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Budgeted Income Statement Template
What Is a Budgeted Income Statement?
A Budgeted Income Statement is a financial tool that covers the estimated revenue and costs of a company for the upcoming months or years. It will demonstrate the modified income of the organization provided that certain expenses were eliminated. The purpose of this document is to assist a business in forecasting its financial standing in the future and distributing its funds and resources efficiently.
Alternate Name:
- Pro Forma Income Statement.
A properly-composed Budgeted Income Statement updated whenever necessary (usually, once a month) is typically kept in the internal records of the company - there is no obligation to share a copy with business partners, clients, or financial institutions, you should simply engage in a deeper assessment of your profit and costs of maintaining the organization and maybe even expanding the business in the next years.
Download a Pro Forma Income Statement template through the link below. You may either follow the required Pro Forma Income Statement steps to draft your own document from scratch or customize the ready-made template.
How to Create a Pro Forma Income Statement?
Follow these guidelines to compose a Budgeted Income Statement:
- Decide on the reporting period for your analysis: it is recommended to prepare a statement that will cover four quarters and let you add all the numbers . This way, the finance department of the organization can see a full picture of your financial year and monitor the performance of the business closely in order to follow every single detail and possibly reduce certain expenses.
- Draw a simple table with several columns: financial data, formulas for calculation, reporting period. Insert a "total" column on the right to be able to compute the aggregate results.
- Draft two statements right away in case you want to evaluate the performance of the company in the past and plan for the future - not only you will be able to compare actual numbers you have at your disposal now, but also you can create a sales forecast and maybe even prevent unnecessary spending before it happens. A flexible document that combines the financial data collected from all departments of the organization will be a good fundament for financial planning.
- Find out the gross profit of the business - subtract the cost of sold goods from the total revenue of your entity.
- Calculate all the operating expenses of the business - fixed, variable, and periodic expenses, costs of managing every department and program - do not forget a single expense incurred through the regular operations of the business, especially if some of these costs were related to unexpected events or emergencies. Discover the operating profit of the business by subtracting these expenses from the gross profit.
- Compute the non-operating income (the income of the company not related to its day-to-day activities such as dividends and investments) and non-operating expenses (legal fees, currency exchange costs, and other extraordinary costs) . Add this income to the operating profit and then subtract the expenses to find out the earnings of the business.
- In case you have to deal with interest payments every month or two weeks, subtract them from the total amount of earnings . Calculate the taxes you pay and subtract them from the earnings to determine the net income of your organization.
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