Essential points to keep in mind while preparing a Project Report

Updated on Nov. 9, 2021, 12:10 p.m.

Profit and Loss statement and balance sheet are key focus of a project report however, you need to consider few points while preparing a project report.

Project Report is essential document for availing financing from any source. Project report explains the future earnings and financial position of business.

As a business owner if you are preparing project report, you must note few key points.

Report should be well formatted

Project report should be presented in a nice format. Report should be straight forward and self explanatory.

Each schedule should be drafted carefully to show true and fair estimates. Report should have following schedules chronocally.

  1. Covering page
  2. Index of content
  3. Profit and Loss statement
  4. Balance Sheet
  5. Cash Flow Statement
  6. Depreciation schedule
  7. Borrowing and interest calculation
  8. Ratios

Current Ratio

Current ratio indicates working capital status of a business. Loan provider will check if business has a healthy current ratio.

Current ratio formula is Current Assets/Current Liabilities.

Current ratio is derived from dividing Current Assets by Current Liabilities.

A healthy current ratio is higher than 1. Current ratio lower than 1 indicates that business is not able to meet its current liability obligations.

Always maintain a current ratio more than 1.25.

Debt Service Coverage Ratio

Debt Service Coverage Ratio (DSCR) is another indicator used by bankers before providing a loan.

DSCR indicates ability of business to pay interest and EMI.

DSCR is derived by dividing operating income by debt obligations.

Debt obligation is total of interest payable on loan and installments on loan.

For example, if you have annual operating income of 10 lakhs and interest for the year of 1 lakh and principal repayment of 1 lakh. DSCR ratio will be 5 (10/2).

Tool to prepare project report by Banking91, helps you to prepare project report and validates your report to make it ready for submission.

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