An income statement forecast starts at the top line and works down, one driver per line:
- Revenue: last year times (1 + growth).
- Cost of goods sold and SG&A: a percentage of revenue.
- Gross profit = revenue - COGS, and EBITDA = gross profit - SG&A.
- D&A: from a fixed-asset schedule, or a percentage of revenue in a quick model.
- EBIT = EBITDA - D&A. Interest expense links from the debt schedule.
- Taxes = pre-tax income times the tax rate, and net income = pre-tax income - taxes.
Put the drivers in an assumptions block under the statement, one row per driver and one column per year, lined up with the years above. Then every forecast formula is relative and fills right across all the years, and anyone can see why a number moved.
Check the margins as you go. If gross margin jumps from 38% to 60% between the last actual year and the first forecast year, a driver is wrong. Percentage-of-revenue drivers have a limitation: rent and salaries don't move with every sale, so a fuller model forecasts them on their own.