The paper "Business Finance - TESCO" is a good example of a business assignment. Preparing proforma -financial statements are of critical importance to the success of the business organization. According to (Thomas and James, 2006), the projections are important in that they guide the management in planning the business growth. The following are some of the factors that should be considered in preparing the projected statements. Prior financial statements The statements reflect how the business has been performing in the past. The rate of growth reflected by these statements will be of great importance in projecting the future growth of the business.
From these statements, one uses sales and levels of revenue, various business ratios, average expenses and any information regarding payables and receivables in projecting the future figures. The prior financial statements should show the financial improvement for the business for each year under consideration. Internal factors The status of the firm's operations is of paramount importance in preparing the projected statements. For instance, consideration must be made on whether the firm needs to relocate owing to expansion or whether the firm requires replacing the existing assets due to improvement in technology.
One also needs to consider the level of competition that the business faces and the strategies that need to be implemented in order to deal with the competition. One also needs to consider whether the firm requires hiring additional personnel or to train the existing. External factors In preparing the projected statements, one needs to consider the status of the country’ s economy as well as the status of the global economy. The trends of the industry in which the business falls also needs to be considered in order to know whether the projected sales revenue levels, as well as profitability, will be achieved. The business must also consider the reliability of the sources of raw materials as well as changes in technology (Peter, 2008). Other factors to consider include whether the company is performing as expected (up to the mark); the company’ s current financial status; the stage of growth the market is; the management’ s role in the company’ s growth as well as the risks associated with the company’ s operating activities.
Tesco plc .com 2009, Tesco plc, Viewed 23 July 2010, http://www.google.com/search?hl=en&q=Tesco+PLc+goup+annual+reports+for+2009&btnG=Se arch&aq=f&aqi=&aql=&oq=&gs_rfai=.
Tesco plc.com 2006, Tesco annual report and financial statements for 2006, viewed 23 July 2010,
Zero million.com 2010, financial ratio analysis, viewed 23 July 2010, http://www.zeromillion.com/business/financial/financial-ratio.html.
Peter, A2008, Financial management for decision makers, London: prentice hall.
Thomas, G & James, P 2006, Financial and business statements, London: Routledge.
Jim, M 2007, Financial management: an introduction, London Routledge.
Leopold, A 2005, Analysis of financial statements, New York: McGraw-Hill