Forecasted financial statements approach
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Forecasted financial statements approach is a method of forecasting financial statements to determine the additional funds needed. Many items on the income statement and balance sheets are assumed to increase proportionally with sales. As sales increase, these items thatare tied to sales also increase, and the values of these items for a particular year are estimated as percentages of the forecasted sales for that year.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Forecasted financial statements approach. A method of forecasting financial statements to determine the additional funds needed. Many items on the income statement and balance sheets are assumed to increase proportionally with sales. As sales increase, these items thatare tied to sales also increase, and the values of these items for a particular year are estimated as percentages of the forecasted sales for that year.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
