|
Prospective financial statements for business planning
The heart of any successful business plan and/or financing memorandum is a forecast or a projection. Decosimo works with you to provide the right solution based on your specific needs.
A Forecast is an expectation based upon historical financial statements. A Projection is an expectation based upon a hypothetical assumption of what might happen if a specified action or event occurs.
Prospective financial statements are useful for business planning and decision making. Some of the common uses are acquisitions, financing negotiations and plan expansions.
Decosimo can help you examine and compile your historical financial statements, perform agreed-upon procedures and assemble prospective financial statements.
In addition to prospective financial statements, we can assist management in preparing internal-use budgets and financial analyses.
Forecasts
A financial forecast consists of prospective financial statements that present, to the best of the responsible party's knowledge and belief, an entity's expected financial position, results of operations, and cash flows. A financial forecast is based on the responsible party's assumptions reflecting conditions it expects to exist and the course of action it expects to take. A financial forecast may be expressed in specific monetary amounts as a single point estimate of forecasted results or as a range, where the responsible party selects key assumptions to form a range within which it reasonably expects the item or items subject to the assumptions to actually fall. If a forecast contains a range, the range is not selected in a biased or misleading manner (for example, a range in which one end of the range is significantly less expected than the other).
Projections
A financial projection consists of prospective financial statements that present, to the best of the responsible party's knowledge and belief, given one or more hypothetical assumptions, an entity's expected financial position, results of operations, and cash flows. A financial projection is sometimes prepared to present one or more hypothetical courses of action for evaluation, as in response to a question that begins, for instance, 'What would happen if…?' A financial forecast is based on the responsible party's assumptions reflecting conditions it expects would exist and the course of action it expects would be taken, given one or more hypothetical assumptions. A projection, like a forecast, may contain a range.
-Guide for Prospective Financial Information. New York: American Institute of Certified Public Accountants, 1993.
|
