1.Pro forma statements which is used as a tool of business planning and control entails setting up different scenarios of performance to produce various financial results. Assumptions have to be made in terms of expected market conditions, marketing penetration, competitive landscape which related to the sales volume for the company. Sales volume used in forecasting is the pinnacle of the pro forma planning process. The sensitivity in sales volume helps present a variety of outcomes simply by manipulating the figure of units sold and price of the goods. Assumptions on expenses and production planning cannot be put into place without a viable sales volume figures. Revenues directly relate to Cost of Sales, operating expenses and eventually to the profit or loss for the period.(McQueen; Clarke, 2001)
2. Rising healthcare expenses play a paramount role in the fiscal health of an economy. In the US as per the world bank 17.9% of the GDP is dedicated to healthcare as a percentage is higher than any other nation.(The World Bank, 2014). This has harsh ramifications when you realize that the US economy for the past 6 years has been experiencing single digit growth of 2% to 4 %. Increases of government spending on healthcare has a direct effect on a household due to tax increases causing lesser disposable income and higher amount of borrowing overall. In the case of the US increases in spending on Medicare and Medicaid programs brings down the amount which can be spent on energy issues, improvements on infrastructure etc. Increase in healthcare costs force companies to increase the cost of their products and services which directly affects the demand in the world market hence affecting overall US exports. Rising healthcare costs could convince employers to lower the number of full time employees which in turn has a direct effect on the unemployment rate. Therefore unless spending on healthcare is controlled more Americans will receive lesser medical care and the overall economy will cease to improve.(U.S Dept of Health, 2005)
References
McQueen, G., & Clarke, R. (2001). Forecasting financial statement: Proforma Analysis. Provo UT
U.S Department of health and human services (2005). Effects of Health Care Spending on the U.S. Economy. (2005). Retrieved from http://aspe.hhs.gov/health/costgrowth
The World Bank (2014). GDP Data By Country, Retrieved from http://data.worldbank.org/indicator/SH.XPD.TOTL.ZS
