Simple profit and loss forecast template

Emme adds up her total fixed costs, including the following:. When you are satisfied with your cost estimates for an average month, fill in estimates for six or 12 months. Then, for each month, subtract your total fixed expenses from your gross profit to get the net profit. EXAMPLE: Emme fills in an entire year of sales estimates, with the usual dip in sales she experiences in summer and then upswings in September when the kids go back to school and in December, traditionally her best month.

It's also useful to know your gross profit margin. Gross profit margin measures the difference between the costs of producing a product or providing a service and what you're selling it for. In short, it lets you know how profitable your products and services are. To get your profit margin, divide your estimated average monthly gross profit by your estimated monthly sales. Now she knows she will get to keep, on average, about 55 cents of every sales dollar she takes in before paying for overhead.

Profit margins can be used in many different ways. Some businesses regularly calculate their profit margin to monitor the profitability of their products or services. A decrease in profit margin over time usually means that variable costs have gone up—costs for raw materials, manufacturing, or labor—which should nudge the company to either look for new suppliers or raise prices.

Other businesses use their anticipated profit margin to help them price products or services and increase profitability. However, some experts disagree with this use of profit margin, recommending instead that businesses start with the price they think customers will pay and then making sure the costs are low enough to make a profit.

Another way to use profit margins is to screen new products and services to sell. What's a good profit margin? The answer varies across industries. But without looking at the costs of a company's overhead, such as marketing and administration, profit margins don't give the whole picture of a company's profitability. The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or will be formed by use of the site.

The attorney listings on this site are paid attorney advertising. In some states, the information on this website may be considered a lawyer referral service. Please reference the Terms of Use and the Supplemental Terms for specific information related to your state. Talk to a Lawyer. Grow Your Legal Practice.

Meet the Editors. Basic Profit and Loss Forecast. Includes any direct costs involved in making and selling the product purchased, including the wages of those involved in making the product and purchases made from suppliers for goods or raw materials used in the accounting period.

Includes general expenses and all other costs you have been invoiced for during the period, such as: rent, rates, professional fees, vehicle costs, national insurance and pensions, utilities, etc. Items invoiced for, but not yet paid, are added to your creditors account on your balance sheet. It is a judgment call on how long a period fixed assets should be depreciated over but be consistent in your application of it.

We recommend using one of these accounting tools:. Looking for funding? Find the right finance for your business here. The main difference is that the Goods worksheet includes a Cost of Goods Sold section for recording inventory and purchases and calculating Gross Profit. The difference between a business budget and a profit and loss projection is subtle, but important. After creating a profit and loss projection, you could simply change the title of your spreadsheet to "Budget".

However, if you are like me, your budget will be much more conservative than your projection. A projection should be as realistic as possible. The profit and loss template includes the same set of categories as the business budget, and information about income categories and expense categories can be found on the Income Statement and Business Budget pages. Screenshot Goods.