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

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 2023May 2024May 2025
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)

61,399134,960311,431
    
Net Assets104,145184,946377,574
    
Capital5,0005,0005,000
    

Retained Profits Bfwd

20,00099,145179,946

add: Profit / Loss after Tax

79,14580,801192,628

less: Dividend

000

Retained Profits C/Fwd

99,145179,946372,574
    

Balance Sheet Equity (Reserves)

104,145184,946377,574

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..

FAQs
Corporation Tax and Marginal Relief From 2023 Deferred Income Explained What is a Monthly Cash Flow Forecast What is Pretax Profit How does a balance sheet balance? Lockdown Recovery: Forecasting Profits, Cash and Finance. How to Apply for Business Interruption Scheme with Figurewizard How to calculate liquidity and short-term liquidity How to calculate markup and margin The Truth about Monarch Airlines Labour's Spending over 10 years from 2000 How to make profits and not run out of cash 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 How Depreciation is Calculated What is Business Operating Activity What are Fixed Assets Liquidity and Cash Flow Balance Sheet Liabilities and Leases Stock or Inventory Control What is Distressed Stock or Inventory What is Interest Suspense Account Product Safety Laws What is a Bill of Exchange What is Payment at Sight What is a Pro Forma Invoice What is a Bill of Lading What is a packing note What is Demurrage Cash Flow Forecasts and Planning Factoring: Invoice Discounting and Cash Flow How Does VAT Work Figurewizard as a Sales Aid for Factoring and Invoice Discounting