Excel Skills Australia | Annual Cash Flow Projection Template

Instructions www.excel-skills.com.au
This template enables users to compile a 5 year annual cash flow projection and includes a detailed income statement, cash flow statement and balance sheet. User input is limited to specifying the input values that form part of the template assumptions. The template is ideal for trade based businesses but can also be used for service based businesses by simply specifying gross profit percentages of 100% in the template assumptions. Note: The templates section of our website also includes a Monthly Cash Flow template and a Forecast vs Actual Cash Flow template which enable users to compile a 36 month cash flow forecast and to compare the forecasted balances to actual account balances. The following sheets are included in this template: Assumptions - this sheet contains all the user input values that are used in order to compile the annual cash flow projections. Additional expense accounts can be added by inserting the appropriate number of rows in the Expenses section on this sheet. IncState - this sheet includes a detailed income statement for a five year period. All the calculations on this sheet are automated and based on the input values that are specified on the Assumptions sheet. Additional expense accounts can be added by inserting the appropriate number of accounts on the Assumptions sheet (and on this sheet) and copying the formulas from any of the existing rows in the Expenses section on this sheet. CashFlow - this sheet includes a detailed cash flow statement for a five year period. All the calculations on this sheet are automated and based on the input values that are specified on the Assumptions sheet. No user input is required on this sheet. BalanceSheet - all balance sheet account balances are automatically calculated from the input values that are specified on the Assumptions sheet. No user input is required on this sheet. Loans - this sheet includes a loan amortization table which is used to calculate the annual interest and capital repayment amounts relating to the start-up long term loan balance and the additional financing amounts that are entered on the Assumptions sheet.

Template Assumptions
Turnover The turnover amounts on the annual income statement are based on the year 1 amount that is specified on the Assumptions sheet. All subsequent turnover amounts are calculated by applying the annual increase percentages that are specified in row 7 to the previous year's turnover amount. Gross Profit % The annual gross profit percentages need to be entered in row 9. The gross profit amount for the appropriate year is calculated by multiplying the user defined gross profit percentage by the appropriate turnover amount. The cost of sales amounts are then calculated by deducting annual gross profit amounts from the appropriate turnover amounts. Note: If you are using the template to compile a cash flow forecast for a service based business (entities that hold no inventory), you will need to specify a gross profit percentage of 100% in all five years. The gross profit amount that is calculated will therefore be the same as the turnover amount and the cost of sales amount will be nil. You may also want to consider hiding the cost of sales and gross profit rows on the IncState sheet. Expenses The template includes 23 default expense accounts. These expense accounts can be edited by simply replacing the default expense description and you can delete the expenses that are not required. After customizing the list of expense accounts, we also recommend sorting it in an ascending order based on the descriptions.

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Excel Skills Australia | Annual Cash Flow Projection Template

Instructions www.excel-skills.com.au

Additional expense accounts can be added to the list by simply inserting a new row anywhere above the "Add new expense items above this row" text and entering the appropriate description of the expense in column A. The Expenses section on the income statement (IncState sheet) is automatically compiled from the expenses that are included on the Assumptions sheet.

After entering descriptions for all the required expense accounts on the Assumptions sheet, you need to enter a year 1 projection amount for each of the expenses in column C. All the expense amounts for subsequent years are calculated by applying the annual expense increase percentages that are specified in row 35 to the appropriate previous year's expenses.

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Excel Skills Australia | Annual Cash Flow Projection Template

Instructions www.excel-skills.com.au
Note: All the input values that are specified for turnover and expense accounts should be entered exclusive of any sales tax that may be applicable to these line items. Working Capital The annual closing balances of inventory, receivables and payables are calculated based on the days that are specified in the working capital assumptions. We believe that this is the easiest and most accurate technique for calculating the closing balances of each working capital component at the end of the appropriate periods. The inventory days assumption is multiplied by the average daily cost of sales amount in order to calculate the inventory balance on the balance sheet at the end of each year. The average daily cost of sales amount is calculated by simply dividing the appropriate annual cost of sales amount by 365 days. The debtors days assumption is multiplied by the average daily turnover amount in order to calculate the receivables balance on the balance sheet at the end of each year. The average daily turnover amount is calculated by simply dividing the appropriate annual turnover amount by 365 days. The standard trading terms that are negotiated with customers can also be entered into this input cell. If products are not sold on credit, a nil value should be entered. The creditors days assumption is multiplied by the sum of the annual cost of sales amount and the total annual expenses before dividing the total by 365 days in order to determine the payables balance on the balance sheet at the end of each year. The value that is entered in this input cell should therefore be carefully considered. Even if the trading terms that are negotiated with suppliers stipulate that payments are only due 30 days after the invoice date, you should take into account that a lot of expenses are paid on a cash basis (for example: salaries & wages). You should therefore not only consider supplier trading terms when determining the creditors days, but also the percentage of expenses & cost of sales amounts that are paid on a cash basis. Capital Expenditure & Depreciation This line item relates to the acquisition of property, plant & equipment (fixed assets). It is important to note that only the cost of fixed assets that have a useful life of more than one year should be included in this line. All fixed assets with a useful life of less than one year should be included in the appropriate expense item. All capital expenditure (fixed asset acquisitions) should be entered as positive values. Note that this assumption relates to the total annual acquisition of fixed assets, not the closing balance of fixed assets at the end of each year. The condition of all fixed assets deteriorates over time and asset depreciation is therefore usually recorded in the income statement in order to account for the decrease in value of fixed assets. Although depreciation is a non-cash accounting adjustment and therefore does not have a direct effect on cash flow calculations we have included depreciation in the template assumptions in order to account for the tax effect of wear and tear tax allowances. The depreciation amounts for each period therefore needs to be recorded in row 42 on the Assumptions sheet. These amounts are included separately on the income statement below the Expenses section and added back from the profit or loss for the period on the cash flow statement. Note: The depreciation amounts need to be calculated based on the effective depreciation rate for each class of fixed assets after taking the remaining useful life of the start-up assets into account and applying the appropriate effective depreciation rates to all capital expenditure amounts. For the purpose of the cash flow projections, it is assumed that the wear & tear allowances (for income tax purposes) are the same as the depreciation rates. Additional Financing This line item relates to loans that are raised during the course of the five year cash flow projection period. The annual loan amounts are added to the start-up long term loans amount and the interest and capital repayment amounts on the Loans sheet are calculated based on the total of these amounts.
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Excel Skills Australia | Annual Cash Flow Projection Template

Instructions www.excel-skills.com.au
Note: All loan repayment calculations are based on the loan terms (interest rate, repayment period and interest only selection) that are specified in the Loan Terms section of the Assumptions sheet.

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Excel Skills Australia | Annual Cash Flow Projection Template

Instructions www.excel-skills.com.au
Shareholders' Contributions This line relates to all the equity amounts that are contributed by the shareholders of the business. Annual amounts need to be entered as positive values and are added to the Shareholders' Contributions line on the cash flow report and balance sheet. Start-up Balances This section of the template assumptions relates to the balance sheet balances at the start of the cash flow projection period. If you are compiling a cash flow projection for an existing business, you should enter the appropriate opening balance sheet balances in this section. If the business is being acquired from another party, the balance sheet balances as per the acquisition agreement should be entered in this section. Note: Equity and liability balances should be entered as negative values and the total of all the start-up balances that are entered in this section should be nil. We have added conditional formatting to the input cells in this section in order to highlight the entire section in orange if the total of all the start-up balances does not equal nil. Note: If you want to include a line or even several lines for start-up expenses on the income statement, you will have to include the required accounts in the Expenses section on the Assumptions sheet, make sure that the accounts are reflected on the income statement and then delete the formulas in all the cells that relate to subsequent years. By default, the expense increase percentage is applied to all expenses but the formulas can simply be deleted if an expense account only relates to the first cash flow projection year. Loan Details The loan details that are entered in this section are applied to the long term loan and loans raised amounts that are specified in the template assumptions. You are required to enter the appropriate interest rate and loan repayment period and to select "Yes" or "No" from the interest only list box. If the "Yes" option is selected (for interest only loans), no loan repayments are included in the cash flow projections. Note: The maximum loan repayment period that is provided for is 10 years. Refer to the Loans sheet for a loan amortization table which contains the calculation of the interest and capital repayment amounts that are included in the cash flow projection calculations. Taxation The income tax percentage that is entered in this input cell is applied to the profit before taxation in order to calculate the taxation amount for each year (as per the income statement). If a net loss before taxation is projected, the taxation amount will be nil and the loss will be carried over to the next cash projection period.

Income Statement
The income statement on the IncState sheet is automatically calculated from the user assumptions that are specified on the Assumptions sheet. Most of the line item calculations are discussed in the Assumptions section of these instructions. The only user input that is required on the IncState sheet is to add or remove expense items from the Expenses section of the income statement. The order in which expenses are displayed on the income statement is exactly the same as the order in which the expense accounts are listed on the Assumptions sheet. If you remove some of the expenses from the Assumptions sheet, the row below the last existing expense account on the income statement will include the "Add new expense items above this row" text. This row and all the other rows below it in the Expenses section should then be deleted.

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Excel Skills Australia | Annual Cash Flow Projection Template

Instructions www.excel-skills.com.au
If you've added additional expense accounts to the Assumptions sheet, you may notice that all the expense accounts are probably not included on the income statement. You therefore need to insert additional rows in the Expenses section by placing your cursor anywhere inside this section and using the Insert Rows Excel feature to insert the appropriate number of rows. After the required number of rows has been inserted, simply copy the formulas in column A to F from one of the existing rows and paste the formulas into the new rows. The account descriptions of the rows below the new rows will change automatically (after inserting the new rows) and the formulas that are copied to the new rows ensure that the correct number of accounts are now included on the sheet.

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Excel Skills Australia | Annual Cash Flow Projection Template

Instructions www.excel-skills.com.au

Note: When all expense accounts have been included on the income statement, the description of the last expense account on the Assumptions sheet should be the same as the description of the last expense account on the IncState sheet. We've added conditional formatting to the Total row in the Expenses section on the income statement in order to highlight the description of the Total row in orange if the number of expense accounts on the income statement is not the same as the number of expense accounts on the Assumptions sheet. If the Total row therefore contains orange highlighting, check that the correct number of expense accounts has been added to the income statement on the IncState sheet! Refer to the Loans sheet in order to review the calculation of interest and loan repayments. The taxation amount is calculated by applying the income tax percentage on the Assumptions sheet to the profit before taxation on the income statement. Note: The interest cover financial ratio is calculated by dividing the net profit before interest and taxation by the annual interest charges and indicates whether the annual profit is sufficient to cover annual interest charges.

Cash Flow Statement

The cash flow statement on the CashFlow sheet is automatically compiled based on the user input on the Assumptions sheet and the calculations of the balance sheet account balances on the BalanceSheet sheet. No user input is required on this sheet.

Balance Sheet

All balance sheet balances are calculated from the input values that are specified on the Assumptions sheet and the income statement that is compiled on the IncState sheet. No user input is required on this sheet. All the financial ratios that have been included below the balance sheet are based on the appropriate amounts on the income statement and balance sheet.

Interest & Loan Repayments

The Loans sheet includes a loan amortization table which is used to calculate the interest charges and capital repayment amounts that are associated with the long term loans start-up balance (specified in cell B54 on the Assumptions sheet) and the loans raised amounts (row 44 on the Assumptions sheet). The loan terms that are displayed at the top of the sheet are also specified on the Assumptions sheet and the same loan terms are applied to start-up and additional loan balances. Note: When the interest only option is selected from the input cell in the Loan Details section on the Assumptions sheet, no loan repayments are included in the amortization table or cash flow projection calculations.

Help & Customization

If you experience any difficulty while using this template and you are not able to find the appropriate guidance in these instructions, please e-mail us at support@excel-skills.com.au for assistance. This template has been designed with flexibility in mind to ensure that it can be used in most business environments. If however you need an Excel based template that is customized specifically for your business requirements, please e-mail our Support function and provide a brief explanation of your requirements.

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Example Trading (Pty) Limited

Cash Flow Projections - Assumptions www.excel-skills.com.au Start-up Turnover Annual Turnover Annual Increase % Gross Profit Gross Profit % Expenses Accounting Fees Advertising & Marketing Bank Charges Cleaning Expenses Computer Expenses Consumables Electricity & Water Entertainment Equipment Hire Insurance Legal Fees Motor Vehicle Expenses Postage Printing & Stationery Professional Fees Rent Repairs & Maintenance Salaries & Wages Security Subscriptions Telephone & Fax Training Uniforms Add new expense items above this row Annual Increase % Working Capital Inventory Days Debtors Days Creditors Days Capital Expenditure Annual Capital Expenses Depreciation Expense Additional Financing Loans Raised Shareholders' Contributions Contributions by Shareholders Start-up Balances Property, Plant & Equipment Inventory Debtors Cash Share Capital Retained Earnings Long Term Loans Creditors Loan Terms Interest Rate Repayment Period (in years) Interest Only Taxation Income Tax % Business Details Business Name Example Trading (Pty) Limited 30.0% 7.5% 5.0 No 100,000 12,500 30,000 125 (125) (125,000) (17,500) 50 2,000 1,000 2,000 3,000 1,500 24,000 24,000 5,000 25,000 10,000 11,000 7,000 4,400 20 30 20 20 30 20 20 30 20 20 30 20 20 30 20 7.0% 6.0% 6.0% 6.0% 3,000 7,500 180 750 500 1,875 1,500 1,000 750 1,250 563 4,500 250 688 2,125 15,000 1,375 30,625 1,625 725 3,500 2,250 625 35.0% 40.0% 40.0% 40.0% 35.0% 375,000 10.0% 5.0% 5.0% 5.0% Year 1 Year 2 Year 3 Year 4 Year 5

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Example Trading (Pty) Limited

Cash Flow Projections - Income Statement www.excel-skills.com.au Year 1 Turnover Cost of Sales Gross Profit Gross Profit % Expenses Accounting Fees Advertising & Marketing Bank Charges Cleaning Expenses Computer Expenses Consumables Electricity & Water Entertainment Equipment Hire Insurance Legal Fees Motor Vehicle Expenses Postage Printing & Stationery Professional Fees Rent Repairs & Maintenance Salaries & Wages Security Subscriptions Telephone & Fax Training Uniforms Total Expenses Depreciation Profit / (Loss) before Interest & Tax Interest Taxation Profit / (Loss) for the year Net Profit % 3,000 7,500 180 750 500 1,875 1,500 1,000 750 1,250 563 4,500 250 688 2,125 15,000 1,375 30,625 1,625 725 3,500 2,250 625 82,155 24,000 25,095 9,525 4,671 10,899 2.9% 3,210 8,025 193 803 535 2,006 1,605 1,070 803 1,338 602 4,815 268 736 2,274 16,050 1,471 32,769 1,739 776 3,745 2,408 669 87,906 24,000 53,094 7,960 13,540 31,594 7.7% 3,403 8,507 204 851 567 2,127 1,701 1,134 851 1,418 638 5,104 284 780 2,410 17,013 1,560 34,735 1,843 822 3,970 2,552 709 93,180 25,000 55,070 6,334 14,621 34,115 7.9% 3,607 9,017 216 902 601 2,254 1,803 1,202 902 1,503 676 5,410 301 827 2,555 18,034 1,653 36,819 1,954 872 4,208 2,705 751 98,771 11,000 72,141 4,625 20,255 47,262 10.4% 3,823 9,558 229 956 637 2,389 1,912 1,274 956 1,593 717 5,735 319 876 2,708 19,116 1,752 39,028 2,071 924 4,460 2,867 796 104,697 4,400 58,035 2,618 16,625 38,791 8.1% 375,000 243,750 131,250 35.0% Year 2 412,500 247,500 165,000 40.0% Year 3 433,125 259,875 173,250 40.0% Year 4 454,781 272,869 181,913 40.0% Year 5 477,520 310,388 167,132 35.0%

Interest Cover

2.63

6.67

8.69

15.60

22.16

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