Market Demand and Pro-forma Income Statement

MHACB/506 Competency 3 Assessment and Rubric
Course Title: Ethical Marketing: The New Healthcare Economics
Competency Assessment Title: Market Demand and Pro-forma Income Statement
Assignment Directions
In this part of the course, you will prepare a pro forma income statement for a new or revised product or service you recommend for East Chestnut Regional Health System.
Review Case Study: East Chestnut Regional Health System.
Part I: Market Size Calculation:
Determine the size of the market for the ECRHS product or service you are recommending. Assume East Chestnut Regional Health is located in the market in which you live or work.
Determine the local market for the product or service you recommend for East Chestnut Regional Health.
Prepare a 150- to 300-word summary of your market determination process.
Part II: Breakeven Analysis:
Prepare a 150- to 300-word summary of your breakeven analysis that includes the following:
• The fixed and variable costs of product production or service provision
• The price and number of units sold at that price
• The number of units of product or service sold to cover the fixed and variable costs at the price level
Part III: Pro Forma Income Statement:
A pro forma is an income statement that predicts income for the new or revised product or service you are recommending to East Chestnut Regional Health System (ECRHS) after one year. It shows the sales ECRHS expects to achieve during that period of time, along with the costs associated with that level of sales. The organization must cover the costs of products or services it delivers (cost of goods sold) and the expenses we estimate to achieve those sales (salaries for sales reps, advertising and promotion, office expenses, etc.). This will leave us with a projected profit.
A good pro forma income statement proves out a strategy by showing the expected revenue minus the expected costs and the resulting profit. Conversely, it shows, for example, that you can't have $100,000 in forecast sales and $3 million in projected advertising, since that would result in a loss.
Use the Pro Forma Income Statement Worksheet to create your pro forma income statement.
Create a pro forma income statement based on the above. Include the following for 1 year:
• Projected sales volume in units and revenue
• Projected cost of goods/services
• Projected marketing expenses
• Projected net income
Prepare a 500-word summary statement of your pro forma income statement for East Chestnut Regional Health System for the new or revised existing product or service you have recommended. Include the following:
• Summary of market size calculation (150 words)
• Summary of breakeven analysis (150 words)
• Summary of projected profit (200 words)
Part IV: Marketing Plan Considerations:
Now that you have a better understanding of your market and the finances of the organization, you must consider how economics and finances can affect your marketing strategy.
Write a 350- to 500-word analysis of how specific economic or financial issues will affect the marketing strategies for ECRHS.