Financial Planning

Financial Planning

  is the task of determining how a business will afford to achieve its
strategic goals and objectives. 

Financial Plan

 is a document that contains assumptions made by those involved in

financial planning, a review of past financial performance and trends in
the industry, and projected financial statements and ratios.

Working Capital

 Firm’s current asset

 “Paikot na puhunan”

The working capital of a firm normally consist of the following:

1. Cash on hand and in the bank

2. Cash equivalents (checks for encashment, marketable securities)

3. Accounts receivable

4. Inventories and supplies

5. Prepaid expenses and deferred items

Purposes of Working Capital:

a) Replenishment of Inventories

b) Provision for Operating Expenses

c) Support for Credit Sales

d) Provision for Contingencies

NET WORKING CAPITAL

Net Working Capital = Current Assets – (Payables + Accruals)

Accruals - are salaries owed to employees and taxes owed to the government

Accrued Salaries and Accrued Taxes - the balance sheet accounts for accruals

Types of Working Capital

 Fixed/ Regular/ Permanent Working Capital

- Remaining unchanged indefinitely

 Variable/Fluctuating Working Capital

- Seasonal/ temporary in nature