ENTERTAINMENT BUSINESS FINANCE (GEB6508)

Week 1 Assignment: Pro Forma Financial Statements Assignment (20%) Page 1 of 2

Objectives:
Instructions
Conduct extensive research.
Time Allotment: 8-10hrs
Apply financial statement concepts properly. - How did you come up with your sales numbers? What
1. Please complete and submit the included Pro Forma
Financial Statement Excel Spreadsheet using the provided will you do if they come in at 1/2 of the estimated levels?
Pro Forma Income Statement Resources. Do not transfer
For this assignment, you have been asked to create a Pro-
the spreadsheet into another program, or type in the - What are you going to do when a competitor sees how
Forma income statement and presentation for your new
shaded areas, as this will cause errors in the macros successful you are and starts doing exactly the same
company, with the assumption that you will complete all
included on the spreadsheet. thing?
required pre-planning activities this year, so that you can

open for business in January. For this exercise, you have
Deliverable: Completed Pro Forma Financial - How would you respond to an investor who says: Why
been asked to create a pro forma income statement by
Statement Excel Spreadsheet, following details should I give you the money? You have no proven track
month for the first year of business. A business plan tells a
outlined in the GoTo Trainings. record. I can go out and find someone who as already
multi-faceted story to potential investors or lenders. The
done this and has proven they can do it.
Pro-Forma financial statements use numbers to tell the
story. How will you use your numbers to tell your 2. Answer the following questions in a Word document.
Cite any sources used in the project on this document as Deliverable: Minimum one paragraph answer to
companys story?
well. Each answer should be a minimum of one well-written each of the four questions, submitted on a Word
paragraph and fully answer all aspects of the question document.
Please view the resources, rubric and the other
accompanying documents for more detailed instructions. A being asked.
Deliverable: A Word document and Microsoft Excel
template is provided to complete your Pro Forma Financial
- Briefly describe your business idea and state the reason spreadsheet titled Lastname, Firstname Pro
Projections, as well as a sample. The GoTo Trainings for
for why there is a need for your business. In other words, Forma and submitted via the platform. DO NOT
Week Three and Four contain guidance for the project as
what market problem are you solving or what market convert the Excel spreadsheet to a different format.
well.
opportunity are you fulfilling?
For this assignment you will use the Full Sail University
library to access EBSCOhost, Lexis-Nexis, trade journals
or other available library resources to conduct research.

FULL SAIL UNIVERSITY | EBMS

 ENTERTAINMENT BUSINESS FINANCE (GEB6508)
Guidelines:
Here are some guidelines to help you with the
income statement. The Pro Forma Income
Statement Resources goes into much more detail
on the various items, and the Week Three and Four
GoTo Trainings demonstrate how to fill out the
spreadsheet.
Gross Sales These are your estimated first year
sales. They often go up as the year progresses. Be
conservative with these numbers as the number
one reason that most new business fail is an over
estimation of first year sales. It is rare for a new
business to achieve more than $100,000 a month in
sales during its first year and most of the time,
these numbers are considerably less.
Commissions & Returns and Allowances
These generally dont apply to most entertainment
companies but if they apply, commissions tend to
be 10% to 30% of sales.
Salaries and Wages These also include your
own income, which is generally in the range of
$3,000 to $4,000 a month. Try to keep labor
expenses low in the early months of a new
business. You can add employees later as the
business grows.
Employee Benefits These can vary but
generally, something in the range of 40% of salaries
and wages should cover them.
Payroll taxes Around 10% of Salaries and
Wages should be adequate.
Page 2 of 2
Professional services These are accountants
and lawyers fees. Allocating around $250 a month
should be adequate.
Remaining expenses Come up with reasonable
estimates for the remaining numbers (depreciation
and interest are covered on the next page) and you
can leave zeros in for anything that doesnt apply.
Depreciation This is an allowed expense for the
write off of the cost of equipment due to assumed
obsolescence. Please see the document on
depreciation included with the assignment. No
money goes out the door but depreciation is an
allowed expense by the IRS to lower profit and
income tax liability. Depreciation can only be taken
on equipment purchased for business use with a
useful life of more than one year. For this
assignment, assume a five-year (60 month) useful
life and straight-line (same number is entered each
month) depreciation. To enter a number for
depreciation, take the total cost of your Start-up
Assets and divide by 60 and enter that number for
each month. You can round up to the next whole
dollar.
Interest expense You are required to take a loan
as part of the assignment. Use the Amortization
Calculator on the Assumptions Tab of the Excel
Template to calculate your expense. This is
demonstrated in the GoTo Training.
FULL SAIL UNIVERSITY | EBMS
 ENTERTAINMENT BUSINESS FINANCE (GEB6508)
Pro Forma Financial Statements Assignment Rubric
Excel Spreadsheet - 60 points
Start-up Costs 10 points
Are all start-up costs included? Sufficient working
capital allowance? Cash until Break Even and
Contingency Fund per instructions?
Sales 10 points
Are estimates reasonable and supported by
research? Returns and allowances considered?
Ramp-up logical?
Payroll and Taxes 10 points
Salaries and wages breakdown provided and
properly calculated? Payroll taxes calculated per
instructions?
Depreciation 10 points
Properly calculated per assignment instructions?
Interest Expense & Funding Sources 10 points
Properly entered? Loan amount, term and interest
rate provided? Debt and equity mix logical?
Break-even 10 points
Cumulative net profit properly calculated? Break-
even time period accurate and properly explained?
Word Document Questions - 40 points
Were the questions answered fully and correctly?
Proper spelling, punctuation, sentence structure
and grammar used? Work submitted in proper
format?
Important: You are not being graded on the
financial success or failure of your business. If your
business shows a negative profit for the first year,
or if it shows a massive gain, makes no difference.
You are graded on properly following the
instructions and making the correct calculations for
your business.
NOTE: This assignment requires a great deal of
unstructured research on your part. Every business
is unique, and as a result costs and expenses that
can incur in one industry can be non-existent in
another. Be sure to use the resources attached to
this assignment, and follow the instructions given in
the GoTo Training.
This assignment is the first step in what will
ultimately become your final project in the EBMS
program, where you will be asked to project the first
three years of revenue and expenses for your
business.
Late Policy
You will receive a 20% deduction for submitting the assignment one
day late, a 50% deduction for submitting the assignment two days late,
and no assignment will be accepted for credit after the second day.
Any assignment submitted late will receive a flat 5-point GPS
deduction.
Academic Integrity Policy
Students may not reuse identical or near-identical work that was
submitted for a previous course in the EBMS program, or any prior
degrees, unless approved, in writing, by the course director. If the
student is repeating this current course due to withdrawal, leave,
failure or other circumstance, an exception will be granted: he or she
may reuse and resubmit previous material created for this particular
course so long as the material is updated and revised to include any
prior faculty feedback and corrections. An assignment identified as
resubmitted work from a different class will receive a grade of 0 as
well as a loss of GPS points. A second occurrence will be considered
Academic Dishonesty and subject to the penalties outlined in the
Student Manual. Please refer to your Student Manual for the complete
Full Sail Code of Conduct and Standards of Behavior, including the
consequences of academic dishonesty. If you have any questions,
please contact your instructor or student advisor.
Grammar, Punctuation and Sentence Construction
One point deduction for each non-repetitive error. For example, one
word spelled incorrectly throughout the assignment receives only one
point deduction. For non-repetitive errors, these criteria are
uncapped (i.e. 25 typos = 25 points deducted). Grading under this
criteria evaluates whether the error distracts the reader from
understanding the material presented.