Income Estimation Report Example

An income estimation report example is a document which is basically required to have an exact idea about what amount of income you can possibly earn from a business or project. It further clarifies the possible amount of earnings which a business anticipates by investing in the desired capital. Moreover, an income-estimation report can also help business management to avoid getting into further sales or purchase contracts which can cause loss or trouble in the future. The purpose of preparing this report is very clear; it gives mental satisfaction and confidence that the direction of business is going on the right side. Moving ahead, an estimation of possible income can let management decide how much further investment is required for a particular task or project. Moreover, how much investment do they currently have and do they need more funds or not for investment? This will help them have an idea about how much they have earned and whether their estimation was more or less.

Why is an Income Estimation Report Required?

An income estimation report has very great relevance as it familiarizes a business with income, which is one of the most decisive aspects due to which a company runs a business. Being helpful, it can be used for multiple purposes; knowing how much you are earning at the present time and how much further you can earn. As a matter of fact, it guides management to make an agreement with any third party regarding importing goods or inventory, which are required to achieve a certain level of earnings. By understanding current manufacturing requirements, it lets a manager know what their current position is and why they need to purchase more stock. It answers many questions. For instance:

1- How many fixed expenses can they afford?

2- Does their budget allow them or not?

3- Did they earn more or less than they estimated?

Example:

Mr. Maguire is a successful individual who is working as an import manager. The firm where he works runs an import business and imports various products from other countries. One day, he decided to make an agreement with Wilkinson U.S.A. for the import of certain products. After the initial process of this transaction started, he came to know about the income estimation report. Therefore, he hired a professional to conduct income estimation of current orders, which he did at Wilkinson. The results of the report shocked Mr. Maguire, as they are out of budget and cannot complete this transaction from their own capital. Mr. Maguire felt helpless. For the first time, this thing was eating him from the inside. He couldn’t get an idea about their business income estimation. He then asked some of his friends for a loan so that he could purchase those imports he ordered from the U.S.A. He really felt that having an income estimation document could have saved him today, but he didn’t care.

Perquisites of Income Estimation Report:

An income estimation report brings as many benefits as one can understand. However, to learn about these prerequisites, you should have an idea about your income. The following are the most common benefits which can be driven by this report:

1- Using this form can save you from making agreements or deals which you are not actually in a position to afford.

2- By using this report, you also save yourselves from getting embarrassed in front of other companies.

3- An income estimation report helps you to think about the future of your business wisely, not make any decisions which you regret in the future.

4- Moreover, it informs the management if they are earning more than estimation. In this case, you are more than welcome to spend your money wherever you wish.