Income Statement Forecast
Financial Planning is one of the most important sections from the viewpoint of an entity as it enables an organization to incur the expenses as per the budgeted income. Income Statement is the one that has all the relevant information regarding the revenues, expenses and net income of an organization. It has sufficient information for an analyst to analyze the financial performance of an organization throughout a certain time period. It has been consensus that most of the items found in the income statement are in the proportion of total sales of the company. It is required to analyze and forecasted the income statement of Reject Shop, Australia. The company is in a good financial position. Cost of Goods Sold in percentage to Sales accounts for 55% through the analytical years . The forecasted income statement of the company is showing that the company will be in a good financial position throughout the next 4 years of their operations. The sales of the company has a Constant Growth Rate (CGR) of 9.5% from 2011 to 2013, and we have applied the same on the income statement of the company, while cost of the goods sold is nearly 55% of the proportion of total sales. Net income of the company is also increased considerably with regular percentages. Account Receivable to Sales proportion of the company also lies in a satisfactory range which is an effective sign for the company in particular and it should be higher. Apart from that, inventory to sales of the company is also 14%. Sales to account payable of the company are 3.94%, while inventory to sales of the company is 13.8%.
In last three years, the net income of the company increased considerably well each year which is a positive and effective sign for the company as it has the tendency to grow more in the future. All of the financial indicators that used to make an income statement is in the favor of the company which is a positive and effective sign for them in the future. The snapshot of income statement forecasted is mentioned below
Balance Sheet Forecast
Likewise income statement, the provision and existence of balance sheet is also extremely important for the sake of an organization. Balance Sheet usually referred as the financial position of an organization and it has the tendency to analyze the effectiveness of its company in terms of total assets and total liabilities. Total assets of a company analyze that how much a company can generate from their operational assets in particular.
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Swan, J. (2009). Practical Financial Modelling: A guide to current practice. Chicago: Butterworth-Heinemann.