In this section, you should state the assumptions you have used for your financial statements and projections.  This is important because without this critical information your reader will have less perspective on the significance of the numbers used.  Include any assumptions you have made (even basic ones) that might not be readily apparent, or for which alternative variables might have been used.  For example:

>  Combined categories in your financial statements.

>  The interest rate for cash infusions (loans, venture capital, etc.).

>  The rate of return on investments.

>  The formula of depreciation used (if depreciation is a significant factor).

>  The formula for cost of goods sold (if not readily apparent from the statements).

>  The repayment period for cash infusions (loans, venture capital, etc.).

>  The method of accounting used.

>  Any major departures from Generally Accepted Accounting Principles.

>  The assumed rates of interest for accounts payable and receivable, and

>  The method of inventory counting and valuation.