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Projection Information

Being able to present a clear, concise, logical and supportable financial projection is probably the most important key to having a chance of obtaining the capital you desire. If you don’t have financial forecast ability, hire someone who does. Have your pro forma give a month by month breakdown for the first year, quarterly for the next two years and then annually for the last two years. Include and fully support:

  • Sales Estimates
  • Administrative Costs
  • Production Costs
  • Sales Costs
  • Capital Expenditures
  • Gross Margin by Product Line
  • Sales Increase by Product Line
  • Interest Rates on Debts
  • Income Tax Rate
  • Accounts Receivable Collection Plan
  • Accounts Payable Schedule
  • Inventory Turnover
  • Depreciation Schedules
  • Usefulness of Assets

The Income Statement (Profit & Loss)

You will use the income statement to measure your business revenues against your expenses for a certain period. Let’s consider an apparel manufacturer as an example in outlining the major components of the income statement:

The income projection enables the owner/manager to develop a preview of the amount of income generated each month and for the business year, based on reasonable predictions of monthly levels of sales, costs and expenses.

  1. Total Net Sales (Revenues)
    The total number of units of products or services you realistically expect to sell each month in each department at the prices you expect to get. Use this step to create the projections to review your pricing practices. What returns, allowances and markdowns can be expected?
  2. Costs of Sales
    The key to accurately calculating your cost of sales is not to overlook any costs that you have incurred. Calculate the cost of sale of all products and services used to determine total net sales. Where inventory is involved, remember transportation costs and any direct labor.
  3. Gross Profit
    Subtract the total cost of sales from the total net sales to obtain gross profit.
  4. Gross Profit Margin
    The gross profit is expressed as a percentage of total sales (revenues). It is calculated by dividing the gross profits by the total net sales.


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