Build a Financial Forecast Model
Forecast revenue, profit, balances and cash from one set of business assumptions.
Financial forecast · FY2026–FY2027
Preview · Illustrative values · EUR thousandsIncome Statement
| Line item | FY2026 | FY2027 |
|---|---|---|
| Revenue | 12,960.0 | 13,996.8 |
| Net income | 1,718.1 | 1,896.9 |
Balance Sheet
| Line item | FY2026 | FY2027 |
|---|---|---|
| Total assets | 14,022.3 | 15,631.5 |
| Cash & Cash Equivalents | 4,006.8 | 5,121.9 |
Cash Flow Statement
| Line item | FY2026 | FY2027 |
|---|---|---|
| Cash flow from operations | 2,107.7 | 2,274.5 |
| Change in cash | 984.0 | 1,115.1 |
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1. Establish the starting position and forecast horizon
Choose the company, currency, historical periods and forecast years. Enter opening balances and observed history separately from future assumptions. A generated company is useful for exploring the workflow; replace its figures with a coherent starting position before planning your own business.
Check that opening assets equal liabilities plus equity. An unexplained opening difference should be resolved before interpreting future cash. The connected three-statement structure carries this starting position through the forecast; your task is to explain the future activity.
2. Explain the revenue forecast
Start with a growth assumption when that is a useful first estimate. Use named revenue lines when activities develop differently, and supported drivers such as price × volume when they explain what the business will sell. Keep expected sales distinct from assumptions about when customers pay.
The focused revenue forecasting model lets you develop the sales drivers before continuing into the complete model. If capacity constrains the plan, test whether the operating assumptions can support the expected activity instead of raising the total without an explanation.
3. Forecast costs and the path to profit
Connect revenue to cost of sales, staffing and other operating costs. Add the depreciation, interest and tax assumptions relevant to the business. Review gross profit, operating earnings and net income to see where a change in the plan appears.
Use the income statement forecast for a focused earnings workflow. An improving margin is a forecast assumption to examine, not a substitute for cash planning. Costs may be recognized before or after the related payment, and investment can affect cash before depreciation affects profit.
4. Forecast the resources and funding behind the plan
Project receivables, inventory and supplier balances from the operating plan and payment assumptions. Add investment and asset schedules, then the borrowing, repayments, equity movements or distributions that fit the case. Opening positions remain part of these roll-forwards.
The balance sheet forecasting workflow helps examine those positions. Review whether growth absorbs funds or releases them. A balanced forecast preserves the accounting relationships; it does not establish that the expected customer terms or financing can be obtained.
5. Reconcile the cash forecast
Review operating cash flow, investment cash flow and financing cash flow together. Beginning cash plus their combined movement must agree with ending cash on the Balance Sheet. Follow the driver behind a cash movement instead of entering the same effect again as a separate cash assumption.
Compare liquidity with profit across the forecast. Slower collections can reduce cash while revenue is unchanged, and equipment spending can reduce cash before its full cost appears in earnings. The modeled revolver shows a funding requirement; examine that requirement as part of the plan.
6. Choose periods that explain the timing
Use Annual for the broad horizon, Quarterly for reporting intervals, Monthly for an operating budget or Weekly for shorter cash timing. Supported modeled lines can use different source granularities within the same forecast. Choosing a view alone does not replace their inputs.
A monthly financial forecast gives operating detail; quarterly modeling can support a broader review cycle. The period and source reference documents fiscal year ends, ISO weeks, source changes and how other views derive from those sources.
7. Review assumptions, compare cases and retain the forecast
Use financial model scenario analysis to change selected assumptions and inspect profit, balance-sheet positions and cash together. Check the statement reconciliation and the input behind material movements. A forecast is a conditional plan: revise the assumptions when new information changes the case.
The financial model workflow reference documents setup, modes and saving. Keep your model in the local library and export a backup when you need a portable record. Return to the inputs when updating the plan instead of treating copied statement totals as an editable forecast.
Frequently asked questions
What inputs do I need for a financial forecast?
A coherent opening financial position, any relevant historical observations, a forecast horizon and assumptions for revenue, costs, investment, payment timing and funding. The level of detail depends on the business question.
Is a revenue forecast enough to forecast cash?
No. Costs, customer and supplier payments, investment and financing also affect cash. Follow those assumptions through the connected statements.
Can I start with annual assumptions and add monthly detail?
Yes. View the derived results first, then choose a finer source for supported lines that need more detail. Other lines can retain their existing source.
How is this different from the Three-Statement Model page?
This page explains the workflow for building a forward financial forecast. The Three-Statement Model page explains the integrated product and the relationships that keep its statements connected.