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
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 Charges5,0627,4695,469
add: Exceptional Item (Profit on Asset Sales)000

Pre-Tax Profit for the Year

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.

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