Step 7 Constructing the financial statements

(From costs, volume profit analysis and the ROE models).

1. Proforma Income Statements
• Estimate the size of business i.e volume and value
• drawn from cost volume profit analysis - step 1
• Matching of revenue against the right expenses assured
2. Proforma Balance Sheet
• drawn from working capital - step 2
• drawn from fixed assets - step 3
• drawn from equity - step 4
• financial leverage if any step 4
3. Checking the capacity, health, efficiency and balance of the company through ratio analysis.
• ROE step 5
• Liquidity
• Efficiency
• Gearing
• Potential
• Market performance