Along with the balance sheet, as well as the report on the results of capital circulation, a large number of other sources of data on the state of affairs regarding the economic development of the company can be formed in the financial statements of the enterprise. These include the forecast balance sheet of the organization. What are its specifics and how it is composed, we will consider further in the article.
The essence of the forecast balance
What is the forecast balance sheet of a commercial firm? This document is intended to reflect the entity's estimated financial position at a specific date in terms of its assets, liabilities and capital.
The preparation of the forecast balance is usually due to the need to formulate a strategy for investing in a business, to determine the needs of the company in cash in the form of investments of founders, loans and investments. In addition, this document may be compiled at the request of the owners, managers or partners of the company in order to determine the prospects for business development.
The corresponding balance in many cases is part of the business plan of the enterprise. In this case, it can perform the function of summing up and documenting within the framework of financial calculations for the revenue and profitability of the company. The preparation of the forecast balance sheet is usually preceded by the formation of the profit and loss plan of the company. The corresponding document is usually formed on their basis or using the data that is reflected in them.
The forecast balance sheet may reflect the financial position of the enterprise as a whole or of any of its divisions. In some cases, when it is formed, indicators are taken into account that can give the company’s management the opportunity to assess the degree of customer and counterparty satisfaction with its activities as one of the demand factors for the supplied products or services.
In some cases, the forecast balance sheet may be supplemented by a special report, which includes the estimated profit and loss figures of the company. The forecast balance sheet and the forecast report in many cases are prepared simultaneously, like accounting documents of the corresponding purpose.
It is noteworthy that the source in question can be presented in several varieties. The construction of the forecast balance can be carried out according to different principles. Consider the most common types of document in question.
Types of forecast balances
Probably the most popular type of forecast balance sheet is accounting. What is its specificity? In its structure, it can correspond to the classical balance sheet, which is prepared in accordance with the recommendations of financial supervisory authorities. The main task of the competent specialists of the enterprise in the formation of this document is to correctly reflect the estimated indicators of assets and liabilities in it.
In this case, the forecast balance will be calculated on the basis of the actual results reflected in the accounting, if it is available at the time of preparation of the first document. If the company has just opened and the accounting department has not formed an appropriate source, approaches can be applied according to which assets and liabilities will be calculated on the basis of patterns typical for the industry or group of enterprises, and also taking into account the calculations of experts and consultants.
The next type of forecast balance sheet is a document that reflects the estimated income and expenses of the company’s cash. So, a document may include indicators:
- on cash receipts due to payment by customers and counterparties of goods or services;
- on revenue arising from the sale of fixed assets;
- on receipts against partners paying rent of property provided;
- as a percentage of financial investments;
- foreign exchange differences involving the formation of additional revenue of the company.
Also, the corresponding forecast balance allows you to compare certain items of income with expenses. For example, if the estimated value of the proceeds from the sale of fixed assets will be, relatively speaking, 1 million rubles, then it may correspond to subsequent investments in fixed assets, since the value of these revenues allows us to solve many problems associated with updating the production resources of the company.
The forecast balance methods used to form its structure in relation to the economic model of a particular enterprise may be different. Thus, competent specialists of the company can adapt it to reflect the estimates of revenue and expenses specifically for the sale of products, if the appropriate source is the main one, in terms of revenue generation. The balance sheet drawn up in this structure may include indicators classified as those that are related to the accrual basis or cash, if necessary to improve the quality of forecasting economic indicators.
It is possible to draw up a forecast balance sheet of an enterprise with an emphasis on the distinction between cash flows generated by revenue and those created as a result of investment in business by owners, partners, and creditors. This document may also include data on expenses, which are related to the volume of revenue or capitalization due to investment.
How can this or that forecast balance look like? An example of the structure of the corresponding document we offer you in the article.
This source in terms of content is quite close to the balance sheet. It presents assets, liabilities, and also the articles that correspond to them.
Note that an example of the forecast balance sheet of an enterprise in the structure considered by us can be used both at industrial enterprises and in service companies.
Forecasted balances at state enterprises
The procedure for the formation of the appropriate balance sheet can be determined by law if the company is a state or municipal enterprise. In some cases, the competent state authority is responsible for its drafting. So, for example, for business entities that are related to the Unified Energy System of Russia, the forecast balance in the cases prescribed by law is the Federal Tariff Service. The main tasks of the FCS in the formation of this document may be:
- ensuring the supply of electricity consumers with the necessary volume of this resource;
- reduction of costs associated with the production and supply of energy;
- ensuring the stability of electricity supplies to the market.
The forecast balances formed by the FCS can be used in the future for:
- the signing by organizations of wholesale contracts for the supply of electricity;
- determination of internal balances of electricity in various constituent entities of the Russian Federation;
- signing contracts for the supply of electricity in the retail market.
Having studied the specifics of forecast balances in the field of electricity supply, let us return to the consideration of the procedure for compiling the corresponding document in private firms. It will be useful to study some common nuances of this procedure.
The formation of the forecast balance: the nuances
The forecast balance of the enterprise is of 2 main types - start and current. The first is drawn up if the company has just opened. The second - if it has been functioning for some time, and its business indicators are reflected in the balance sheet.
In the first case, the document is likely to less accurately reflect the prospects for business development, but its preparation may be desirable, due to the need to clarify the needs of the company in financing or in order to determine the potential of the company's capitalization.
To make a forecast balance, you must have access to such documents as:
- sales forecast;
- plan for the sale of products or services;
- profit or loss plan;
- cash flow plan .
How to make a forecast balance that best reflects the financial position of the company?
The main criterion for successfully solving this problem is the timely accumulation of the largest possible and most substantial amount of information regarding the economic activities of the company. It may be contained in primary documents, registers and other sources of accounting.
It is highly desirable that they be standardized, and the information reflected in them regularly. This will allow us to trace how these or other economic indicators change in dynamics. And the latter, in fact, determines what the forecast balance sheet of the enterprise will be in terms of reflecting in it the estimated value of profitability, revenue, as well as the possible ratio between the assets and liabilities of the company.
The procedure for compiling the forecast balance
We will study in accordance with which algorithm the document in question can be formed. Drawing up a forecast balance, if you follow a common scheme, involves:
- Analysis of current financial indicators in the framework of the economic activities of the company.
- The study of financial results based on the results of certain reporting periods, as well as the identification of factors that may affect them.
- Determination of changes in assets, liabilities of an enterprise, its income and expenses, in accordance with various reporting periods.
- Formation of forecast indicators and their subsequent paperwork.
Forecast Balance Components
Let us now consider which components can be included in the corresponding balance. One of the key is the equity of the enterprise. In some cases, it is also supplemented by the statutory, but its value reflected in the constituent documents often does not change (if it corresponds to the minimum, which is enshrined in law). The main factor in changing the organization’s equity capital is an increase or weakening in the intensity of the company's receipt of revenue, as well as the dynamics that characterizes the state of affairs in business in terms of costs.
The forecast balance sheet is formed at the end of the reporting year and reflects the company's equity in the correlation:
- with assets and liabilities;
- investments made by the owner or other interested parties in production;
- with retained earnings.
Like the accounting, for example, balance sheet, the forecast one also in most cases includes assets, the amount of which should be equal to liabilities. Of course, relevant indicators should be reasonable. The best option is to use the information reflected in the balance sheet as initial data, if possible.
Documentation of the forecast balance
An important task is not only to determine indicators for the forecast balance sheet, but also to fix them in a separate document. The legislation does not provide for its universal form, if we do not consider the formation of an appropriate source by a competent government agency. Therefore, firms draw up their own forms of the appropriate balance sheet. How can they look like?
Above, we examined several common varieties of the forecast balance. Let us examine the structure in which probably the most universal — accounting — can be represented.
The formation of the forecast balance in the accounting variety
It is recommended to draw up the forecast balance sheet of the enterprise in its accounting form so that the assets and liabilities reflected in the document are arranged in decreasing order of liquidity of the former and urgency of the latter. This is the difference between the document in question and the balance sheet, which is formed on the basis of the opposite principle.
What specific items of assets and liabilities can be recorded in the forecast balance sheet? The first can be represented:
- funds in the current account of the enterprise;
- accounts receivable;
- stocks of the enterprise;
- the total amount of current assets of the company or its working capital;
- the total amount of fixed assets;
- the amount of intangible assets;
- total assets of the company.
In turn, the liabilities of the organization can be represented:
- billed by counterparties;
- payables - for example, salary, tax payments;
- the amount of debts on short-term loans;
- the total number of current liabilities;
- the amount of long-term loans;
- amount of equity capital;
- the amount of retained earnings;
- equity;
- total liabilities.
We will study in more detail how indicators that include the forecast balance sheet can be applied in practice.
The application of the forecast balance in practice: the nuances
The formation of the document in question allows you to create and optimize the organization’s budget, a plan for investing capital in certain assets. The appropriate balance allows you to determine the degree of security of the company with its own funds, as well as its need for external financing.
In this case, the efficiency of using the capital of the enterprise may be important, and the forecast balance is among those tools that can be used to conduct its assessment. It can be compiled in the structure that is most optimal for considering the quality of managing financial assets of a company within specific areas of economic activity.
The described balance can be used for a large number of financial indicators. So, for example, if the company needs to calculate the estimated cost of goods in a given reporting period, then the forecast balance may be involved. An example of calculating the corresponding indicator can be as follows.
If at the end of 2015 the cost of actual accounting data, for example, was 30% of revenue, while maintaining the main costs in 2016, it will remain the same. But if the costs, which make up 50% of the cost, increase by 90% in 2016, and this will be known on the basis of the balance sheet, then the forecast figure in question will increase, respectively, by 45% and will thus amount to , 43.5% of revenue. It will be predictive, and it can be taken into consideration when determining, for example, the selling price of the goods.
Using balance as a capital management tool
It sometimes happens that a company has a large amount of short-term obligations that can be problematic to fulfill if the dynamics of revenue is insufficient and investment is limited.
But management is given the opportunity to prevent this situation when the forecast balance is correctly drawn up, which will reflect the estimated ratio of revenue received in the short term to investments, as well as related liabilities. This approach is very convenient when building a strategy for calculating an enterprise for taxes. The fact is that the obligation to pay them arises at the time of recognition of a particular income, which may not coincide with the actual receipt of revenue. In order to avoid a situation in which an enterprise needs to simultaneously fulfill its obligations to pay taxes and to pay off other obligations in the absence of sufficient capital, a forecast balance should be drawn up taking into account the frequency of occurrence of the corresponding obligations.
Managers at many modern enterprises solve the difficult task of how to draw up a forecast balance that would allow to prevent, above all, a shortage of capital. A similar situation is possible even in profitable enterprises. The formation of the relevant document with the necessary degree of elaboration of the items of income, expenses, and also the periods of their occurrence is the main criterion for solving this problem. Of course, its observance requires highly qualified financiers responsible for compiling internal reporting in the company.