings per share (EPS) of the company that occurs because of a percent change in the earnings before interest and taxes (EBIT).
List some of the benefits and limitations of financial leverage when it comes to profitability. Then, explain the factors a company should consider when deciding which type of leverage plan (i.e., leveraged or conservative) it should follow.
Answer preview to before developing a pro forma income statement, one must first prepare a sales projection.
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