Projected financial statements definition
/What are Projected Financial Statements?
Projected financial statements incorporate current trends and expectations to arrive at a financial picture that management believes it can attain as of a future date. At a minimum, projected financial statements will show a summary-level income statement and balance sheet . This information is typically derived from a revenue trend line, as well as expense percentages that are based on the current proportions of expenses to revenues.
Best Practices for Projected Financial Statements
A better set of projected financial statements will incorporate the following features:
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Expense projections that include step costs for major points at which revenues increase or decline
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Consideration of the pace at which the business can reasonably grow, based on its prior history
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Consideration of the corporate bottleneck operation on the ability to grow
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The ability of the business to attract the funding needed in order to accomplish the financial results stated in the plan