Income Statement Overview Funding New or On Going Variables Scenarios Best Case Scenarios Worst Case Income Statement Cash Flow Statement Balance Sheet Benchmarks 70 % Income Statement Income Statement GuruPlus asks you to enter your projected revenue and expense for the 5 year planning period. The following describes the general categories for making those projections. Revenue The revenue from your business is probably derived from several sources. You should enter your projections for each major category of revenue. You may customize the category labels shown below using the Edit Row Label command from the Edit menu. Product/Service Sales This category will normally represent the major source of income for an enterprise. The number entered here should be the total of the amounts invoiced for the purchase of your products or services. Maintenance Often in the case of product sales and sometimes for services there are physical devices that require some form of on-going maintenance. If you provide and charge for maintaining these devices enter the total of the amounts invoiced for this service. Interest If you are fortunate enough to receive interest or dividends for investments made by the enterprise enter the total of the amounts received for these investments. Other You may have sources of revenue other than any of those listed above. If so, enter the total of the amounts received. Customer Deposits/Sale of Assets This entry is a calculated value for income that has resulted from the sale of assets or receipt of customer deposits. You should not attempt to make a direct entry to this row but rather edit the entries for these items in the Financials outline. Total Revenue This row is the sum of all categories in the Revenue section. Expenses: The Expenses section consists of two types of expense: Cost of Goods Sold and General Operations. Cost of Goods Sold Most offerings (even services) have some production costs. For products there are material costs and labor costs for assembling or manufacturing the product. For services there may be user manuals or other complementary support costs. By isolating the cost of goods you can quickly see the ratio between what you pay to produce your offering and what the customer pays to purchase it. While the ratio varies by industry and offering it must usually be greater than 3:1 to cover your operating expenses and still make a profit. Management & Non-Management Salaries It is usually more effective to separate these salary groups when making projections. Management is usually higher paid, but does not receive overtime pay so the only variances to be considered over a projection period are pay raises. Non-management usually receives lower pay, however, during peak periods they will often work extra hours for which they receive higher rates. You should include in this projection the cost for factors such as social security, medicare, insurance, vacation, sick leave, education, etc. This is normally projected as a percent of salary ranging from 20% to 50%. Production Expenses This projection typically includes the materials cost for your offering, but does not include equipment or facilities costs. Enter the total of the expenses incurred. Other Expenses Your business may have some unique costs that should be associated with the cost of goods sold. If so, enter the total of the expenses incurred. Gross Margin This sub-total is your Revenue less Cost of Goods Sold. General Operations Expenses These are all costs other than those involved in producing your offering. This includes general and administrative costs as well as costs for development, engineering, marketing, sales, customer support and any other costs you might incur. Management & Non-Management Salaries It is usually more effective to separate these salary groups when making projections. Management is usually higher paid, but does not receive overtime pay so the only variances to be considered over a projection period are pay raises. Non-management usually receives lower pay, however, during peak periods they will often work extra hours for which they receive higher rates. You should include in this projection the cost for factors such as social security, medicare, insurance, vacation, sick leave, education, etc. This is normally projected as a percent of salary ranging from 20% to 50%. Operating Expenses Include expenses for all non-production departments in your enterprise including the costs for buildings, equipment and supplies. Bad Debt Any business that invoices their customers for products delivered or services rendered can expect that some of those customers will not pay their debt. Projecting this expense is most easily accomplished by assuming some percent of total sales as bad debt. Contributions Most businesses gain benefits from their community and in return make contributions to causes they consider worthy. As a new enterprise you may not be in a position to contribute, but as your business matures you may want to project some contributions. Other Expenses If there are expenses not covered by the categories above they should be accounted for in this category. This is a good place to record expenses for product inventory. Depreciation As your business grows you will probably acquire equipment and facilities. As it ages, it depreciates in value. This depreciation can be taken as an expense. You should check with your accountant to determine the appropriate depreciation period for the equipment and facilities you are projecting. Plan Write calculates the depreciation amount for you using a straight line depreciation method. Loan Payment Interest If you are projecting the requirement to borrow operating capital as you grow your business you will be committed to a repayment schedule which includes interest. The total interest you expect to pay for the borrowed capital will be expensed over the loan period. Plan Write calculates the interest amount in a manner such that for each subsequent payment period the interest amount will decrease and capital reduction amount will increase. Total Operating Expenses This is the total of all General Operating Expenses. Pre-Tax ($) This is Revenue minus Cost of Goods Sold and General Operating Expenses. Pre-Tax % This is Pre-Tax ($) divided by Revenue. Federal Tax Provision This is the percent of Pre-Tax ($) you specified to be used as projected taxes. See the entry for Tax % in the Financials outline. Income Statement The Income Statement subtracts all the costs incurred to operate your enterprise from the amounts received from selling goods and services. The result is a net income or a net loss for the year. You will be asked to enter revenue and expenses for each month of the first year, for each quarter of the second year and annually for the remaining years. You do not have permission to view this form. You do not have permission to view this form. You do not have permission to view this form.