Financial Statements - Free Report Example

Introduction

Business project financial statement forms an essential aspect of predicting outcomes in any firm's valuation in the futures. In understanding this concept, the company prepares or develops financial statements within the given periods into predicting projection estimates of teams. These projections bases on the compilation of internal and external accounting figures used in the daily operation of the business. Projection estimates in revenue and expenses ensure a company knows its strength and weakness concerning success. This paper, therefore, presents a three-year estimate projection of the team's financial statements and substantiates the criteria used to develop the projections. The paper analyses feasibility in finances presented to the investors and a 5 minutes oral exposition about this point.

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Historical Data

In a business that has been operating for more than one year, investors or financial institutions require more than historical data for the three years. Investors want financial projections alongside historical data for the past and future three years. Financial projections include income forecasts, balance sheets, and flow of cash (Cassar, 2009). Projections occur by the first month of every year, followed by a year for the next three years. The selected team develops financial projections to determine the set objectives and adequate resources for allocation (Solomon, 1968). In developing a financial projection for an established business, the team presents the historical data related to the company's performance for the last three years, depending on the period the firm has been functional. In future projections (next three years), the investors want to note financial data reflecting on the expectations of revenue and margins of profits (Solomon,1968).

The teams handle the forecast income data, flow of cash, and balance sheets for the years a company has been active. Then for the first year, monthly or quarterly projection added. After the first year, monthly projection surfaces after at least four years of operation (Carraher & Van Aucken, 2013). Projections must match funding desires to avoid inconsistency. The teams then write financial information, including ratios and trends, alongside the use of visual representation such as graphs and charts.

Feasibility

What is the feasibility of finances? In the projection, the teams outline the initial investment as a cost-effective exercise that meets the requirements and prospects for success. The company possesses the latest technology and resources for its projected high returns in valuation (Carraher & Van Aucken, 2013). The resources required to procure the capitals include investors and willing ventures to capitalist businesses. The feasibility projection outlines the returns on investment within the start of the second year of the monthly projection.

Conclusion

Business projections statement on finances outlines essential aspects of daily activities in a firm. Developing three-year estimates of projection by teams requires specific criteria. These criteria use specific distinct valuation in year progression to account for the inputs and outlays. Feasibility in finances ensures that the teams can outline the key terms in expounding the business to the investors. Can it survive, and does it have the required technological data?

References

Cassar, G. (2009). Financial statement and projection preparation in startup ventures. The Accounting Review, 84(1), 27-51.
https://meridian.allenpress.com/accounting-review/article-abstract/84/1/27/53715

Solomon, K. (1968). Pro forma Statements, Projections, and the SEC. Bus. Law., 24, 389.
https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/busl24&section=46

Van Auken, H., & Carraher, S. (2013). Influences on the frequency of preparation of financial statements among SMEs. Journal of Innovation Management, 1(1), 143.
https://lib.dr.iastate.edu/management_pubs/21/

Carraher, S., & Van Auken, H. (2013). The use of financial statements for decision making by small firms. Journal of Small Business & Entrepreneurship, 26(3), 323-336. https://www.tandfonline.com/doi/abs/10.1080/08276331.2013.803676?casa_token=S4t5ptZCIVIAAAAA:kX6iXe8elL0O0PfKENVK0d5eOjNXKJel9wxQvHNYIVjtPDGZzGSybVzVJfMMbMCla_OIDO10CHyeGQfHPg.