The predominant task is to understand and diagnose the situation why revenue grew by 13 percent, but pretax profit declined 21 percent in 2001. The major reason for that would be the lack of forecasting through the use of financial modeling to better forecast beforehand and monitor during the project. Due to the lack of information provided, with only three years� historical financial statements from 1999 to 2001, the forecast is derive through the �percent-of-sales� method. This forecasting method involves initially forecasting sales as such forecasting other financial accounts based on their direct relationship with sales For this reason, all accounts in the pro-forma financial statement are based on the key assumptions about their relationships with sales. Key assumptions Sales � It is assumed that sales will grow at a constant rate of 11% every year. This figure is the historical average for the past three years (1999 to 2001). The average of the three historical years was used because the firm is in the maturity stage of the product life cycle � implying that it is les......

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