How to Make a Projected Balance Sheet

by Contributor; Updated September 26, 2017

If you operate a business, knowing how to make a projected balance sheet can help you obtain financing and plan purchases. You can create relatively simple projected balance sheets for your small business by following a few standard guidelines and using any spreadsheet software; no accounting software required.

Step 1

Look at your business checking and savings account to estimate cash on hand for the coming year to place on the left side of the projected balance sheet. If your cash balance fluctuates, use an average for the 12-month period. Multiply the average amount by the expected rate of inflation for the coming year unless you have specific knowledge about cash changes. If you have specific knowledge about cash changes that will occur, use your information to create the cash total for the projected balance sheet.

Step 2

Consider the assets owned and whether you intend to purchase any major assets, sell them or dispose of them in the next year. If no major changes are expected, subtract one year of depreciation from the assets and write the amount on the left side of the balance sheet under "Cash." You can group these assets (such as tools, equipment, building and machinery) or split them into categories (long-term assets and intermediate-assets). Make separate projected amounts for each category if you choose to split them.

Step 3

Total the assets listed on the left side of the projected balance sheet. Write the word "Total" and the projected amount at the bottom, still on the left side.

Step 4

Determine the projected expenses or liabilities to write on the right side of the projected balance sheet. Make a separate list of all of your expenses for the business. If you have been advised of specific increases, like utility or rent increases, for example, use the amounts you have been given. If you know of purchases that will increase liabilities or sales that will decrease liabilities, use those as well. Multiply all other expenses by projected inflation percentages. When you have arrived at the total, write the word "Liabilities" on the right side of the balance sheet and your total amount. To get more specific, you can split liabilities into short-term (less than one year), intermediate (two to five years) and long-term liabilities.

Step 5

Subtract liabilities from total assets. The amount you end up with is owners' equity. Write the words "Owners' Equity" under the liabilities on the right side of the balance sheet and the amount you just calculated beside it.

Step 6

Add the liabilities and owners' equity, and write the word "Total" and the amount on the bottom right side of the balance sheet. This amount should be exactly the same as the total on the left. Your projected balance sheet is complete.

Tips

  • If an exceptional event caused an asset or liability to be significantly higher or lower than average, do not use the exceptional amount in your projections.

Warnings

  • Remember that projections are estimates and unexpected cost changes do occur, such as fuel prices.

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