Projecting Expenses

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There are ten expense categories, three of which are reserved for percent of revenue calculations.  Expenses are entered directly in the column for each period unless they are percentage expenses, which are entered in column adjacent to the label.

Using The Expense Worksheet

The Expense Worksheet is for developing expense projections that are subject to inflation and/or are based on the amount of inventory. There are three sections.

Section 1
The first section is for reoccurring expenses that increase with inflation and continue over the course of the sell out period. The calculated expenses can be copied to the cash flow worksheet. There are a number of uses for this sheet. For example, if a line item expense was expected to increase at 3% per year, simply enter the initial expense amount and the inflation rate of 3% for each period of the analysis. To copy the results to the cash flow analysis, select the check box on the left-hand column and click the copy button (top-right).  

Important > Be careful to match the inflation rate with the frequency of cash flows. For example, if the analysis is based on semi-annual cash flows, the annual inflation rate should be divided by 2.

Section 2
The second section is similar, but does not automatically copy to the cash flow worksheet, though individual cells can be manually copied. Use this section to estimate a future expense for specific point in time, based on current cost plus inflation. 

Section 3
Use the third section to estimate expenses that are based on the number of units sold during the period (e.g., legal expenses), or remaining at the end of the period (e.g., taxes expenses).  Tip: You can combine results from section 2 for use with section 3.