The first thing you need to do is understand the history of the company. A good starting point is to get the four or five latest set of accounts and analyse the financial performance of the company. You do that so that you can understand whether the results that you see in the current year income statement is a trend or if it’s a one off event.
The second thing you need to do is try to build assumptions for each line item. For example, you will need to create an assumption for the way that sales will move within the next five years for example based on the history of the company (first step) as well as based on any news or information that you have for the company.
The third you need to do which can be done at the same time that you do the second step is to develop relationships for analogies. For example, you would expect that cost of sales move in line with the sales generated. In other words, you can use the historical income statements to calculate an average gross profit margin which you can use to forecast the way that the cost of sales will move based on the forecast you have developed for the sales.
Finally, you will need to revisit your assumptions. A good way to do that is to try to forecast the income statement for the past two years using older sets of data (older accounts) so that you can test whether the assumptions you use are reasonable.