How to calculate projected sales

Written by carter mcbride
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How to calculate projected sales
Prior income statements provide information on possible future outcomes. (financial report image by PaulPaladin from Fotolia.com)

Projected sales figures are used on a pro forma income statement. They show how much a company thinks it will make in an upcoming time period. The period is usually a month or a year. Management bases projected sales on prior results and expectations of the future. Management's projected sales are just an estimate and are usually not 100 per cent accurate. Projected sales created by management should not always be considered accurate because they are normally not audited.

Skill level:
Easy

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Things you need

  • Information on prior year's sales

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Instructions

  1. 1

    Determine last year's overall sales and the monthly sales from last year. For example, management wants to estimate sales based on its prior year's results for the month of April. Last year, the company had £45,500 in sales and £6,500 of sales in April. This year, the company projected £58,500 in sales for the year.

  2. 2

    Divide the prior month's sales by the prior year's sales. In the example, £6,500 / £45,500 equals 14.2857 per cent.

  3. 3

    Multiply the per cent of sales the month represented for the prior year by the projected sales for the year. In the example, £58,500 * 14.2857 equals £8,357.1 of projected sales for the upcoming April.

  1. 1

    Determine the prior year's annual sales. For example, a company had £45,500 of sales last year.

  2. 2

    Create a projection of how much management plans on sales rising. In the example, due to inflation and the introduction of a new product, the company estimates sales will increase 10 per cent.

  3. 3

    Add 1 to the per cent increase projection. In the example, 1 + 0.1 equals 1.1.

  4. 4

    Multiply the prior year's sales by the number calculated in Step 3. In the example, £45,500 * 1.1 equals £50,050 of projected sales for the next year.

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