Financial Projections

Provisional and Projection

Provisional statements report on a completed period using actual, though unaudited, data, while projected statements forecast a future period based on estimates and assumptions. The two are often used together to provide a complete picture of a company's past performance and future potential, particularly when applying for business loans

Provisional financial statements

A provisional financial statement is an interim report that provides an unaudited snapshot of a company's finances at a specific point in time, before the final, audited statements are complete.

Time period: Covers a completed period, such as a fiscal quarter or the most recently concluded fiscal year.

Basis of figures: Uses real, historical transaction data that has already occurred, though final adjustments and auditing have not been performed.

Purpose: Helps with internal decision-making, monitoring performance, and providing lenders with a recent financial update during a loan application.

Accuracy: Is more accurate than a projection, as it is based on actual data, but can still change after a final audit.

Projected financial statements

A projected financial statement is a forward-looking forecast of a company's future financial position.

Time period: Covers a future period that has not yet started, often for 3, 5, or 10 years.
Basis of figures: Based on estimates, assumptions, market analysis, and a company's strategic plans.
Purpose: Used for long-term strategic planning, creating budgets, justifying loan requests, attracting investors, and planning for business expansion.
Accuracy: Is less certain than a provisional statement because it relies on forecasts and assumptions about the future.

Key differences at a glance

Feature	Provisional Statement	Projected Statement
Time Period	A past, completed period that is yet to be audited.	A future period that has not yet begun.
Data Basis	Actual, historical transaction data.	Estimated figures based on assumptions and forecasts.
Accuracy	Generally accurate, but subject to final audit adjustments.	Less certain; depends on future events and market conditions.
Primary Use	Internal decision-making and interim reporting for lenders.	Long-term planning, securing loans, and attracting investors.