FinanceThe Finance area’s December 31 Cash Position includes all of your projected cash inflows and outflows this year. This includes (as an outflow) current debt that’s due this year.
The December 31 Cash Position also displays as the proforma balance sheet’s Cash Position. Cash reflects the amount left after all company payments are subtracted from the sum of:
- Total sales revenue reported on the proforma income statement (see below);
- Stock, current debt and long term debt entries on the Finance spreadsheet.
Forecasts are used by the proformas to calculate financial projections (see “Proformas & Annual Reports” in the Guide section). If you enter a forecast that is unrealistically high, the proformas will take that forecast and project unrealistic revenue.
Sales Revenue on the Proforma Income Statement
On the proforma income statement, sales revenue for each product is based on its price multiplied by the lesser of either:
- The Your Sales Forecast entry (or, if none is entered, the Computer Prediction); or
- The total number of units available for sale (that is, the production schedule added to inventory).
When a forecast is less than the total number of units available for sale, the proforma income statement will display an inventory carrying cost. When a forecast is equal to or greater than the number of units available, which predicts every unit will be sold, the carrying cost will be zero.
Tip: The simulation charges a 12% inventory carrying cost.