This is a Working Example of our Forecasts
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Report name: Sample Forecast

How the Balance Sheet Forecast is Calculated

Assets and liabilities in this balance sheet define a company’s forecast financial condition. Liquidity, gearing and solvency are all derived from it.

forecast for year beginning the 1st.May 2024May 2025May 2026
Fixed Assets56,62454,08177,791
Current Assets217,675260,109505,309
Total Assets274,298314,190583,099
Current Liabilities156,276125,149193,877
Long Term Liabilities13,8784,09511,648
Total Liabilities170,153129,244205,525

Net Current Assets (Working Capital)

Net Assets104,145184,946377,574

Retained Profits Bfwd


add: Profit / Loss after Tax


less: Dividend


Retained Profits C/Fwd


Balance Sheet Equity (Reserves)


How to Read this Balance Sheet Forecast

Profits, cashflow and solvency forecasts all depend upon the balance sheet. Without positive working capital and equity, none of those are achievable.

Total assets less total liabilities describe net assets. These always equal equity or reserves; hence "balance". A forecast deficit for net assets / equity is a serious matter as that means insolvency.

Net current assets describe working capital. A deficit here describes cash-flow insolvency. While it is possible to address this by taking on new long-term debt, credible changes to your budgets for overheads and investments are a far better solution.

Working to resolve working capital or any other deficits for that matter by using the What-If Calculator is strongly recommended.

How Forecast Working Capital is Calculated

Net current assets also describe 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 included.

Total current liabilities, representing debt payable within twelve months are deducted to arrive at net current assets.

Current liabilities will always include the result for the bank overdraft forecast as overdrafts are repayable on demand. 

Non-Current Assets / Fixed Assets

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 their net book value. 

Fixed assets net book value representing a significantly high proportion with respect to balance sheet equity / net worth can raise concerns for a bank, potential investors or other senior creditors. 

The Balance Sheet and the Law

Because the balance sheet describes the financial condition of any organisation; company or otherwise, there are strict rules attached to its content.

The standard balance test is that total assets must equal total liabilities plus equity / reserves.. If that is not the case, the balance sheet is either in error or subject to misrepresentation; the latter being a serious offence.

An example of of misrepresentation is the ommission of a deferred a liability, representing cash paid in advance for goods or services where delivery of the goods or services paid for has not yet made by the end of the financial year..

Another is by presenting liabilities as assets in order to disguise deficits for reserves. One example of this is a large local authority with net assets heavily in deficit, making it insolvent but showing reserves matching net assets but as a positive valuse rather than as a correct match for their net assets deficit..

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