Financial Statements Projection Models
In its simplest form, a financial projection is a forecast of future revenues and expenses. Typically, the projection will account for internal or historical data and will include a prediction of external market factors.
Income Statement (Profit & Loss, P&L):
An income statement or profit and loss projections template will forecast how much money you will bring in by selling products or services and how much profit you will make from these sales. In good times, you use it to ensure that there will be enough money coming in to exceed the costs of providing the goods and services so you can make a solid profit. In tough times, your P&L can play an essential role in showing you what kind of a plan you need to return to breakeven, so that you’ll be able to survive until better times come.
A balance sheet projections template will communicate expected changes in future asset investments, outstanding liabilities and equity financing. Businesses may consider the creation of a projected balance sheet as a way to facilitate long-term, strategic planning. A business’ long-term plans often concern future asset growth and how it may be supported by increased financing through both debt and equity. A projected balance sheet provides the most relevant financial information needed in the business planning process.
A cash flow projections template will tell you if your business will have enough cash to run the business or to expand it. It will also show you when more cash is going out of the business, than is coming in, thereby necesssitating the need for external debt or equity financing.