The simplest approach for forecasting financial statements for an established business is the modified percentage of sales method, which involves estimating the company's sales growth rate, and then assuming that all income statement and balance sheet line items grow at the same rate.

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The modified percentage of sales method involves estimating the company's sales growth rate and then assuming that certain income statement and balance sheet line items, such as cost of goods sold or accounts receivable, will grow at the same rate as sales. However, not all items are assumed to grow at this rate; some, like interest expense or fixed assets, may require different growth assumptions or calculations based on other factors.

The Simplest Approach for Forecasting Financial Statements for an Established