Final answer:
The first step in developing a pro forma income statement is to estimate your sales projections and include consideration of goods and services, followed by COGS and operational expenses. It's also important to use available information to calculate taxes and account for income from abroad.
Step-by-step explanation:
The first step in developing a pro forma income statement is to focus on goods and services first. This involves projecting your future business activity based on an analysis of historical performance and market conditions. You would begin by estimating your sales revenue, considering the dollar amounts of exports and imports of goods and services if your business operates internationally. After that, incorporate estimated costs of goods sold (COGS) and other operational expenses to delineate projected net income.
Moreover, it's essential to analyze the problem by identifying what information is available and what needs to be calculated. For a pro forma income statement, this might include sales forecasts, pricing strategies, market trends, and historical data. A time-line or a sketch might be helpful in visualizing these projections over the upcoming periods.
To refine this further, you might calculate the amount of taxes for each level of national income, for instance, using GDP as a guide, and then determine financial flows such as income payments coming back to the business from abroad, all of which can affect the bottom line of your pro forma income statement.