What are Projected Financial Statements?

Projected financial statements incorporate current trends and expectations to arrive at a financial picture that management believes it can attain as of a future date. At a minimum, projected financial statements will show a summary-level income statement and balance sheet. This information is typically derived from a revenue trend line, as well as expense percentages that are based on the current proportions of expenses to revenues.

Best Practices for Projected Financial Statements

A better set of projected financial statements will incorporate the following features:

A statement of cash flows
Expense projections that include step costs for major points at which revenues increase or decline
Consideration of the pace at which the business can reasonably grow, based on its prior history
Consideration of the corporate bottleneck operation on the ability to grow
The ability of the business to attract the funding needed in order to accomplish the financial results stated in the plan