Budgeted and forecasted income statement

Introduction to Financial Statements in Power BI

Nikisha Alcindor

Investor and Data Scientist

Budgeted income statement

Income statement

Determines if there is a loss or a gain

Budgeted Income Statement

Reports expected profitability
Basis of evaluating company performance
Information used to implement immediate actions

Cool imange of an income statement

¹ Weygandt, Jerry J., et al. Accounting Principles, John Wiley & Sons, 2018.

Key metrics of the income statement

Gross Revenue

Total earnings

Net Revenue

Earnings a company keeps from its sales
Net Revenue = Gross Revenue - Discounts - Returns

Gross Profit

Profit after subtracting COGS.
Gross profit = Net Revenue - COGS

Net Profit

Profit after subtracting all expenses
Net profit = Gross profit - Expenses

Budgeted cost of goods sold

COGS: costs of producing items sold by a company
Budgeted COGS: Estimates the costs of the materials and labor for next year
Key metric to set a strategy

Example

Lemon prices go up
--> Increase the price of a lemonade

Cartoon image of a man trying to control the costs levels on a meter.

Forecasted income statement

Financial Forecasting

Estimation of future financial outcomes

Example

Budget: $2000 in gross revenue
Halfway through the year: $1200 in gross revenue
Forecasted gross revenue: $2400.

Lemonade and juice store with sun in a new location

Budget variance

Budget Variance = Actuals - Budget

Favorable: Actual is better than budget

More revenue than expected
Less costs than expected

Unfavorable: Actual is worse than budget

Less revenue than expected
More costs than expected

Example: Favorable budget

$2400 - $2000 = $400

Multiple lemonade stands

Let's practice!

Introduction to Financial Statements in Power BI

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