projected balance sheet

What is cash flows & Balance sheet projection?

A cash flow forecast is an estimate of the amount of money expected to flow in and out of the business and includes all the projected income and expenses. A forecast usually covers the next 12 months, however it can also cover a short-term period such as a week or month. Balance sheet gives the view of assets’ mix i.e proportion of fixed and current assets. Moreover it also gives a clear picture of quality of assets mix- percentage of productive and non-productive assets, percentage of highly liquid, relatively liquid and non-liquid current assets. In nut shell we can say that forecasting balance sheet will tell us the strategic plan of the business owners!!!

Why is cash flow & balance sheet required?

Businesses need cash flow in order to keep themselves solvent. No cash means bankruptcy. This is why cash flow forecasting is so important! If your business runs out of cash, and it isn’t able to obtain any new finance, it will become insolvent. There is no excuse for businesses not to see a cash flow crisis coming, especially given how easy it can be to create a cash flow forecast.

Why cash flow forecasting is important?

  • Identifying potential shortfalls in cash balances
  • Ensure you have enough cash to pay suppliers and employees
  • Understanding the future sustainability of the business
  • Convincing the investors for pitching in for getting funds
  • Enable you to see when problems or cash shortfalls are likely to occur so you can plan to avoid them

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What's our approach for projection?

  • Listing down the assets currently employed
  • Analysing the present balance sheet ratios
  • Analysing the trends of the balance sheet ratios
  • Understanding the business plan/future strategy
  • Understanding the requirement of future assets
  • Forecasting with the help of projected income statement, simulation and sensitivity

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