Free Profit and Loss Forecast Template – Income Statement

The well functioning of a firm indisputably depends on the up to date documentation of the present income as well as the expected profit and loss. A profit and loss forecast report is the illustration of the health of the business at a given time. It is a forecast of income from sales after deducting all the expenditure. The calculated data is stored in the form of templates that can serve as the starting point for a new document. That is, a given template will include a pre-formatted setup, which can be further edited accordingly, to add or cut out texts. Among the forecast templates, a projected profit and loss statement template is the most essential one and the availability of the same, free of cost is one of the most admired innovations in the world of accounting.

Financial forecasting

Financial forecasting is a crucial step in the development of any particular business firms. It is the process of estimating and predicting the future sustainability of a business. It helps to determine the current stature as well as the expected progress of a company in the foreseeable future. Moreover, it enables the company to improvise its decision making capability, to decipher and exploit the latest trends and thereby to provide better performance. An example of financial forecasting is the method of predicting revenue of a business. Forecasting enables entrepreneurs to foresee and execute the expansion of resources. 

Profit and loss (Income statement) forecast report

To keep it simple, a profit and loss forecast report primarily depict the level of progress and sustainability of a particular business. Furthermore, it helps to understand the rate of success or failure of the establishment. That is, at the end of the day, if the income is more than that of the expenditure, then the firm is assumed to be in profit, whereas if the income is less than that of the expenditure, it is in a loss. Therefore, it is a financial report that illustrates the overall income, total cost of production, further expenses and also the net income over a given time. 

Content of P&L forecast template

The forecast report is documented with the help of a template in which the required headings and formulae are already arranged precisely. The mere addition of data will help the user to produce a forecast report. The content of P&L forecast template, From top to bottom, will include a header block, a revenue section, the cost of goods sold section and a general and administrative. In addition to this, there is an income and profit or loss section. The template, from left to right, encapsulates description line items, and a column of period totals (namely a month, a quarter or a year) for the account aggregations.

To substantiate, a profit and loss forecast template would mainly include,

  1. Revenue

The statement begins with the overall income acquired during the given period. In the P&L, revenue is showed when it is to be paid rather than when it is paid. The forecast for revenue includes finding methods to model revenues with a high degree of accuracy and details. Another quick way is more straightforward and depends on historical trends but is less accurate and detailed. 

  1. Expenditure

This is a summary of all the indirect expenses related to the enterprise. Forecasting selling, General and administrative costs is expressed in percentage of revenues. This will vary over short periods hence is calculated over longer intervals.

  1. Cost of goods sold   

This includes the direct costs which refer to the cost of production and services. This is documented when the transaction occurs and is not delayed until the cash is paid.

  1. Gross profit and Gross margin

Gross profit is the measuring scale of the progress attained by a business. If the gross profit is less, then an increase in the price debited for the products and services as well as a decrease in the expenditure is essentially required. The greater the gross profit, the more the financial growth and the higher the ability to tackle any unexpected circumstances in the business field. In the P&L forecast, gross profit is a good indicator of the sustainability of a business.

Gross profit=Total income-Direct costs

Gross margin is forecasted in the terms of percentage of revenues, based on historical figures or trends.

  1. Operating expenses(OPEX)

This embodies the cost of operation of the business which may include expenses like insurance, advertising, salaries etc. Thus operating expenses is a summary of the day to day expenditure of a business establishment.

  1. Depreciation

This calculates the decline in the value of the firm within the given time.

  1. Operating profit

Operating profit is the result of operating expenses deducted from gross profit. To put it another way, it is the overall income from a venture, keeping apart the operational expenses. However, it does not consider any finance costs and income. As the operating profit includes the depreciation, it gives a clear picture of the company’s present financial state. Moreover, it also helps to compare the progress with that of other similar firms.  

  1. Finance costs and income.

It is the calculation of net profit or loss from different sectors of the establishment, which does not require any cost of operation.

  1. Earnings before tax(EBT)

The subtraction of direct costs, operating expenses, and depreciation from the total income would result in the earnings before tax. In the P&L forecast tax, documentation occurs when the tax is accrued.

      10.Net income

The net income is calculated by deducting the indirect expenses from the gross profit. Whether a loss or profit, this is the base of a financial statement. In the case of the profit, it is the positive financial outcome of the advancement obtained. It is used by the external organizations to decide the risks related to the venture.

      11.Dividends and retained surplus

          Profit is not the endpoint of a P&L forecast. After calculating    

profit, the dilemma of whether the sum should have been reinvested in the business or should be shared between the investors exists. The former is retained surplus whereas the latter is called dividends. In addition to this, cumulative retained surplus refers to the profit obtained from this month and the bygone months after the tax and dividend. 

Free templates for P&L forecast

Free templates for P&L forecast reports are now available in the market. Some well-known types are Google sheets and excel. There is a huge list of business websites which provides free P&L forecast templates. Normally, these templates are mobile-friendly. Moreover, they feature one page and multi-page setups. In the situations demanding a need for templates for a fresh venture or to re-customize the current model, the free templates will help the entrepreneur to cover their need without much cost. These free templates are easy to handle coupled with an option for individual touch-ups. The templates can be modified by adding the name of the company and the logo. Thus it can be shared to investors, partners and other financial organizations as well. 

                             As a free P&L forecast template will encapsulate a spreadsheet with the column headers as revenue streams, expense types etc along with the date, it will help the companies to keep an up to date bookkeeping. It makes the whole process a lot easier. Furthermore, since the templates are pre-formatted with the required headers and formulae, the forecasting will take relatively lesser time and effort. Subsequently, it avoids the hectic task of dealing with a handful of bills and documents. The template demands only a data input, which will be later processed by the template to create the final statement. The processor is capable of calculating the revenue, gross profit, EBIT, EBT etc. At the end of every month, the sum could be calculated to create a profit and loss forecast report. 

                            Several web and mobile accountings apps are generating free templates for profit and loss forecasting. This includes the apps which assist relatively smaller or medium ventures. For example, applications like Xero, QuickBooks, and Freshbooks.  These templates are capable of automatically processing the data and adding them to the statement, estimating the net income before and after taxation and storing the data related to bills and receipts. Most often, it is coupled with advanced features like time tracking. 

                          An easy way to use the free templates to forecast the profit and loss is to,

  • Add the forecasted values to each section.
  • Add or subtract the expenses related to the business.
  • Check the values automatically calculated by the template.
  • Add duplicate sheets in case of comparing different scenarios.
  • Check the total revenue, gross profit, operating profit and the net profit calculated by the processor.

       Normally, the forecast template is available in different types. The monthly P&L forecast template is designed for the establishments demanding frequent and regular reporting. This can be used for small, medium and even large firms. The annual P&L forecasting templates are suitable for companies that are in the working phase for several years. 

Free profit and loss forecast template for small businesses

  COMPANY NAME        
        Net Income minus Total Expenses $                               –   
  Sales Income (including Deductions for Returns and Discounts) $                                –      Wages and Benefits $                                –   
    Rent/Mortgage $                                –   
  Other Income $                                –      Utilities $                                –   
  TOTAL INCOME $                               –      Office Supplies $                                –   
        Phone $                                –   
  COST OF GOODS SOLD     Web Hosting $                                –   
  CoGS $                                –      Insurance $                                –   
  TOTAL CoGS $                               –      Travel $                                –   
        Depreciation $                                –   
  NET INCOME  |  Income minus CoGS $                               –      Taxes $                                –   
        Other Expenses $                                –   
        TOTAL EXPENSES $                               –   

This kind of templates can be utilised for the forecasting of small businesses, which may include only a moderate range of sums to be calculated. The template comprises space to show income and deduction of CoGS in the income section, whereas, it includes wages and benefits and other similar categories in the expense section. This kinds of template are suitable for establishments which may mainly concentrate on retails and services.

Free profit and loss forecast template for big business

(For example, restaurants)

        equals (sales minus CoGS) minus total expenses $                           –   
  Food $                            –      Salary $                            –   
  Beverage (Non-Alcoholic) $                            –      Hourly  $                            –   
  Spirits $                            –      Benefits $                            –   
  Beer (Bottled and Canned) $                            –      Other $                            –   
  Beer (Draft) $                            –      TOTAL LABOR EXPENSE $                            –   
  Wine $                            –         
  Merchandise $                            –      OTHER EXPENSE  
  Other  Income $                            –      Direct Operating Expenses  $                            –   
  TOTAL SALES $                            –      Music & Entertainment  $                            –   
        Marketing $                            –   
  COST OF GOODS SOLD     Utilities  $                            –   
  Food $                            –      General & Administrative Expenses $                            –   
  Beverage (Non-Alcoholic) $                            –      Repair & Maintenance  $                            –   
  Spirits $                            –      Rent/Mortgage $                            –   
  Beer (Bottled and Canned) $                            –      Equipment Lease $                            –   
  Beer (Draft) $                            –      Corporate Overhead $                            –   
  Wine $                            –      Depreciation & Amortization $                            –   
  Merchandise $                            –      Interest Expense $                            –   
  Other  Income $                            –      Other Expense $                            –   
  TOTAL CoGS $                            –      TOTAL OTHER EXPENSE $                            –   
  GROSS PROFIT  |  Sales minus CoGS $                            –      TOTAL EXPENSES $                            –   

This kind of template could be used where there is a large sum of profit and loss to be forecasted. In the case of food services, tracking the production of food products and beverages is essential. Thus, this template includes sections for multiple food products in both the sales and CoGs sections. 

Free profit and loss forecast templates for personal uses

        equals total income minus total expenses $                         –   
  Wages $                          –      Rent / Mortgage $                          –   
  Tips $                          –      Food $                          –   
  Other $                          –      Utilities $                          –   
  TOTAL INCOME $                          –      Phone and Internet $                          –   
        Vehicle and Commuting $                          –   
        Household Supplies (Cleaning, etc.) $                          –   
        Clothes $                          –   
        Entertainment and Dining Out $                          –   
        Medical and Dental $                          –   
        Furniture $                          –   
        Insurance $                          –   
        Travel $                          –   
        Taxes $                          –   
        Bank Fees $                          –   
        Other Expenses $                          –   
        TOTAL EXPENSES $                          –   

Another important use of free templates is to forecast the monthly or annual expense in a household or for a particular person. This kind of template helps to provide a general outlook of the money spent on daily necessities, products and services.

To put it in a nutshell, there are different varieties of forecasting templates available in the market. These templates would be specially designed for particular causes like small scale businesses, large scale businesses or personal uses. The utilisation of these templates helps to reduce the difficulties related to regular bookkeeping and can be solved up to an extent with the help of free templates. The free profit and loss forecasting templates enable a company to foresee the profits, losses and thereby to make necessary developments. Thus, the different websites and apps providing a plethora of free profit and loss forecasting templates are a boon to the accounting world.   

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