1. Income Projection Statement

Instructions for Income Projection Statement

2. Balance Sheet

Instructions for Balance Sheet

3. Monthly Cash Flow Projection

Instructions for Monthly Cash Flow Projection

4. Information Resources

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INCOME PROJECTION STATEMENT

Industry J F M A M J J A S O N D Annual Annual% total %

	Total net sales (revenues)
	Costs of sales
	Gross profit
	Gross profit margin

	Controllable expenses
	Salaries/wages
	Payroll expenses
	Legal/accounting
	Advertising
	Automobile
	Office supplies
	Dues/Subscriptions
	Utilities
	Miscellaneous
	Total controllable
	expenses

	Fixed expenses
	Rent
	Depreciation
	Utilities
	Insurance
	License/permits
	Loan payments
	Miscellaneous
	Total fixed expenses

Total expenses

	Net profit (loss)
	before taxes

Taxes

Net profit (loss) after

taxes

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INSTRUCTIONS FOR INCOME PROJECTIONS STATEMENT

The income projections (profit and loss) statement is valuable as both a planning tool and a key management tool to help control business operations. It 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.

As monthly projections are developed and entered into the income projections statement, they can serve as definite goals for controlling the business operation. As actual operating results become known each month, they should be recorded for comparison with the monthly projections. A completed income statement allows the owner/manager to compare actual figures with monthly projections and to take steps to correct any problems.

Industry Percentage

In the industry percentage column, enter the percentages of total

sales (revenues) that are standard for your industry, which are

derived by dividing

Costs/expenses items x 100%

___________________________

total net sales

These percentages can be obtained from various sources, such as trade associations, accountants or banks. The reference librarian in your nearest public library can refer you to documents that contain the percentage figures, for example, Robert Morris Associates' Annual Statement Studies (One Liberty Place, Philadelphia, PA 19103).

Industry figures serve as a useful bench mark against which to compare cost and expense estimates that you develop for your firm. Compare the figures in the industry percentage column to those in the annual percentage column.

Total Net Sales (Revenues)

Determine 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?
	Exclude any revenue that is not strictly related to the business.

Cost of Sales

The key to calculating your cost of sales is that you do not overlook any costs that you have incurred. Calculate cost of sales of all products and services used to determine total net sales. Where inventory is involved, do not overlook transportation costs. Also include any direct labor.

Gross Profit

Subtract the total cost of sales from the total net sales to obtain gross profit.

Gross Profit Margin

The gross profit is expressed as a percentage of total sales

(revenues). It is calculated by dividing

gross profits

______________

total net sales

Controllable (also known as Variable) Expenses

	Salary expenses-Base pay plus overtime.
	Payroll expenses-Include paid vacations, sick leave, health insurance, unemployment insurance and social security taxes.
	Outside services-Include costs of subcontracts, overflow work and special or one-time services.
	Supplies-Services and items purchased for use in the business.
	Repair and maintenance-Regular maintenance and repair, including periodic large expenditures such as painting.
	Advertising-Include desired sales volume and classified directory advertising expenses.
	Car delivery and travel-Include charges if personal car is used in business, including parking, tools, buying trips, etc.
	Accounting and legal-Outside professional services.

Fixed Expenses

	Rent-List only real estate used in business.
	Depreciation-Amortization of capital assets.
	Utilities-Water, heat, light, etc.
	Insurance-Fire or liability on property or products.

Include workers' compensation.

	Loan repayments-Interest on outstanding loans.
	Miscellaneous-Unspecified; small expenditures without separate accounts.

Net Profit (loss)

(before taxes) - Subtract total expenses from gross profit.

Taxes - Include inventory and sales tax, excise

tax, real estate tax, etc.

Net Profit (loss)

(after taxes) - Subtract taxes from net profit (before

taxes)

Annual Total - For each of the sales and expense items in

your income projection statement, add all

the monthly figures across the table and

put the result in the annual total column.

Annual Percentage - Calculate the annual percentage by dividing

Annual total x 100%

___________________

total net sales

Compare this figure to the industry percentage in the first column.