Financial Statements Projection Models
Prospective startup investors will be especially attentive to the financial section of the plan. Because too much or too little funding will negatively impact growth, the funding needs must be projected as precisely as possible. Consequently, this requires the use of a dependable and reliable financial statement projections model.
You will need to build a financial statements projection model that prepares spreadsheet monthly forecast figures for the next year and annual figures for the following two to four years, starting with your current income statement, cash flow statemen,t and balance sheet, if applicable. In addition, you will need to add sections to the model for financial ratios that you or prospective investors are likely to care about, for example, profit margins, debt to equity, assets to liabilities. The best place to start is with the income statement projections (also known as profit and loss projections and P&L projections).
Income Statement or Profit & Loss Projections
A Profit and Loss (P&L) statement measures a company’s sales and expenses during a specified period of time. The function of a P&L statement is to total all sources of revenue and subtract all expenses related to the revenue. It shows a company’s financial progress during the time period being examined and whether or not it will make or lose money.
Balance Sheet Projections
A Balance Sheet is a statement of the financial position of a business which states the assets, liabilities, and owners’ equity at a particular point in time. In other words, the balance sheet illustrates your business’s net worth for accounting and book purposes.
Cash Flow Projections
In financial accounting, a cash flow statement, also known as statement of cash flows, is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing and financing activities.
Business Plan Templates
The collection of business plan templates can also be accessed below: