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 Profit and Loss Forecast is Calculated

Gross profit minus overheads and expenses describes pre-tax profit. There is a lot more than that to a successful profit and loss forecast though.

forecast for year beginning the 1st.May 2024May 2025May 2026
Sales1,500,0001,650,0002,200,000
add: Delivery / Service Charges37,50041,25055,000
Total Sales1,537,5001,691,2502,255,000
less: Cost of Goods Sold885,000973,5001,298,000
Gross Profit Cfwd652,500717,750957,000
    
Wages NI and Pensions300,000310,000330,000
Administrative Overheads105,800127,200145,500
Selling Overheads136,381156,500203,567
Depreciation10,87617,54320,290
Operating Overheads and Expenses553,057611,243699,357
    

Operating Profit

99,443106,507257,643
less: Interest Charges5,0627,4695,469
add: Exceptional Item (Profit on Asset Sales)000

Pre-Tax Profit for the Year

94,38199,038252,174
less: Corporation Tax15,23618,23759,546
Net Profit Cfwd79,14580,801192,628
    
Corporation Tax % of Pre Tax Profit16.1%18.4%23.6%

The Operating Profit Forecast

This is the net profit forecast earned exclusively from core trading activity. Operating profit is also known as EBIT - Earnings before interest and tax.

It describes the predicted performance of the business exlusively from core trading activity and its expected return on investment from that.

If your operating profit forecast is unsatisfactory, you can examine how simple changes to margin, overheads or fixed asset purchases can improve it in real time, using the What-IF Calculator and Planner. Changes in financing can also be investigated.

Exceptional Profits

Profits (or losses) from the sale of fixed assets or income from investments are "exceptional items" unconnected with core trading activity.

Exceptional profits (or losses) are one-time events unconnected with operations, so are only added to net profit cfwd (net income) once the operating profit forecast has been calculated.

How the Profit and Loss Forecast is Calculated

This and all of the other forecasts simply come from your own projected figures for sales, gross profit margin, overheads, fixed asset, purchases, disposals and financing.

Corporation tax including capital allowances and VAT are automatically calculated and included in the forecasts, which can be for one, two or three years.

Financing Fees and Interest Charges

Fees other than interest that are associated with financing activity, such as bank, charge card or invoice financing are charged to the operating profit forecast.

Interest charges such as from a bank overdraft are only charged to profit and loss as and when they arise.

The exception to this is when the sum of interest at a fixed rate is calculated and applied to the value of a contract from the outset, such as for a hire-purchase agreement. Interest is then paid monthly in line with the installments of the principal.

Forecast Profit after Tax and Equity

Retained profits after tax are those available for distribution as dividends.

They are variously referred to in the balance sheet as reserves or shareholders funds and form part of the equity or net worth of the company.

You may not declare a dividend in excess of the vlaue of accumulated profits as shown in the equity of the balance sheet.

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