The Balance Sheet is a core financial statement that presents a snapshot of a company’s assets, liabilities, and shareholder equity. Having a Balance Sheet forecast gives you estimates of what assets and liabilities your company will have in the future so you can make more informed strategic decisions.
The Clockwork Balance Sheet includes 12 months of actuals and a 12 month projection for the following:
Current Assets (eg. cash, Accounts Receivable)
Fixed Assets (eg. land, machinery, buildings)
Other Assets (eg. bond issuance, employee advances
Current Liabilities (eg. Accounts Payable, Short Term Loans)
Long-Term Liabilities (eg. Long term loans)
Equity (eg. Net Income, Retained Earnings, Stock)
How it Works
There are two different tools you can use to drive changes to your Balance Sheet projections:
Within your Financial Model, Balance Sheet will be respond to changes in Revenue, Cost of Goods Sold, and Expenses. Revenue will drive changes through Deferred Revenue increasing Liabilities, COGS will impact Inventory, and Prepaid Expenses will increase Assets on the Balance Sheet
In your Cash Flow tool, you can forecast the Balance Sheet by creating ‘Other Cash In’ and ‘Other Cash Out’ assumptions that can impact any Asset, Liabilities, or Equity account of your choosing.
COGS + Inventory
When building out an assumption in any COGS account, you’ll notice a box you can check that says ‘Use this rule to reduce inventory forecast’. When you check that box, you can select the exact account you’d like to draw down in line with COGS.
Deferred Revenue / Prepaid Expenses
When building out Assumptions that incorporate a Recognition Spread in Cash Timing Profiles (eg. Deferred Revenue, Prepaid Expenses), you’ll see a check box where you can define the Asset or Liability account that will be impacted by the assumption
Other Cash In and Other Cash Out
You have the flexibility to create assumptions that impact Assets, Liabilities, and Equity through the Cash Flow tool in your ‘Other Cash In’ and ‘Other Cash Out’ sections. When you choose an Asset, Liability, or Equity account and start your Assumption, you’ll notice that you can select any account from Balance Sheet that belongs in the selected category. The Balance Sheet account selected will be directly impacted by your Assumption.