Forecasting a Balance Sheet

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1. Fill in projected sales and projected profit using figures from pro forma income statement.
   Sales:    Profit:
   
   
2. Add the projected profit to net worth from your current balance sheet:
   
   
3. Identify the assets and liabilities that vary with sales.
   

   Cash:		Equipment:
   Accounts Receivable:		Accounts Payable:
   Inventory:		Accrued Expenses:

4. Identify your Land/Building Assets and your Long-Term Debt.
   

   Land/Building Assets:

   Long-Term Debt:

5. Relate the figures from your current balance sheet to your current sales level. (See below).
   Multiply projected sales by the percent of sales and write it in the appropriate blank on page 88 (shown below.)
   
   
   Add the new figures. It is easiest to start with cash and work down that column, then copy the total assets to the total liabilities and net worth line, and work up, subtracting until you get to notes payable.
   
   
   The number you need to plug in to the notes payable line to balance the balance sheet is the amount of additional debt you will require to achieve your projected sales.
   
   

   Project the balance sheet as of

   		% Sales				% Sales
   Cash Sales	x 100 =			Equipment Sales	x 100 =
   Accounts. Receivable Sales	x 100 =			Accounts Payable Sales	x 100 =
   Inventory Sales	x 100 =			Accrued Expenses Sales	x 100 =

   Projected Sales: Assets (% of Sales) Cash: Accounts Rec: Inventory: Current Assets: Equipment: Land, Bldg: Total Assets:

   Projected NPBT: Liabilities (% of Sales) Notes Payable: Accounts Payable: Accrued Expenses: Current Liabilities: Long-Term Debt: Total Liabilities: Net Worth: Total Liabilities & Net Worth:

   Notes payable will be the "plug" - in order to balance the balance sheet. The Total Liabilities & Net Worth number above on the right should equal the Total Assets number on the left.

   To check the notes payable:

   (

   Variable Assets

   X

   Sales Increase

   )

   —

   (

   Variable Liabilities

   X

   Sales Increase

   )

   —

   Net Income

   =

   New Debt

   Sales

   Sales

   It's very important to forecast your company's debt requirement to prepare for possible bank loans.