Creating Your Projected Income Statement
Sales and marketing professionals use historical data to determine the percentage incomes and expenses will rise in the future. Often, a business may have an expense that decreases such as a short term loan. Also, a product or service that is sold may become obsolete in the future meaning the sales and cost of sales for that product or service will cease.
You can make pro forma income statement assumptions based on your market area and current trends and much like initial sales forecasting, some items you predict are often your best guesstimate.
To get started, first download the pro forma income statement example in our Media Gallery using the link provided in the above section. Right away you’ll see this income statement is much like a cash flow forecast but deals more with sales and cost of sales to determine your base gross profit margin. In the sales and cost of sales sections, enter the amounts you feel products or services will increase in the future. For example, if you expect product A to increase 10% in the next year, and last year’s sales were $100,000, on the pro forma income statement, the amount you enter under product A would be $110,000. Perform this calculation on all the goods or services you sell to determine total future sales.
In the cost of goods section in the pro forma income statement example, you will now have to determine the future cost of the products or services you sell. You can predict these numbers by looking at historical data to determine how much costs of goods or service have risen in prior years, or ask vendors and suppliers about upcoming price increases. Once these are determined enter these figures to determine your gross profit margin.