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 2017May 2018May 2019
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
Operating Overheads and Expenses553,057611,243699,357

Operating Profit

less: Interest Charges5,0627,4695,394
add: Exceptional Item (Profit on Asset Sales)000

Pre-Tax Profit for the Year

less: Corporation Tax13,61318,49547,077
Net Profit Cfwd80,76880,543205,172
Corporation Tax % of Pre Tax Profit14.4%18.7%18.7%

The Operating Profit Forecast

Also known as EBIT (earnings before interest and tax) operating profit is concerned with profits arising from core trading activity, nothing else.

Operating profit also measures the predicted performance of your business plan. Your operating profit forecast is also a major component of net operating revenue, which forms part of the operating cash flow forecast.

Exceptional Profits

Profits (or losses) from the sale of fixed assets or income from investments are "exceptional items" i.e. not connected with core trading activity.

These are excluded from operating profit and are only added to the profit and loss or net income forecast .after the operating profit forecast has been calculated.

How this Profit and Loss Forecast is Calculated

This example of a profit and loss forecast is calculated simply from your own projected figures for sales, margin, overheads, cost and sales, values of assets bought and sold, financing plus a few simple ratios.

Creating forecasts using Figurewiard can be for one, two or three years.

UK VAT and Corporation tax charges are all automatically calculated and applied to forecasts .for you by our system.

How to Improve Forecast Net Profit, Liquidity and Cash

In this example, forecast overheads include fixed overheads of £130,000 and wages of £300,000, a total of £430,000. Reducing these using our What-If Calculator will dramatically improve both profits and cash.

Year 1 less: Fixed OH + Wages Pre - Tax Profits Working Capital (Liquidity) Operating Cash Flow Bank: Year End
0% 430,000 94,381 63,022 12,208 -35,439
5% 408,500 116,779 81,165 33,488 -13,261
10% 387,000 138,712 98,931 54,768 8,452

How to Improve Forecast Operating Profit, Liquidity and Cash

In this example the What-If Calculator is again used, this time reducing variable overheads.

These are calculated as .percentages of sales to forecast the cost of shipping customer orders and for the provision of bad debts. They are jointly reduced by 0.5% (i.e. 0.25% each).

Shipping and Bad Debts Fixed OH + Wages Operating Profit Working Capital (Liquidity) Operating Cash Flow Bank: Year-End
7.0% 430,000 99,443 63,022 12,208 -35,439
6.5% 408,500 128,523 87,430 40,896 -5,698
6.0% 387,000 157,603 111,326 69,584 23,410

How the Taxable Profit Forecast is Calculated

HMRC does not accept depreciation as tax deductible. That is therefore added back to the pre-tax profit forecast and replaced by capital allowances.

Figurewizard calculates and applies all capital allowances simply from your own forecast figures for fixed asset purchases and disposals with no input called for from yourself.

Provisons for bad debts, which like depreciation do not involve cash transfers and non-deductible charges such as entertainment expenses are also added back to taxable profit.

Financial Fees and Interest Charges

Fees other than interest that are associated with financing activity, such as bank, charge card or invoice financing service charges are chargeable to operating profit.

Interest charges on the other hand are exclusively concerned with financing activity (the cost of money) and are therefore only charged after the operating profit forecast has been calculated. They are tax deductible though.

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.

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