This is a Working Example of our Forecasts
Registered users can produce their own business forecasts in minutes; exactly as is shown here.

Report name: Sample Forecast

How the Balance Sheet Forecast is Calculated

This example shows how Figurewizard calculates your balance sheet forecast. Liquidity, solvency and operating cash flow all derive from the balance sheet.

forecast for year beginning the 1st.May 2017May 2018May 2019
 Fixed Assets56,62454,08177,791
 Current Assets217,675261,733506,750
 Total Assets274,298315,813584,540
 Current Liabilities154,652125,407181,003
 Long Term Liabilities13,8784,09511,648
 Total Liabilities168,530129,502192,651

Net Current Assets (Working Capital)

 Net Assets105,768186,311391,890

Retained Profits Bfwd


add: Profit / Loss after Tax


less: Dividend


Retained Profits C/Fwd


Capital and Reserves (Equity)


How to Read the Balance Sheet Forecast

Of all the forecasts Figurewizard produces this balance sheet forecast is the most important, describing as it does the predicted financial condition of your business. Solvency, liquidity and operating cash flow are all going to be derived from it.

The two most important numbers will be those for net assets (equity) forecasting balance sheet solvency and net current assets (working capital) forecasting liquidity but of the two  working capital always outranks equity.

That's why a working capital deficit in a balance sheet forecast will call for changes to the business plan. Reducing overheads and investment in new assets, including the  level of year-end stock will all be important candidates, which is a job that can be quickly and easily undertaken in real time using the What-If Calculator and Planner.

Simply leaving working capital in deficit amounts to a business plan forecasting a cash flow crisis and probable insolvency, neither of which are recommended. Deficits can be covered by borrowings but regardless of whether that is with short or long term loans, they only buy you time: Loans are not a cure.

Planning Overheads and the Balance Sheet

Editing the figures you have entered into the form or better still using the What-If Calculator enables all forecasts to be updated including this balance sheet with single clicks of the mouse.

For example when both fixed overheads and wages (currently totalling £430,000) are reduced by degrees of 5%.

Year 1 less O/Heads & Wages Pre-Tax Profit Equity Working Capital Increase / Decrease Borrowings Bank Year End
0% 430,000 94,381 105,052 59,993 53,854 -35,439
5% 408,500 116,779 123,911 81,165 33,488 -13,261
10% 387,000 138,712 141,677 98,931 9,962 8,452

Planning Fixed Assets and Overheads

Improved working capital and cash flow also rely on sustainable expenditure for investment in new fixed assets. Their cost, regardless of financing will always affect balance sheet liquidity.

In this sample forecast £30,000 of new main pool assets (e.g. plant and machinery, fixtures, equipment, trucks and vans) and £25,000 for company cars haave been entered, a total of £55,000. Seventy percent of that is financed over 24 months.

The table below shows how that £55,000 will affect liquidity (working capital) and cash flows, followed by what happens to these if first the £25,000 for new cars is removed followed by the £30,000 of new main pool assets.

Despite these assets being 70% financed, the liquiity and cash flow improvements are significant.

Fixed Asset Acquisitions Fixed Overheads Interest Charges Equity Working Capital   Increase / Decrease Borrowings Bank Year End
55,000 430,000 5,062 105,052 59,993 53,854 -35,439
30,000 408,500 3,104 127,097 100,956 5,616 -691
0 387,000 1,488 143,371 135,789 -48,780 69,719

No comfort can be taken from the fact that the acquisition of fixed assets might be supported by asset finance. While fixed assets do not figure in working capital, repayments plus residual short term debt (payable within one year) deplete it.

Paying Current Liabilities on Time

Resolving cash flow problems by delaying payments for current liabilities only makes a bad situation worse.

Financial penalties for late payment of taxes are bad enough but the inevitable loss of confidence in your business that goes with late payment to suppliers will be worse still by putting commercial credit and therefore operating cash flows at risk.

Fixed Assets and Depreciation

Cost less depreciation describes the net book value of fixed assets in the balance sheet. That represents the residual value of their forecast working life in the business, not their estimated fair market values.

This is an important distinction. Depreciated net book values for fixed assets are invariably significantly lower than what could reasonably be expected to be realised if put up for sale. In the event of a forced sale (which is how bank managers will view their value) that realisable value will be lower still.

Fixed assets play no part in defining liquidity other than depleting it upon their acquisition; regardless of asset financing.

Producing this Balance Sheet Forecast

No intervention by a user is called for to calculate this balance sheet forecast. Figurewizard will automatically produce it just from your forecast sales, margins, overheads, investment and simple cash ratios.

Plan to Avoid Business Failure Using Figurewizard

With your first attempt at forecasting with Figurewizard there are likely to be areas of profit, cash, and balance sheet value that you will want to change. This is what the What-If Calculator and Planner is for.

For example it allows you to address deficits for profits, working capital and cash flow by amending your original figures such as profit margin, overheads, year-end stock, investments and financing , all with single clicks of the mouse. 

As you do so, the calculator, which displays the key features of your forecasts such as operating profits, profit after tax, cash flow, bank balances, working capital and net worth all change too, again in real time.

What-If Calculator and Factoring / Supply Chain Financing

You can also use the What-If Calculator to select factoring / supply chain financing.  Once again all this takes are single clicks to select the percentage of invoicing to be factored and the rate of interest to be charged. Once more as yo do so, everything changes in real time.

Subscribing to Figurewizard costs just £20 a year with no extra charges.

The Truth about Monarch Airlines Labour's Spending over 10 years from 2000 Business Planning and Forecasting: What to Look For. Credit Checking - How to Read Micro or Short Form Accounts Amortisation of Arrangement Fees for Long Term Loans BHS Profits Performance 2010 - 2014 BHS profits, liquidity and cash flows 2009 - 2014 How to Calculate a Free Cash Flow Forecast Campari: How to apply for a bank business loan What are Current Liabilities What are Current Assets Late Payers and Cash Flow What is Operating Cash Flow What is Working Capital How to Read a Balance Sheet Business Planning Cash Flow Calculator Short Term Liquidity Business Liquidity Corporation Tax is not Calculated on Net Profit Small Business Corporation Tax Cash Flow Calculator Using Figurewizard - VAT Using Figurewizard - Sales by Month Using Figurewizard - HP or Instalment Plan Budgets Using Figurewizard - How the budgeted cash flow forecast is calculated Using Figurewizard - Fixed Asset Budgets Using Figurewizard - Calculate Purchase of Goods Using Figurewizard - Forecasting Payments to Suppliers Using Figurewizard - How to Forecast Cash Collection Solvency and the Balance Sheet Property in the Balance Sheet Why Equity is a Liability Asset Management and Liquidity Selling Fixed Assets Contracts: Invitation to Treat What is Deferred Income Loss on the Sale of Fixed Assets Calculating Gross Profit Margin Profit and Loss Statement What is Operating Profit What is Net Operating Revenue What is Equity Profit on the Sale of Fixed Assets How Taxable Profit is Calculated What are Operating Overheads Overheads - Provisions Depreciation What is Business Operating Activity What are Fixed Assets