There are several ways to determine projected revenue. The methods range from fairly simple relationships to very complex statistical formulas. The easiest way to project revenue is to estimate by looking for relationships during previous reporting periods. This analysis depends on a firm's business and the seasonality of its products.
Instructions
Monthly Income
1. Analyze the firm's monthly financial statements. For example, after analyzing the previous four years, Firm A, a ski shop, finds that on average, 40 percent of revenue came in January.
2. Find key statistics to perform an analysis. In the example in Step 1, the key statistics are January's revenue and 40 percent of income. In January, Firm A had $80,000 of revenue.
3. Divide the revenue for the month by its average percent of income. To stick with our example, that's $80,000 divided by 40 percent, or 80,000 / .40 = $200,000 of projected revenue for the year.
Prior Year
4. Determine last year's sales, any additional revenue expected and expected market growth. For example, Firm A had $500,000 in sales last year, plans to enter into a merchandising contract for $10,000 and expects the market to increase 5 percent.
5. Multiply last year's sales plus any additional expected revenue by the market increase. In this case, $510,000 x .5 = $25,500.
6. Add the number calculated in Step 2 to last year's sales--this is the expected revenue for the upcoming year. In our example, $500,000 + $25,000 = a projected revenue of $525,000 for the coming year.
Tags: last year, average percent, expected revenue, last year sales, market increase, percent income, projected revenue