3.4 Analysis of Financial Statement Projections.
Based on your strategies and projected financial statements, here we test whether your strategy or planworks. For each of the objectives in Section 2.1 (revenues, income (profit), ROE, Share Price, Target Share Price, and EPS), compare your projected results in your financial statements to these objectives. This tests whether your plan works (i.e., whether it achieves your objectives). For example, if your objective was to achieve Profit/Net Income of $5,000,000 in Year 5 and $6,000,000 in Year 6, compare the Profit/Net Income from your projected financials with these objectives. State whether your objectives were met by your plan. Then, discuss meaningfully why you believe your objectives were met or not met by your plan.
Although Stock Price cannot be measured directly from your projected statements, it can be estimated indirectly. Calculate your historical Price-to-Earnings Ratio (i.e., P/E Ratio) and use that ratio with your proforma earnings to estimate your future stock price.
