Statement Analyzer allows you to create projections for examining what-if situations, based on existing historical statements. A projected statement typically covers at least one year and may cover multiple years. There are specific requirements that must be met prior to creating projections and there are three projection types from which to choose.

Assumption Methods

In projections based on averages, the assumption results will be calculated using the value of the historical period rather than the average value across periods, resulting in more conservative projections.

The letters in the projection spreadsheet's header cells signify the assumption methods used for each of the periods in the currently highlighted account. The letters are codes for the nine assumption methods available:

Dollar	D	Projected account balance = this amount (enter an exact dollar amount). Typically used when the account is constant or when the projected amount is known. Exceptions: Current Portion Long-Term Debt, which does not allow you to over-amortize, and Depreciation, which is zero if the customer has no net assets to depreciate. Example: Entering D 3000 results in a balance of $3,000.
Change	C	Projected account balance = the prior period's balance plus or minus this amount (enter a positive or negative dollar amount). Often used for adding or reducing fixed assets and debt accounts. Example: Entering C -1000 results in a decrease of $1,000 from the prior period.
Growth	G	Projected account balance = the prior period's balance multiplied by this percentage (enter as a percentage, with or without decimal points). Example: Entering G 20.0 results in a 20% growth from the prior period.
Percentage (or Percent of Account)	P	Projected account balance = a selected account multiplied by this percentage (enter as a percentage, with or without decimal points). Each account on the statement is associated with a certain other account to use with this method. (Go to Historical Data to view and change the associated % of Account.) Typically used in the income statement to make an account a percentage of sales. Example: Entering P 15 results in an amount that's 15% of the other account.
Turnover	T	Used for receivables, payables, and inventory accounts only. Expressed as the number of times per year the account has turned over. Example: Entering T 3 means that the projected turnover is three times a year.
Days	Y	Used for receivables, payables, and inventory accounts only. Expressed as the number of days per year that the account has turned over. Example: Y 40.
Sales	L	Causes the projected account balance to grow at the same rate as projected sales. No additional entry is necessary; the application performs this calculation. Simply type L in the cell.
Formula	F	Projected account balance is calculated according to the formula that you enter. To define formulas, click the Formula button on the projected-statement toolbar, or simply wait until you assign the Formula assumption method to an account (type F), at which time the application requests that you enter a formula.
System	S	Used for Accumulated Depreciation and Interest Expense only. Causes the application to automatically calculate the projected account balance. No additional entry is necessary. Simply type S.

 

Amortization of Debt

The application automatically amortizes long-term debt in projections. The Current Portion (CP) and Long-Term (LT) components of the debt work together for each of the six long-term-debt lines in the General & Middle Market industry spreadsheet (for example, CP line 80 works with LT line 115).

Note: For the automatic amortization to take place, the CP line must be set up to use the Dollar assumption method, and the LT line must use the Change assumption method. Click here for more information about assumption methods.

When setting up new debt, manually enter the total amount of new debt on the LT line as a Change amount. The application will divide the debt between CP and LT. For example, if the total amount of new debt is $100,000 and the current portion is $20,000, enter 100000 on line 115 and 20000 on line 80; the results will be $20,000 in CP and $80,000 in LT.

If part of the debt will be paid off the first year and you are using Debt Calculator to add the new debt, after entering the loan date, the results will show the total debt outstanding (CP + LT) equal to the total amount of the debt minus the principal paid off the first year.

In subsequent years, LTD will amortize based upon the projected CPLTD amount.

If the debt has interest that is not paid in cash, meaning that the cash interest flag is not set to True in the Debt Calculator, the amount of interest is also added to the Total Debt.

The application will not over-amortize — that is, once the debt becomes zero, the resulting CP will be zero, even if the CP has a Dollar assumption value.

Projected Interest Expense

The application calculates interest expense on debt in projections as follows:

•  If the debt is old:

([Beginning Balance + Ending Balance] ÷ 2) × Interest Rate

unless you direct the application to use a different calculation

•  If the debt is new:

([Ending Balance × Months Outstanding in year 1] ÷ 12) × Interest Rate

If Current Portion (CP) and Long-Term (LT) are both zero in the prior period, the application assumes that the debt in the current period is new.