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Financial projection

05 March 2016

Mr.X requires an Estimated balance sheet and profit and loss a/c for next two year – 2016-17, 2017-18For a loan (CC amount Rs65,00,000). What is the important things to be noticed for preparing a projected balance sheet and P&L. Anybody Please give your valuable advice

Thanks in advance

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Sandip Makadiya (Student CA Final ) (36 Points)
Replied 05 March 2016

Please note below points

1. Turnover of the unit should be at least 5 times to CC limit (That means Rs.65 lacs * 5 = Rs.325 Lacs)

2. In projected balance sheet 75% paid stock (Closing Stock - Sundry Creditors) + 50% of Sundry Debtors should be equal to your CC limit.

3. Financial ratio depends on Banks norms like some bank require Current Ratio 1.10 or some requires 1.25, Total Outside Liabilities / Tengible Networth ration should be less than 4, some banks requires other financial ratio. Contact to particulars bank for ration norms.

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