The pro forma balance sheet and cash flow statement are created with the financial budget.Īn operating budget starts with a sales forecast and logically works through all of the expenses necessary to achieve that level of sales. The end result is a pro forma (expected) income statement. Sales, materials, labor, overhead (cost of goods sold (COGS)), and SG&A (selling, general, and administrative) costs. More specifically an operating budget estimates every line item on an income statement. The other types of budgeting are capital budgeting (the estimating of profitability of projects) and financial budgeting (the forecasting of cash flows). This operating budget template will walk you through how to make one for your small business. When people think of budgeting, they think of income and expenses.
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