| forecast for year beginning the 1st. | May 2023 | May 2024 | May 2025 |
| Fixed Assets | 56,624 | 54,081 | 77,791 |
| Current Assets | 217,675 | 260,109 | 505,309 |
| Total Assets | 274,298 | 314,190 | 583,099 |
| Current Liabilities | 156,276 | 125,149 | 193,877 |
| Long Term Liabilities | 13,878 | 4,095 | 11,648 |
| Total Liabilities | 170,153 | 129,244 | 205,525 |
Net Current Assets (Working Capital) | 61,399 | 134,960 | 311,431 |
| Net Assets | 104,145 | 184,946 | 377,574 |
| Capital | 5,000 | 5,000 | 5,000 |
Retained Profits Bfwd | 20,000 | 99,145 | 179,946 |
add: Profit / Loss after Tax | 79,145 | 80,801 | 192,628 |
less: Dividend | 0 | 0 | 0 |
Retained Profits C/Fwd | 99,145 | 179,946 | 372,574 |
Capital and Reserves (Equity) | 104,145 | 184,946 | 377,574 |
The liquidity and solvency of your business plan will be displayed by this balance sheet forecast. It is the most important element of any business plan.
Total assets less total liabilities describe net assets. These always equal equity; hence "balance". A forecast deficit for net assets / equity is a serious matter as it describes insolvency.
Net current assets describe working capital. A deficit here describes cash-flow insolvency. While it is possible to resolve this by taking on new debt, credible changes to your budgets for overheads and investments is a far better solution.
That can be easily and rapidly achieved using the What-If Calculator.
Net current assets describe working capital. These forecast year-end liquidity; the sole source of cashflow to be generated from core trading activity.
Current or short term assets are cash and cash convertibles such as accounts receivable and stock that can safely be assumed will be turned into cash within twelve months. Prepayments and deposits are also included.
Total current liabilities, also payable within a year are deducted to arrive at net current assets.That in turn describes working capital.
Current liabilities will always include the result for the bank overdraft forecast as that is repayable on demand.
Although fixed assets less depreciation contribute to forecast net asset value, care should be taken with how much is invested in them.
Depreciation only serves to recognises their residual useful working life, not fair market value. Most fixed asset values net of depreciation put up for sale would almost certainly return a heavy discount against net book value.
A high proportion of fixed assets realative to equity / net worth will devalue a balance sheet in the eyes of banks and other senior lenders.
The financial condition of any organisation; business or otherwise is defined by its balance sheet. As a result, there are strict rules attached to it.
The balance test is that total assets less total liabilities plus equity / reserves must equal zero. If that is not the case, the balance sheet is either in error or misrepresented. Misrepresentation of any part of the balance sheet is a serious offence..