Projected financial statements provide potential investors with an overview of the expected financial performance and position of a start-up.…

Financial projections include three basic documents that make up a business's financial statements. Income statement: This estimate how much money the business will generate by projecting income and expenses. It will show: How much revenue did the business generate? How much did it cost to generate and support that revenue? How much did the business pay its employees? How much did it pay towards rent? For your first year in business, you'll want to create a monthly income statement. For the second year, quarterly statements will suffice. For the following years, you'll just need an annual income statement. Cash flow statement: A projected cash flow statement will depict how much cash will be coming into the business and how much cash will be utilized. At the end of each period (e.g. monthly, quarterly, annually), one can tally it all up to show either the cash burn or the cash generated during the period and the cash balance remaining at the end of the period. Balance sheet: The balance sheet shows the business's overall finances including assets, liabilities and equity. Typically, one will create an annual balance sheet for one's financial projections. It shows: How much cash is in the bank? How much money does the company owe to suppliers? How much money has been invested in the company?