Maine Marine Supply Inc. Prepares 5-Year Financial Statement

Introduction

Maine Marine Supply Inc. (MMS) is a leading supplier of marine products and services in the Northeast. The company has been in business for over 40 years and has a strong reputation for quality and customer service. MMS is preparing to embark on a new phase of growth and has developed a 5-year financial statement to guide its future decision-making.

Financial Projections

MMS's financial projections are based on a number of factors, including historical data, industry trends, and economic forecasts. The company expects to see revenue grow at a rate of 5% per year over the next five years. Net income is projected to grow at a rate of 6% per year over the same period.

Key Financial Assumptions

The following are the key financial assumptions that MMS used to develop its 5-year financial statement:

• Revenue growth: 5% per year
• Net income growth: 6% per year
• Gross profit margin: 35%
• Operating expenses: 25% of revenue
• Capital expenditures: $2 million per year

Financial Statement Overview

The following table presents MMS's projected financial statements for the next five years:

Sensitivity Analysis

MMS conducted a sensitivity analysis to assess the impact of changes in key financial assumptions on its projected financial performance. The analysis showed that MMS is most sensitive to changes in revenue growth and gross profit margin. A 1% decrease in revenue growth would reduce net income by 1.5%. A 1% decrease in gross profit margin would reduce net income by 2.5%.

Conclusion

MMS's 5-year financial statement provides a roadmap for the company's future growth. The projections are based on a number of assumptions, but MMS believes that they are realistic and achievable. The company is committed to meeting its financial goals and continuing to provide quality products and services to its customers.

Frequently Asked Questions

1. What is the basis for MMS's financial projections?
MMS's financial projections are based on historical data, industry trends, and economic forecasts.

2. What are the key financial assumptions that MMS used?
MMS used the following key financial assumptions: revenue growth of 5% per year, net income growth of 6% per year, gross profit margin of 35%, operating expenses of 25% of revenue, and capital expenditures of $2 million per year.

3. What are the projected financial results for the next five years?
MMS projects revenue to grow from $100 million in 2023 to $121.5 million in 2027. Net income is projected to grow from $6 million in 2023 to $8.7 million in 2027.

4. What is the sensitivity of MMS's financial projections to changes in key financial assumptions?
MMS is most sensitive to changes in revenue growth and gross profit margin. A 1% decrease in revenue growth would reduce net income by 1.5%. A 1% decrease in gross profit margin would reduce net income by 2.5%.