WEEK 7-8: MODULE 5 & 6

-Financial Planning Tools and

Concepts
-Sources of Funds
Ms. Alyssa Villorente
OLC
IN THIS LESSON YOU SHOULD BE ABLE TO:

 Know the steps in financial planning

 Identify the different types of financial budget
 Understand the basics of working capital management
 Identify the different sources of funds.
WHAT IS FINANCIAL PLANNING?
• A financial plan is a comprehensive
picture of your current finances, your
financial goals and any strategies
you've set to achieve those goals.
• Good financial planning should include
details about your cash flow, savings,
debt, investments, insurance and any
other elements of your financial life.
 THE FINANCIAL PLANNING PROCESS IS A
LOGICAL, SIX-STEP PROCEDURE:

(1) determining your current financial situation

(2) developing financial goals
(3) identifying alternative courses of action
(4) evaluating alternatives
(5) creating and implementing a financial action plan, and
(6) reevaluating and revising the plan.
(1) DETERMINING YOUR CURRENT
FINANCIAL SITUATION
(2) DEVELOPING FINANCIAL GOALS
(3) IDENTIFYING ALTERNATIVE COURSES
OF ACTION
(4) EVALUATING ALTERNATIVES
(5) CREATING AND IMPLEMENTING A
FINANCIAL ACTION PLAN
(6) REEVALUATING AND REVISING THE
PLAN.
 WHAT IS FINANCIAL BUDGETING?

• Budgeting is the process of estimating the revenue and

expenses over a specified future period of time.
 SALES BUDGET
THIS CONTAINS AN ITEMIZATION OF A COMPANY'S SALES EXPECTATIONS
FOR THE
BUDGET PERIOD, IN BOTH UNITS AND AMOUNT. THIS MAY INCLUDE CASH
SALES
AND CREDIT SALES.

PRODUCTION BUDGET
THIS CALCULATES THE NUMBER OF UNITS OF PRODUCTS THAT MUST BE
MANUFACTURED, AND IS DERIVED FROM A COMBINATION OF THE SALES
FORECAST
AND THE PLANNED AMOUNT OF FINISHED GOODS INVENTORY TO HAVE ON
HAND.
THIS INCLUDES BUDGETS FOR DIRECT MATERIAL, DIRECT LABOR AND
MANUFACTURING OVERHEAD.

SELLING AND ADMINISTRATIVE EXPENSE BUDGET

THIS IS COMPRISED OF THE BUDGETS OF ALL NON-MANUFACTURING
DIVISIONS
SUCH AS THE SALES, MARKETING, ACCOUNTING, ENGINEERING, AND
FACILITIES
DEPARTMENTS. THIS USUALLY INCLUDES EXPENSES REGARDING
ADVERTISING,
INSURANCE, RENT, SALARIES, AND UTILITIES.
 CASH BUDGET
THIS CONTAINS AN ITEMIZATION OF THE PROJECTED SOURCES
AND USES OF CASH
IN A FUTURE PERIOD. THIS BUDGET IS USED TO ASCERTAIN
WHETHER COMPANY
OPERATIONS AND OTHER ACTIVITIES WILL PROVIDE A
SUFFICIENT AMOUNT OF CASH
TO MEET PROJECTED CASH REQUIREMENTS.

PROJECTED FINANCIAL STATEMENTS

THIS INCLUDES PROJECTED INCOME STATEMENT, STATEMENT
OF FINANCIAL
POSITION AND CASH FLOW STATEMENT.
 WHAT IS WORKING CAPITAL?

A measure of both a company's efficiency and its short-

term financial health.
 WHAT ARE SOURCES OF FUNDING?

Funding, also called financing, represents an act of

contributing resources to finance a program, project, or a
need.