If this is an expansion of an existing business, provide financial information for previous years.  Regardless of whether this is a start-up or an expansion, show pro forma financial statements of how the business is expected to perform. It is important that you give a clear picture of where the business stands today.

Use the points below to help you prepare this section.

1. Historical Information (past three years)

• Balance Sheets 
• Income Statements 
• Income Tax Returns
• Financial Performance

2. Pro Forma Information during Start-Up (provide notes of explanation and assumptions)

• Balance Sheet
• Income Statement
• Cash Flow Statement (monthly)
• Sources and Uses of Funds Statement

3. Pro Forma Information under Full Production (provide notes of explanation and assumptions)

• Balance Sheet 
• Income Statement (monthly first year, quarterly second and third years)
• Cash Flow Statement (monthly first year, quarterly second and third years)
• Sources and Uses of Funds Statement

4. Sensitivity Analysis

• What are the key variables affecting profitability and cash-flow?
• Identify the levels of these variables (worst case, best case, expected).
• Project profitability and cash-flow under various combinations of these variables.
• Project profitability and cash-flow breakeven under various assumptions.
• Conduct Monte Carlo simulation

5. Other Information 

• Compare to Industry Standards (ie. Dun & Bradstreet, Risk Management Associates, etc.)
• Show how the financial information is consistent with the marketing, operations and other plans outlined in previous sections.
• Identify control mechanisms that will measure actual versus planning performance.

More information is available on Financial Management.