Immaculada Concepcion College

Of Soldier’s Hills Caloocan City, Inc.

Soldier’s Hills III Subd. Brgy. 180, Tala, North Caloocan City

Name: _________________________________________ Strand and Section: _________________________________

Teacher: _______________________________________ Period cover: ____________________________
Weeks 14-15

CHAPTER 4:
FINANCIAL ASPECT

I. INTRODUCTION
“Businesses run on money, so the financial aspect of your business determines whether you can pay your
staff and your suppliers and whether you earn a profit at the end of the day. Even if you're a craftsperson who is
more concerned with making shoes or cakes than evaluating numbers, you'll find yourself with fewer obstacles
to pursuing your craft if you get your financials in order (Gartenstein, 2019).”

II. LESSON OBJECTIVES

At the end of this lesson, you are expected to:

a. discuss the importance of financial aspect of a feasibility study; and

b. create financial statements relative to the chosen feasibility study

III. PRE- ASSESSMENT

Directions: Answer the following questions.

• What is financial aspect of a business?

• Why do we need to manage our finances accordingly?

IV. LESSON CONTENT

1. Financial Assumptions
“Financial assumptions are estimates or predictions about future financial performance. They are used to
forecast a company’s revenue, expenses, and profits over a certain period. Financial assumptions are
based on historical data, market trends, and the company’s own goals and strategies.”

Key Assumptions of a Business Plan

a. Finances
b. Consumer Base
c. Need
d. Resources
e. Profitability

2. Project Costs
These are the total funds needed to monetarily cover and complete a business transaction or work
project. These involve the following:
a. Direct costs — Direct costs are those directly involved with the project and necessary in order to
complete said project.
b. Indirect costs — Indirect costs for a project are costs that do not directly lead to project completion
but are still vital for the company or individual working on said project. As such, they are a part of
individual project costs.
 Immaculada Concepcion College
Of Soldier’s Hills Caloocan City, Inc.
Soldier’s Hills III Subd. Brgy. 180, Tala, North Caloocan City
3. Financial Statements
“Financial statements are written reports created by a company’s management to summarize the
business’s financial condition over a certain period (quarter, six-monthly, or yearly). These statements,
which comprise the balance sheet, income statement, cash flow statement, and statement of
shareholders’ equity, must be prepared by specified and standardized accounting standards to ensure
that reporting is consistent.”

a. Statement of Comprehensive Income

It refers to the statement which contains the details of the revenue, income, expenses, or loss of the
company that is not realized when a company prepares the financial statements of the accounting
period, and the same is presented after net income on the company’s income statement.

b. Statement of Changes in Partner’s Equity

The statement of changes in equity is a reconciliation of the beginning and ending balances in a
company’s equity during a reporting period.

c. Statement of Cash Flows

A cash flow statement is a financial statement that provides aggregate data regarding all cash
inflows that a company receives from its ongoing operations and external investment sources. It also
includes all cash outflows that pay for business activities and investments during a given period.

d. Statement of Financial Position

The statement of financial position is another term for the balance sheet. The statement lists the assets,
liabilities, and equity of an organization as of the report date. As such, it provides a snapshot of the
financial condition of a business as of a specific date. It is one of the financial statements, and so is
commonly presented alongside the income statement and statement of cash flows.

e. Notes and Schedules

Financial statement notes are footnotes to the financial statements of the company. They list the
assumptions, methodology, and policies used to prepare the financial statements. Financial schedule,
contained in an audited annual report, summarizes the audited financial position of the audited
entity. Other application of the term is the scheduling of amounts, not necessarily by date, of major
financial events by any given category as to projected receipts, payments, costs, etc.

4. Financial Statement Ratios

A financial ratio is a representation of numbers that show the state of a company's finances. Ratios are
comparison points between different figures in a business' financial statements. If one number goes up
and another goes down, this means that something has changed. Changes in financial ratios can signify
that it's time to reevaluate a business or investment strategy.

5. Financial Statement Analysis

Financial statement analysis involves reviewing financial reports with a goal of learning about a
company’s financial health. Investors study income, expenses, cash holdings, profitability, and other
financial measures to learn how successful a business has performed. With that knowledge, some investors
hope to predict how the business will perform going forward.
 Immaculada Concepcion College
Of Soldier’s Hills Caloocan City, Inc.
Soldier’s Hills III Subd. Brgy. 180, Tala, North Caloocan City

V. Practice
Directions: Answer the question comprehensively in 3-5 sentences. (5 pts)

a. Why is financial management important in a business?

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VI. Enrichment
Directions: In 3-5 sentences, explain the given picture. (10 pts)

VII. Evaluation
Directions: Enumerate at least ten (10) ways on how to manage finances properly. (10 pts)

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Reference/s:

1. Gartenstein, Devra. Financial Aspects of a Business. 2019. https://bizfluent.com/facts-6148534-affects-

profit-cost-goods-sold-.html
2. Melbado. What are financial assumptions in a business plan. 2020. https://melbado.com/what-are-
financial-assumptions-in-a-business-
plan/#:~:text=Financial%20assumptions%20are%20estimates%20or%20predictions%20about%20future,tre
nds%2C%20and%20the%20company%E2%80%99s%20own%20goals%20and%20strategies.
3. https://bizfluent.com/about-5042602-different-types-business-plans.html
4. https://clockify.me/blog/business/project-cost-management/
5. https://www.accountingtools.com/articles/statement-of-changes-in-equity.html
 Immaculada Concepcion College
Of Soldier’s Hills Caloocan City, Inc.
Soldier’s Hills III Subd. Brgy. 180, Tala, North Caloocan City
6. https://www.investopedia.com/terms/c/cashflowstatement.asp#:~:text=A%20cash%20flow%20stateme
nt%20is%20a%20financial%20statement,business%20activities%20and%20investments%20during%20a%20
given%20period.
7. https://www.accountingtools.com/articles/what-is-the-statement-of-financial-position.html
8. https://tallysolutions.com/mena/business-guides/what-are-financial-statement-notes/
9. https://www.ventureline.com/accounting-glossary/F/financial-schedule-
definition/#:~:text=FINANCIAL%20SCHEDULE%2C%20contained%20in%20an%20audited%20annual%20re
port%2C,the%20audited%20financial%20position%20of%20the%20audited%20entity.
10. https://www.indeed.com/career-advice/career-development/what-is-a-financial-ratio
11. https://www.thebalancemoney.com/what-is-financial-statement-analysis-5197221