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Profit forecast – see the development of profitability ahead


The actual income statement shows what has already happened. The profit forecast indicates what revenue, costs, and profitability will look like in the coming months based on current information.

 

Revise EPM combines actuals, sales forecasts, and future assumptions into an updated view of the company's performance development.

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The financial statement reflects the past – management needs a view forward

A company's performance can change rapidly when sales, margins, personnel costs, or other expenses change. Simply tracking the actuals only indicates a change after it has occurred.
 
The profit forecast helps answer three questions:
 
1. How will revenue develop?
The sales forecast forms a key starting point.
 
2. How will costs develop?
Future costs are taken into account in the forecast.
 
3. What does this mean for profitability?
The combined effect of sales and costs is reflected in the upcoming result.
 

The budget is a target – the profit forecast is the current view

BUDGET
What were we aiming for?

The annual plan and objectives.

PROFIT FORECAST
Where are we heading now?

Updated view of the future result.

ACTUALS
What happened?

Actual business development.



Changes in sales are reflected in the future result

The profit forecast should not be built in isolation from business development.

The sales forecast provides a view of future sales and sales margin. The profit forecast takes
this information further and shows its impact on the company's profitability.

The sales forecast changes

↓

Sales –10 %

↓

Revenue decreases

↓

Sales margin changes

↓

How does the company's result change?









Also see the impact of cost changes

Profitability does not depend solely on sales.

In the profit forecast, future development is also examined through costs.

For example:

✔ changes in personnel costs

✔ purchases and variable costs

✔ facility and other fixed costs

✔ the effects of investments when they impact the profit forecast


✔ other planned changes.








Changes in sales are reflected in future results

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The deviation indicates where it is worth asking for more information.

If the actual result deviates from the forecast, the most interesting information is not just the numerical difference.

Management should be able to ask:

Where did the difference arise?

Was it due to sales, margin, or costs?

Is the change temporary or permanent?

Does it also affect the forecasts for the coming months?

Are actions needed?

What if the plan does not materialise?

The profit forecast provides a current view of the future. Scenarios can be examined to see what happens if key assumptions change.
CAUTIOUS

Sales fall short of the forecast.

BASE

The current forecast is realised.

GROWTH

Sales develop better than forecasted.

Profit forecast as part of the whole


From actual data to future outlook

When Revise EPM operates in conjunction with the Odoo environment, financial actuals and business

data can be integrated into planning and forecasting.

The result does not yet tell the whole future.

A profitable company can face cash flow difficulties. Growth can tie up working capital. Investments and financing change the balance sheet and cash flow.
Explore the balance sheet forecast
Read more
Explore cash flow
Read more

See the change in profitability before the financial statements

Revise EPM helps to create an up-to-date view of the company's future results and
to compare development to goals and to reality.

When future changes are seen in time, decisions can also be made in time.

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