More Skills

This week, I continued working on my excel sheet. From my last mentor visit, I took away the fact of the importance of pro forma statements. Before starting the excel sheet, I had a basic idea, however, I did not have a full understanding. My mentor explained to me that pro forma statements are used to show the significance of a company's assets have on a particular company, or on the company that owns them. In the pro forma statements, I realized that there is a significant test in order to determine the impact that the company in question will have. It is similar to how my Statistics class uses these tests to determine whether certain scenarios are important or not.

These significant tests are important because they allow accountants to efficiently use their time. Once the math is done, if the percentage that is shown is above 20%, the company or the asset is significant in the merger. The pro forma statements just really show how much of a impact an asset or company will have. For example, if Apple decides to suddenly buy a small coffee shop worth only 5,000 dollars, it wouldn't affect their overall profit by much, and there would be no need for a pro forma statement. However if they do a 10 million transaction, they would need a pro forma statements.

For this next week, I plan on working on some for tabs of my excel sheet and determining how the first company will affect the second one.