Hi, i am doing financial projection for 3 years. in my projection i need to show expansion of stores 1st year 3 stores 2 nd year another additional 3 stores and 3rd year additonal 3 stores which makes it to total 9 stores at the end of 3 years. so my question is 1) how do i show my opening for 2 nd year because i have another additional 3 stores and my clsong for 1 st year will not match with opening for second year and the ratio also for stock. 2) i am doing projection for investor, how to show them their return whether in balance sheet or p & l a/c. how to address it??
1) In Projection, you need to estimate the revenue and expenses on year to year basis. In your case, revenue and expenses will be related to three stores in first year, then six stores in second year and then nine stores. Calculation of revenue varies from case to case, expenses will be categorised into variable, semi-variable and fixed expenses.
2) Basis on the above p&l, balance sheet get prepared.
Thanks
Get prepared projected profit & loss account and balance sheet
1) But for closing stock second year how to mention for example: if i had closing stock of 60,00,000 after 1 year for 3 stores. then for second year how to show opening stock and closing stock becase i will be having 6 stores after second year that is my confusion. 2) how to adress the investors return in the projected finanacials for exmaple whether to adress it in profit & loss account as income to be given to them or balance sheet ??
1) Closing stock will be reflected both in P&L and balance sheet of concerned year and it will become opening for next year to calculate the COGS.
2) If investors return is in fixed absolute amount then it will be fixed expense for you. If it is based on turnover or profit then you need to calculate accordingly.
Hi
You need to prepare a projected profit and loss account as well as projected balance sheet.
Prepare the statements annually.
1. There shall be no problem as regards to stock. Closing stock of first year shall be opening stock of second year. The three new stores shall have no opening stock in the beginning. There shall only be purchases and sales.
Which ratio of stock are you calculating? Stock ratios shall consider the cost of goods sold which includes purchases and sales. The ratio would come out to be proper. If closing stock would increase over the years, the sales would also increase, leaving a constant ratio thereby.
2. You will have to prepare both.
Hi,
Hope you are doing well !!
1. There is no confusion.
Rs, 60,00,000 will be opening stock after 1 year and closing stock will be calculated as below:
Closing Stock Formula (Ending) = Opening Stock + Purchases – Cost of Goods Sold.
2. What type of investors return i.e is it capital or revenue?
Investment returns can be on revenue or capital account. Similarly investment expenditure could also be on revenue or capital account. Accordingly,you will have to show in financials.
Thank you.
Let me know if you need any help in preparing financials.
If the person is just going to open 3 stores in 2nd year then how will it have opening stock the stock of next 3 years will be shown as purchase and not opening stock.
Opening stock means the stock you had at the end of last year, since the store was not there last year how will it have opening stock. Hope this clarifies your issue.
You can show it at the end of profit and loss as amount to be distributed among investors and show remaining amount in reserve account.
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Thank you
