BBUSS 2403 • BUSINESS PLANNING

CHAPTER 10

Financial Projections

3-1
Introduction
• Sources and uses of funds statement
• Assumptions sheet
• Income statements
• Balance sheets
• Cash flows
• Ratio analysis

10-2
Sources and Uses of Funds
Statement
The sources and use of funds
statement is a document that lays
out specifically how much money a
firm needs, where the money will
come from, and what the money
will be used for

10-3
Assumptions Sheet

An assumptions sheet is an
explanation of the most critical
assumption that your financial
statements are based on

10-4
Financial Statements
• Income statement
• Balance sheet
• Cash flow statement

10-5
Income Statement
• Net sales
• Cost of good sold
• Operating expenses

10-6
Net Sales
Net sales consists of total sales minus allowances for
returned goods and discounts

10-7
 Cost of Goods Sold
Cost of goods sold includes all the direct costs associated
with producing or delivering a product or service,
including the material costs and direct labor

10-8
Operating Expenses
Operating expenses include
marketing, utilities, and
administrative costs not
directly related to
producing a product or
service

10-9
Balance Sheet

A balance sheet is a projection

of a firm’s assets, liabilities,
and owner’s equity at a
specific point in time

10-10
 Balance Sheet
• Assets
• Current assets
• Fixed assets

• Liabilities
• Current liabilities
• Long-term liabilities
• Owner’s equity

10-11
Cash Flow
• Operating activities

• Investing activities

• Finance activities

10-12
 Operating Activities
Operating activities include net income (or loss),
depreciation, and changes in current assets and current
liabilities other than cash

10-13
Investing Activities
Investing activities include
the purchase, sale, or
investment in fixed assets,
such as real estate,
equipment, and buildings

10-14
Financing Activities
Financing activities
include cash raised
during the period by
borrowing money,
making payments on
loans, or paying
dividends

10-15
One Final Note
• Demonstrate the ability
to prepare financial
statements

• Break even analysis

10-16
Ratio Analysis
• Profitability Ratios
• Liquidity Ratios

• Overall Financial Stability

10-17