Income & Expenditure Account 
The following notes give an abbreviated summary of the forecasting routines. See How the Forecast Works for a more detailed discussion.
Business stream-based items
The model generates a forecast based partly on the appropriate
set of different business streams for which there is material stock. For
the property-based streams the income projections are
a function of the number of units each year adjusted for all increases
and reductions, times the relevant unit rents and service income, profit
on disposal etc. The expenditure is based on incremental
unit costs by category, capital expenditure and disposal costs per unit
etc.
All items of income and expenditure are based on year
zero data, inflated in line with either the general assumptions or the
business-stream specific assumptions. These are then adjusted by the appropriate
reconciliation factors to capture any “real growth” issues.
To enable the model to calculate the reconciliation factors, accounting
totals for gross rental income, service income, charges for support services,
rent losses from bad debts, capital expenditure, social housing grant
received etc, are required for each relevant business stream.
Revenue grants, voids and bad
debts are forecast as percentages of income, these being derived
from user inputs.
Non business stream-based items
To obtain expenditure items the existing “fixed”
cost will be inflated at the appropriate rates by category and added to
the incremental or variable costs based on the changes in number of units
in each business stream. The total of incremental and fixed costs in each
category will again be adjusted by the relevant reconciliation factors
to produce “reconciled” amounts.
The remainder of the Income is based
on General Assumptions eg depreciation rates, interest rates, the percentage
of fixed-rate debt, the effective corporation tax rate, (all adjusted
as appropriate by reconciliation factors). Most of these assumptions are
derived from the input financial statements, the exceptions being the
average interest rate on fixed rate debt and on cash deposits, and the
percentage of total debt that is fixed rate. Reconciliation factors are
therefore not required. For a discussion of the detailed mechanics see
How the Forecast Works.
| << Input Requirements | Balance Sheet >> |