152 CHAPTER 7 ABOUT THESE NUMBERS
There is little need to dwell on how you find the historical figures that you need for your
business plan. You just extract them from your records. The only warnings to consider are
Summarised figures hide things. A $10,000 increase in net fixed assets could
conceal a $15,000 acquisition and $5000 of depreciation.
Policy decisions and changes in practices mislead. A decision to write off
a long-standing bad debt might suggest a reduction in assets when actually
nothing fundamental has changed.
In other words, when moving through history to the current figures and on to forecasts,
try to make sure that the numbers are presented consistently. Where a change in account-
ing policies causes lumpiness in the numbers, include an additional line that shows the
earlier figures presented on the same basis as the forecast and explain what is going on.
The figures that you need were introduced in Chapter 4. I will expand on them in the fol-
lowing pages. When and how you use the data that you extract is also discussed below. It
is the same for historical periods and forecasts.
‘Consider the past and you will know the future.’
Estimating the present
I have mentioned already that you often find yourself preparing forecasts for next year
when this year is not yet over.
Filling in gaps in the figures for the current year is more a matter of estimation than
forecasting. You will have a reasonable idea of the transactions yet to be recorded in the
accounts. You can firm up on these as the planning exercise progresses. To avoid making
frequent revisions to the forecast, try not to make it arithmetically dependent on the fig-
ures that you are forced to estimate and are likely to change.
I am sure that you would never attempt to hide, say, an increase in spending
in reclassified or summarised figures. Professional number crunchers are
good at spotting this. Don’t try it.