Consumer Essay

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How to prepare Financial Projections Financial projections usually refer to two types of projected financial statements: profit and loss statements and cash flow statements. Projected financial statements also can refer to balance sheet projections. Projected profit and loss statements estimate the future revenues and expenses of the company. Projected cash flow statements approximate the timing of cash received and paid out by the company. Financial projections should always be accompanied by a statement of assumptions, which explains the basis used to calculate projection figures. Information to make projections can be obtained from research. The projections should be reasonable as most likely to occur, your best guess based on research. Your projected financial statements should be based on: 1. An analysis of your company’s historical financial data or the financial data of other similar businesses. 2. Knowledge of your industry and general economic trends. 3. An estimate of how a proposed financial package will change the future events in the company. Sources of information on which to base your projected revenues and expenses include: • Trade Journals • Suppliers to your industry • Other businesses within your industry • Government statistics • Colleges and universities The public library is a good source of business information for financial projections, and your business plan in general. Most public libraries have a reference librarian who can help you locate business information. Local Chambers of Commerce, City and State economic development offices and professional research services are all excellent sources of business information. Revenues for retail stores can be projected based on the number of customers per hour multiplied by the average purchase multiplied by the number of days per month the store is open.

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