What is the difference between projected and estimated?

Projected vs. Estimated Balance Sheets: What’s the Difference?

Balance sheets are financial statements that provide a snapshot of a company’s financial health at a specific point in time. They list the company’s assets, liabilities, and equity. Projected balance sheets and estimated balance sheets are two types of balance sheets that are used to forecast future financial positions.

Projected Balance Sheets

Projected balance sheets are forecasts of future financial positions that are based on assumptions and planned actions. They are typically used for long-term planning and decision-making. Projected balance sheets are more detailed than estimated balance sheets and include more information about the company’s expected future financial performance.

To create a projected balance sheet, a company will typically start with its current balance sheet and then make assumptions about future events. These assumptions may include expected changes in sales, costs, and investments. The company will then use these assumptions to project its future financial position.

Estimated Balance Sheets

Estimated balance sheets are approximations of future financial conditions that are based on less-detailed calculations. They are typically used for short-term planning and decision-making. Estimated balance sheets are less detailed than projected balance sheets and include less information about the company’s expected future financial performance.

To create an estimated balance sheet, a company will typically start with its current balance sheet and then make general assumptions about future events. These assumptions may include expected changes in sales and costs. The company will then use these assumptions to approximate its future financial position.

Which Type of Balance Sheet Is Right for You?

The type of balance sheet that is right for you will depend on your specific needs. If you need a detailed forecast of your future financial position, then a projected balance sheet is a good option. If you need a general approximation of your future financial position, then an estimated balance sheet is a good option.

Both projected balance sheets and estimated balance sheets can be useful tools for financial planning and analysis. By understanding the difference between the two types of balance sheets, you can choose the one that is right for your needs.