06 May 2010
I want to prepare projections for next 3 years. What are the important steps to be considered while making projections. How the P&L & Balance sheet is tallied?
06 May 2010
Note some of th efollowing points while providing projections >
- Determine sales on the basis of the trends from the previous years. - Estimate debtors on the basis of the experience of the debt collection and increase in credit sales. - Estimate the increase or decrease in creditors on the basis of the credit period u can avail from the suppliers and level of purchases made. - Stock should be estimated on the basis of the sales, inventory turnover, storage capacity and working capital investment. - Estimate expenses based on the past experiences, any special expense to be incurred, commitments made etc. - Estimate depreciation on the basis of past %. Also consider any additional asset planned to be purchased in future. - Consider planning for any additional loan likely to be raised. - Deduct the estimated EMIs , if any paying for any existing loans. - Change fixed assets on the estimate of new purchase or sale of old asset. - Consider capital introduction if likely to be taken in future. - Profit % should reflect some what trend of the past years unless there are specific changes. - Balance or any difference in BS, can be adjusted in cash and bank balance.
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