10-1

The Financial Plan

10-2

Sequence of Financial Statements

Budgets
Operating- Short-Term Capital- Long-Term

Pro Forma Statements

10-3

Pro Forma Statements

Pro Forma Income
Sales Budget By Month Expenses Are Function Of Sales Level

Pro Forma Cash Flow

Cash Receipts Cash Payments

Pro Forma Balance Sheet Pro Forma Sources & Applications of Funds
10-4

Daily Knowledge On Financial Position

Cash Balance On Hand Bank Balance

Daily Summaries Of Sales/Cash Receipts Problems In Credit Collections Record Of Money Paid Out
10-5

Weekly Knowledge On Financial Position

Slow-Paying Accounts Receivable

Discounts Offered On Accounts Payable Payroll- Hours Worked & Payroll Owed
Taxes- When Taxes Due & Reports Required
10-6

Monthly Knowledge On Financial Position

Provide Records
Receipts Disbursements Bank Accounts Journals

Balance Petty Cash Account Review Tax Requirements & Make Deposits Review/Age Accounts Receivable
10-7

Review
Income Statement Balance Sheet

Reconcile Checking Account

Sales Budget
Calculate Sales Expectations In Units Utilize
Marketing Research Industry Sales Experience

Forecasting Techniques
Survey of Buyers Sales Force Opinions Expert Opinions Time Series Analysis
10-8

Pro Forma Balance Sheet

Assets
Current Assets Cash Accounts Receivable Merchandise Inventory Supplies/Debtors Total Current Assets Fixed Assets Equipment Less Depreciation Total Fixed Assets Total Assets $50,400 46,000 10,450 1,200 $108,050 $240,000 39,600 $200,400 $308,450 =======

--- (A)

--- (B) --- (A+B)

10-10

Pro Forma Balance Sheet (contd)

Total Liabilities & Owners Equity

Current Liabilities Accounts Payable Current Portion of L.T. Debt $23,700 16,800

Total Current Liabilities

Long-Term Liabilities Notes Payable

$40,500

$209,200

Total Liabilities
Owners Equity C. Peters, Capital K. Peters, Capital Retained Earnings Total Owners Equity

$249,700
$25,000 25,000 8,750 $58,750

Total Liabilities & Owners Equity

$308,450
=======
10-11

Break-Even Analysis

B/E(Q) =

Total Fixed Cost SP per Unit VC per Unit

10-12

Break-Even Graph
1200 1000 800 600 400 200 0 0 20 40 60 80 100

Break-Even TR = TC

Fixed Cost Total Cost Total Revenue

10-13

Pro Forma Sources & Applications of Funds

Sources of Funds
Mortgage Loan Term Loan Personal Funds Net Income From Operations Add Depreciation $150,000 75,000 50,000 8,750 39,600

Total Funds Provided Applications of Funds

Purchase of Equipment Inventory Loan Repayment

$323,350
$240,000 10,450 16,800

Total Funds Expended

Total Funds Provided Total Funds Expended Net Increase in Working Capital

$267,250
$323,350 267,250 $56,100
10-14

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