- Writing a Business Plan
- Financial Statements
- Business Forecasting
- Business Checklist
Creating Your Forecasted Break-even Analysis
Part 5 - Determine the Forecasted Current Market Value of each Fixed Asset Category
The Forecasted Current Market Value refers to the estimated worth of your fixed assets on the last day of each forecasted business year (IE your year end). Therefore, Murray must determine the estimated value of his fixed assets on December 31, 200X and on December 31, 200Y. To do this, simply subtract each category's accumulated deprecation from the cost of each fixed asset (or appraised values, if any).
Office Salaries Expense - from Operating Expense Budget
Murray expects to hire TWO office workers in July 200X. Each employee will be paid $1,300 each month during 200X. As a result, Murray's 200X Forecasted Income Statement will show a Total Office Salaries Expense of $15,600 ($1,300 per month x two employees x 6 months). In addition, Murray's 200X Forecasted Cash Flow Statement will show a Cash Outflow of $2,600 per month for Office Salaries.
Business Forecasting Financial Statements
Whether you're currently in business or thinking of starting a business this section is a must. In this section, existing business owners will learn about financial planning for the future, while aspiring entrepreneurs will learn how to develop forecasted financial statements for their business plan.
Part 1 - Determine the Fixed Assets You Plan to Invest into the Business
Often entrepreneurs have personal fixed assets that can be used in their businesses. For example, many entrepreneurs invest their personal computer, their photocopier, their fax machine, a building, land, their car, and so on, into their business. Once such assets are recorded on the company's books, they're no longer considered personal assets; that is, they become the property of the business.
PART 1 - The Ending Inventory Budget for a Retailer
Below depicts the formula a retailer would use to calculate its Ending Inventory in Units and in Dollars.
Office Supplies Expense - from Operating Expense Budget
In July of 200X, Murray plans to purchase office supplies valued at $2,500. Therefore, his 200X Forecasted Cash Flow Statement will show a Cash Outflow of $2,500 in July for office supplies. Since Murray expects these supplies to be fully "used-up" or consumed by December 31, 200X (Murray's year end), his 200X Forecasted Income Statement will show an "Office Supplies Expense" of $2,500.
Part 3 - Estimate each Fixed Asset's Deprecation for each Forecasted Year
As fixed assets are used, their values decrease. In other words, fixed assets depreciate in value over time as they are used. There are four methods you may choose from to estimate the reduction in value of fixed assets. These methods are: straight-line depreciation, units-of-production depreciation, declining-balance depreciation, and sum-of-the-years depreciation.