The Financial Plan. Operating & Capital Budgets Who works on budgets? Who works on budgets? Sales Sales Operating Costs Operating Costs List fixed costs.

The Financial PlanThe Financial Plan

Operating & Capital BudgetsOperating & Capital Budgets Who works on budgets?Who works on budgets? SalesSales Operating CostsOperating Costs

List fixed costsList fixed costs Capital BudgetingCapital Budgeting

Long-term buyingLong-term buying

Pro Forma Income Pro Forma Income StatementStatement

SalesSales How to forecast?How to forecast?

Cost of Good SoldCost of Good Sold Selling ExpensesSelling Expenses Salaries & WagesSalaries & Wages Insurance and Other ExpensesInsurance and Other Expenses

InvestorsInvestors TimeframeTimeframe EstimatesEstimates

Pro Forma Cash FlowsPro Forma Cash Flows Why are cash flows necessary?Why are cash flows necessary? Cash v. A/RCash v. A/R Receipts > DisbursementsReceipts > Disbursements Receipts < DisbursementsReceipts < Disbursements How to calculate cash and How to calculate cash and

disbursements?disbursements? Percentages for each monthPercentages for each month

Pro Forma Balance SheetPro Forma Balance Sheet AssetsAssets

““Actual cost or Actual cost or amount expended”amount expended”

CurrentCurrent FixedFixed

LiabilitiesLiabilities CurrentCurrent Long-termLong-term Pay immediately?Pay immediately?

Owner’s EquityOwner’s Equity ““Net worth of a Net worth of a

business”business”

Break-Even AnalysisBreak-Even Analysis Why use it?Why use it?

TFC/ (Price-UVC)TFC/ (Price-UVC)

Pro Forma Sources and Pro Forma Sources and Applications of FundsApplications of Funds

SourcesSources LoansLoans Personal fundsPersonal funds Net IncomeNet Income +Depreciation+Depreciation

ApplicationApplication Increase assetsIncrease assets Decrease L-T liabilitiesDecrease L-T liabilities Decrease owner’s equityDecrease owner’s equity

SoftwareSoftware Microsoft ExcelMicrosoft Excel

AdvantagesAdvantages Other Software and FunctionsOther Software and Functions

PeachtreePeachtree Oracle Business SuiteOracle Business Suite