School: St.

Vincent of Quebiawan Integrated School Grade Level: 12

Teacher: Angelica H. Paras Quarter: Third
Learning Area: Business Finance Week: 3

SELF–INSTRUCTIONAL PACKETS
I. OBJECTIVES
A. Content Standards

The learner demonstrates an understanding of the financial planning process including budget
preparation, cash management, and working capital management

B. Performance Standards

The learner is able to:

1. illustrate the financial planning process
2. prepare budgets such as projected collection, sales budget, production budget, income
projected statement of comprehensive income, projected financial position, and projected
cash flow statement
3. describe concepts and tools in working capital management

C. Learning Competencies

The learners…
1. identify the steps in financial planning process
2. illustrate the formula and format for the preparation of budgets and projected financial
statement

D. Objectives

At the end of the lesson, the learners are expected to:

1. identify the steps in financial planning process
2. illustrate the formula and format for the preparation of budgets and projected financial
statement

II. CONTENT

Financial Planning Process

III. LEARNING RESOURCES

A. Reference/s (Sanggunian)

Business Finance Teacher’s Guide, pp. 120-169

Business Finance by QuexBook

B. Other Learning Resources (Iba pang Kagamitang Panturo)

IV. PROCEDURES
A. Reviewing previous lesson or presenting the new lesson

Hello again! How was your week? I hope you had a good one. How did you find the last module?
Easy, right?

As a grade 12 student, by this time, I do hope you are already thinking where you will be enrolling
next school year, what course you will be taking, or maybe you are thinking to work immediately
right after you graduated.

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 Now, how do you see yourself five years from now? Do you see yourself working on your dream
job? As an accountant? A financial manager? Reviewing for board exam? Running your own
business? Or you’re not still sure?

Whatever it is, it is your long-term goal that you plan to achieve in the future. Planning plays an
important role in everyday life as you already have in mind a set of plans for the next five years.

Even if you are not yet sure what you want five years from now, you will probably still have an
idea of what kind of life you want. You are still in the process of planning.

B. Establishing a purpose for the lesson

Planning is an important aspect of the firm’s operations because it provides road maps for
guiding, coordinating, and controlling the firm’s actions to achieve its objectives.

Management planning is about setting the goals of the organization and identifying ways on
how to achieve them.

Suppose that in five years, you will be owners of a successful business. How will you be able to
attain this goal? If you want to be able to be an owner of a successful business, you should first
be able to set up one, or buy into one which would require capital. Hence, you must be able to
raise the necessary funds. This new milestone is your short term goal.

C. Presenting examples/instances of the new lesson

ACTIVITY

1 Do this.
Answer the following questions. Write your answer on the space provided.

1. What is an item that you would like to have, but cannot currently afford?
_____________________________________________________________________
_____________________________________________________________________
2. Assuming you are starting with no money and you cannot count on anyone else to simply
give it to you, how will you go about saving enough for the item?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
3. How long do you think it will it take you to save enough money to buy the item?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
4. What are some other expenses you need to consider while saving up? Will you make
any sacrifices?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________

You have just come up with a simple “financial plan” to meet a specified goal.

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D. Discussing new concepts and practicing new skills #1

TWO TYPES OF FINANCIAL PLANNING PROCESS

Long-term financial plans
These are a set of goals that lay out the overall direction of the company. A long-term financial
plan is an integrated strategy that takes into account various departments such as sales,
production, marketing, and operations for the purpose of guiding these departments towards
strategic goals.

Those long-term plans consider proposed outlays for fixed assets, research and development
activities, marketing and product development actions, capital structure, and major sources of
financing.

Also included would be termination of existing projects, product lines, or lines of business;
repayment or retirement of outstanding debts; and any planned acquisition

Short-term financial plans

Specify short-term financial actions and the anticipated impact of those actions. Part of short
term financial plans include setting the sales forecast and other forms of operating and financial
data. This would then translate into operating budgets, the cash budget, and pro forma financial
statements.

STEPS IN THE FINANCIAL PLANNING PROCESS

1. Set Goals
This is often vital in planning. during this step you wish to line what's your
dream goal or what are the items that you simply wanted to realize within
the future.

For corporations, long term and short-term objectives are usually

identified. These can be seen in the company’s vision and mission
statements. The vision statement states where the company wants to be
while the mission statement states the plans on how to achieve the vision.

Example of a company’s Vision-Mission statements:

Jollibee Foods Corporation (JFC)
Vision: To excel in providing great tasting food that meets local preferences better than
anyone; To become one of the three largest and most profitable restaurant
companies in the world by 2020.
Mission: To serve great tasting food, bringing the joy of eating to everyone.

2. Identify Resources
Identifying resources means, you would like to search out out what are
the available assets that you just can use as your standing capital. as
an example, as a student, what are the assets you have? you've got
your daily allowance, your savings, or perhaps your gadgets. As long
as these have values, they will be used as a capital to begin a
business.

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 3. Identify goal-related tasks
These are the items that you just have to waste order to attain
your goals. as an example, your goal is to graduate college and
to possess your business. The possible tasks may include;
enrolling in a very business course, studying hard, and begin
investing.

4. Establish responsibility centers for accountability and

timelines
You need to line deadlines and you would like to be responsible
along with your own actions. You must take every action
seriously, you wish to be accountable to things that you just do,
ensure that this may lead you in achieving your long-term goal
or plan.

5. Establish the evaluation system for monitoring and controlling

Do forecasting or predicting the results of your
actions. you'll be able to use a chart and monitor your
actions and objectives. Set priorities and proper
timeline to be properly organized in achieving your
goals.

6. Determine contingency plans. Contingency plans are alternate plans

These are vital because not all the time plans are successful. There are times that you simply
fail in your first plan, this can be the instant when your contingency plan enters.

CHARACTERISTICS OF AN EFFECTIVE PLAN

In planning, the goal of maximizing shareholders’ wealth must always be put in mind.

The following criteria may be used for effective planning:

Specific – target a specific area for improvement.
Measurable – quantify or at least suggest an indicator of progress.
Assignable – specify who will do it.
Realistic – state what results can realistically be achieved, given available resources.
Time-related – specify when the result(s) can be achieved.

"There's a S.M.A.R.T. way to write management's goals and objectives".

E. Discussing new concepts and practicing new skills #2

From the previous part of our discussion, we can conclude that budgeting is the most important
of financial planning process.

A plan is useless if it is not quantified. A quantified plan is represented through budgets and
projected or pro-forma financial statements. These budgets and pro-forma financial statements
are useful for controlling. They serve as the bases for monitoring actual performance. Meeting
the plans is good. However, failing to meet the plans is not equivalent to failure if the reasons for
not meeting such plans can be justified especially when the reasons are fortuitous in nature and
are beyond the control of management.

Measuring actual performance vis a vis the plans even at the early start of the year allows the
management to assess the company’s performance and come up with remedial actions if
warranted.

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SALES BUDGET
The most important account in the financial statement in making a forecast is sales since most of
the expenses are correlated with sales. It refers to the sales target (amount and/or quantity) set
by management. Given the importance of the sales forecast, the financial manager must be able
to support this figure with reasonable assumptions.

FORMULA:
Unit Sales = Sales Target set by management / Sales Price per Unit

The following external and internal factors should be considered in forecasting sales:
External Internal
• Gross Domestic Product • production capacity
(GDP) growth rate • man power requirements
• Inflation • management style of
• Interest Rate managers
• Foreign Exchange Rate • reputation and network of
• Income Tax Rates the controlling
• Developments in the stockholders
industry • financial resources of the
• Competition company
• Economic Crisis
• Regulatory Environment
• Political Crisis

Let me elaborate some of the factors.

Macroeconomic Variables (external)

Macroeconomic variables such as the GDP rate, inflation rate, and interest rates, among
others play an important role in forecasting sales because it tells us how much the consumers
are willing to spend. A low GDP rate coupled by a high inflation rate means that consumers
are spending less on their purchases of goods and services. This means that we should not
forecast high sales of the periods of low GDP.
Developments in the Industry (external)
Products and services which have more developments in its industry would likely have a
higher sales forecast than a product or service in slow moving industry. Consumer trends are
always changing, thus the industry should be competitive to be able to appeal to more
customers and stay in the market.

Competition (external)
Suppose you are selling bread and you know that each person in your community eats an
average of one loaf of bread a day. The population of your community is 500 people. If you
are the only person selling bread in your town, then your sales forecast is 500 units of bread.
However, you also have to take account your competition. What if there are 4 other sellers of
bread? You will need to have to divide the sales between the 5 of you. Does this mean your
new forecast should be 100 units of bread? Not necessary. You should also know the
preference of your consumers. If more of them would prefer to buy more bread from you, then
you should increase your sales forecast.

Production Capacity and man power (internal)

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 Suppose that you have already evaluated the macroeconomic factors and identified that there
is a very strong market for your product and consumers are very likely to buy from you. You
forecasted that you will be able to sell 1,000 units of your product. However, you only have 20
employees who are able to produce 20 units each. Your capacity cannot cover your expected
demand hence, you are limited by it. To be able to increase capacity, you should be able to
expand your operations.

There are implications sales budget is not correct. If understated, there can be lost opportunities
in the form of forgone sales. If it is too optimistic, the management may decide to unnecessarily
increase capacity or hire more employees and end up with more inventories.

PRODUCTION BUDGET
A production budget provides information regarding the number of units that should be produced
over a given accounting period based on expected sales and targeted level of ending
inventories. Or simply, the quantity of units to be produced/manufactured.
FORMULA:
Required Production in Units = Expected Sales + Target Ending Inventories - Beginning Inventories

Look at the given example below.

ABC Company forecasts sales in units for January to May as follows:
Jan Feb Mar Apr May Total
Units 2,000 2,200 2,500 2,800 3,000 12,500
Moreover, ABC Company would like to maintain 100 units in its ending inventory at the
end of each month. The beginning inventory at the start of January amounts to 50 units.
How many units should ABC Company produce in order to fulfill the expected sales of the
company?
Solution:
Required production in Units = 12,500 + 100 – 50
= 12,550 units
Therefore, ABC Company should produce 12,250 units to fulfill the expected sales.

OPERATIONS BUDGET
It refers to the variable and fixed costs needed to run the operations of the company but are not
directly attributable to the generation of sales.

Examples of this are the following:

• Rent payments
• Wages and Salaries of selling and administrative personnel
• Administrative Costs
• Travel and representation expenses
• Professional fees
• Interest Payments
• Tax Payments

CASH BUDGET
It refers to the amounts of cash that is to be reported in the projected balance sheet. The cash
budget, or cash forecast, is a statement of the firm’s planned inflows and outflows of cash. It is
used by the firm to estimate its short-term cash requirements, with particular attention being paid
to planning for surplus cash and for cash shortages.

FORMULA:
Cash to be reported in the PBS = Beginning cash balance + Projected cash inflow – projected cash outflow

Cash inflow are collections, loan receipts, etc.

Cash outflow are inventory and loan payments, salaries, wages, and other expenses
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 For a business enterprise, having the right amount of cash is important since cash is used to
make payments for purchases, for operational expenses, to creditors, and for other transactions.
The cash budget forecasts the timing of these cash outflows and matches them with cash inflows
from sales and other receipts. The cash budget is also a control tool to monitor the way the
company handles cash.

F. Developing mastery (Leads to Formative assessment)

ACTIVITY

2 GOT IT? Do these to find out.

Answer the following questions briefly but completely. Write your answers on
the space provided.
1. What is the difference between long term and short term goals?
_____________________________________________________________________
____________________________________________________________________
2. What is a budget?
_____________________________________________________________________
____________________________________________________________________
3. What is the importance of a budget?
_____________________________________________________________________
____________________________________________________________________
4. What will happen if the budget is not met?
_____________________________________________________________________
____________________________________________________________________

G. Finding practical applications of concepts and skills in daily living

Going through the process of constructing a financial plan is a valuable exercise for any business
owner.

The financial plan, or budget as it is also called, helps guide the day-to-day decision making of
the business. Comparing forecast numbers to actual results yields important information about
the overall financial health and efficiency of the business. Even a one-person company needs
to have a financial plan in place.

Here are some of the importance of financial planning:

Cash Management
Many businesses have monthly or seasonal variations in revenues, which translate into periods
when cash is plentiful and times when cash shortages occur.

Long-Range View
The financial plan, with its forward looking focus, allows the business owner to better see what
expenditures need to be made to keep the company on a growth track and to stay ahead of
competitors. The financial plan is a blueprint for continual improvement in the company’s
performance.

Spotting Trends
The owner can see, for example, whether an increase in advertising expenditures led to the
hoped-for jump in sales. Trends in the sales of individual products help the owner make
decisions about how to allocate marketing pesos.

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H. Making generalizations and abstractions about the lesson

To summarize our lesson…

✓ Financial planning is the process of determining a company’s financial needs or goals for
the future and how to achieve them.
✓ Long-term financial planning is a strategy encompassing more than one year that involves
the planning for the future operations.
✓ Short-term planning involves less uncertainty because market trends are more easily
predictable in the short term.
✓ The following are the steps in Financial Planning Process:
a. set goals
b. analyze information
c. make decisions
d. create and implement a plan
e. monitor and modify the plan
✓ Sales Budget refers to the sales target (amount and/or quantity) set by management.
✓ Production Budget is the quantity of units to be produced/manufactured.
✓ Operations Budget refers to the variable and fixed costs needed to run the operations of
the company but are not directly attributable to the generation of sales.
✓ Cash Budget refers to the amounts of cash that is to be reported in the projected balance
sheet.

I. Evaluating learning

Please see the attached worksheet (pages 9-10)

J. Additional activities for application or remediation

ACTIVITY

3 Make a diagram that shows the steps in Financial

Planning Process with a short description for each step.

HOW DID YOU DO?

If you need more
help, you may reach
me at cellphone #
09179808405 or send
me a private
message thru my
Facebook account:
Angelica H. Paras

Reference: DepEd Order No. 42, s. 2016 (Policy Guidelines on Daily Lesson Preparation for the K to 12 Basic Educ. Program)

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 BUSINESS FINANCE – THIRD QUARTER

WORKSHEET

3 FINANCIAL PLANNING
PROCESS
Name__________________________________ Date _______________
Grade and Section________________________ Score_______________
WRITTEN WORK
I. Read each item carefully. Write the letter of the correct answer on the blank provided before the
number.
___1. Which step in the financial planning process when you establish targets that you want to achieve
in the future?
a. Establish responsibility centers for accountability and timelines.
b. Establish the evaluation system for monitoring and controlling
c. Identify goal-related tasks.
d. Set goals or objectives.
___2. Which is not included in the financial plan?
a. Capital Requirement c. Contingency plan
b. Composition of the capital requirement d. None of the above
___3. Below are descriptions of planning except for _______________.
a. Systematic b. Organized c. In-order d. Muddled
___4. Which of the following is defined as the process of estimating the capital required and
determining its composition?
a. Planning c. Financial Plan
b. Financial planning d. Both b and c
___5. Annie is dreaming of becoming a flight attendant someday, what will Annie do in order to achieve
her dream?
a. Take a course that is non-related to being a flight attendant.
b. Come to school late.
c. Study hard and practice speaking English fluently
d. None of the above.
___6. Which comes first in the financial planning process?
a. Identify goal-related tasks. c. Establish system for monitoring and evaluation.
b. Set goals and objectives d. Determine contingency plans
___7. Which is not an objective of financial planning?
a. None of the following c. Determining capital structures
b. Frames financial policies d. Determining capital requirements
___8. Financial planning reduces uncertainties with regards to changing market trends because?
a. Financial planning gives you less expenses.
b. Financial planning gives you estimates on future changes in costs.
c. Financial planning does not help the business’ needs.
d. None of the above.
___9. Which of following is a reason why do investors invest to business that has quality financial plan?
a. Because it gives investors assurance for higher ROI.
b. Because money is at stake.
c. Because good financial planning gives investors the idea on how the business will be using
the money in the company.
d. None of the above.
___10. What do you call the plan devised for an outcome other than the usual plan?
a. Contingency plan c. Long-term plan
b. Strategic plan d. Short-term plan

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 BUSINESS FINANCE – THIRD QUARTER

WORKSHEET

3 FINANCIAL PLANNING
PROCESS
Name__________________________________ Date _______________
Grade and Section________________________ Score_______________
PERFORMANCE TASK
II. Solve the following problems.
Plymouth Company manufactures a single product, which sells for 5,000 each. The
company's budget for the period April through July of year 2001 is as follows:
April May June July
Sales in units 30,000 40,000 35,000 50,000
The company wants to have in beginning inventory each month: (a) 30 percent of a month's
expected sales of finished goods. The beginning inventory has 9,000 units of finished goods.
Prepare the following budgets: (a) sales budget, (b) production budget
(a) Sales Budget
Formula:
Unit Sales = Sales Target set by management / Sales Price per Unit

(b) Production Budget

Complete the table below.
April May June July Total
Projected Sales
Plus: Target Level of Ending Inventories
Total
Less: Beginning Inventories
Required Production

III. Direction: Do the activity below. Accomplish this using a clean sheet of paper.
1. Your sister is about to celebrate her 18th birthday next month. You are tasked by your mother
to be the events coordinator of your sister’s birthday party.

Required:
Create a financial plan for your sister’s 18th birthday using the steps of the financial
planning process.

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