FINANCIAL PLANNING

&
CASH FLOW
FINANCIAL PLANNING
Financial Planning
• It refers to the process of determining the best uses of
the financial resources of an organization to attain its
predetermined objectives and the procurement of the
required funds at the least cost.
• It is a statement of what is to be done in the future.
• It requires the preparation of a budget.
 Why do we need to conduct
FINANCIAL PLANNING?
• To monitor data
• To identify the liquidity
 How to conduct
FINANCIAL PLANNING?
• Current Financial Statements
• Income Statement
• Balance Sheet
• Cash Flow Statement
Alpha-Beta Corporation
Financial Statements Balance Sheet
Income Statement
Sales Php 1,000 Assets Php 500 Liability Php 250
Costs 800 Equity 250
Net Income Php 200 Total Php 500 Total Php 500
Suppose sales increase by 20 percent, rising from
Php1,000 to Php1,200. Financial planning would then
also forecast a 20 percent increase in costs, from
Php800 to Php960 (Php800 x .20= Php160.00
+Php800.00). Therefore, Pro Forma Financial
Statements, based on financial planning, shall be:
 Pro Forma = Assumptions/Projections

Pro Forma Pro Forma

Income Statement Balance Sheet
Sales Php 1,200 Assets Php 500 (+100) Liability Php 250 (+50)
Costs 960 Equity 300 (+50)
Net Income Php 240 Total Php 600 Total Php 600
Cash Plans
• It can be for a day, week, or month of operations.

Short-Term
Plan
VS

Long-Term Plan
Short-Term Plan
• It is concerned with anticipating and providing for
short-term credit needs and cash control for a year,
consistent with the annual budget.

Long-Term Plan
• It is consistent with corporate plans and investment
plans for more than a year, including major cash
outflows and inflows.