profit and loss statement

IE Publishing 1 ICA16/158-I PROFIT AND LOSS STATEMENT Original written by professors Julián de Cabo and Enrique Dans at IE Business School. Original version, 5 March 1994. Last revised, 12 November 2008. Published by IE Publishing Department. María de Molina 13, 28006 – Madrid, Spain. ©1994 IE Total or partial publication of this document without the express, written consent of IE is prohibited. Mr. Isidro Medario had just been asked by his boss to write a report that included forecasting the company’s profit and loss statement from the next five years. This was not going to be easy, because the only information that he had been given was the following: Sales i for Year 1 1,250 Overheads for Year 1 300 Sales increase 10% Overheads increase 20% Production costs 72% It was supposed that with these data Mr. Medario should do the following : 1.- Forecast the company’s profit and loss statement, in terms of Sales, Production costs, Operating Margin, Overheads, and Gross Profit. 2.- Prepare a graph that showed profits or losses for the five periods included in the analysis. 3.- Prepare a graph that showed the increases in sales, overheads, and the production costs, to see if it was possible to use the graph to modify the bottom-line results . Given the scenario he breathed deeply, rose from his seat and began to look for the folder where he kept the cases of spreadsheet cases that he had been given during the Master’s degree programme he had done recently at the Instituto de Empresa. ■ ■ ■ This document is authorized for use only in Master in Finance SEP-2013 by IE Business School.

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Profit and Loss Statement

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IE P

ublis

hing

ICA16/158-I

PROFIT AND LOSS STATEMENT

Original written by professors Julián de Cabo and Enrique Dans at IE Business School. Original version, 5 March 1994. Last revised, 12 November 2008.

Mr. Isidro Medario had just been asked by his boss to write a report that included forecasting the company’s profit and loss statement from the next five years. This was not going to be easy, because the only information that he had been given was the following:

Sales i for Year 1 1,250 Overheads for Year 1 300 Sales increase 10% Overheads increase 20% Production costs 72%

It was supposed that with these data Mr. Medario should do the following : 1.- Forecast the company’s profit and loss statement, in terms of Sales, Production costs,

Operating Margin, Overheads, and Gross Profit. 2.- Prepare a graph that showed profits or losses for the five periods included in the analysis. 3.- Prepare a graph that showed the increases in sales, overheads, and the production costs, to

see if it was possible to use the graph to modify the bottom-line results . Given the scenario he breathed deeply, rose from his seat and began to look for the folder where he kept the cases of spreadsheet cases that he had been given during the Master’s degree programme he had done recently at the Instituto de Empresa. ■ ■ ■

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