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Profit forecast – see the development of profitability ahead


The realized 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 the actuals, sales forecast, 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 quickly when sales, margins, personnel costs, or other expenses change. Simply tracking the actuals only reveals changes after they have 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 goal – the forecast is the current view

BUDGET
What were we aiming for?

The annual plan and objectives.

FORECAST
Where are we heading now?

Updated view of the upcoming result.

ACTUAL
What happened?

Actual business development.



Changes in sales are reflected in the upcoming result

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

The sales forecast provides a view of future sales and sales margin. The 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 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 forecast


✔ other planned changes.








Changes in sales are reflected in future results

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The deviation indicates where to ask 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, margins, 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 materialize?

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 realized.

GROWTH

Sales perform 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 statement

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

When the upcoming change is seen in time, decisions can also be made in time.

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