1. 1Aboriginal Banking Module 6 Financial Statements

2. 2Aboriginal Banking Module 6 - Purpose >Shows Financial “health” of business over a given period of time >Provides history of business performance >Will highlight any changes in costs, sales, business strategy, ect... If you have any difficulties understanding this Module please refer to the Module 6 guide on how to do the module or glossary for quick definitions of terms.

3. 3Aboriginal Banking Module 6 - Projected Outcomes >Increased awareness of accounting role and importance in small business >Understand the “accounting equation” >Increase awareness of basic financial statements; Start-up Schedule, Income Statement, Balance Sheet, and Cash Flow Projection. >Increased Awareness of accounting terminology >Increased awareness of financial statement preparation.

4. 4Aboriginal Banking Requirements in Module 6 >Start Up Expenses >Loan Calculations >Cash Flow Forecast >Four-month Projected Income Statement >Balance Sheet

5. 5Aboriginal Banking What is Accounting? >Accounting is the process of recording, processing, classifying, summarizing, and interpreting financial transactions. >Essentially how you manage, record, organize, and deal with the money you have coming in and out of your business.

6. 6Aboriginal Banking What are Financial Statements for? >Shows the business is able to pay back debts to any and all sources while still making profit >Shows potential financers (banks or other lenders) how financially strong your idea is, this allows them to decide whether or not to finance your idea. >Shows that your business is able to still make money after paying any monthly bills or other expenses

7. 7Aboriginal Banking The Accounting Equation >The fundamental accounting equation, which resides at the core of all financial transactions is: ASSETS = LIABILITIES + OWNER’S EQUITY This comes into play largely in the Balance Sheet section of the Module

8. 8Aboriginal Banking Module 6 - Start-Up Costs We will now start to look at the various financial statements found in Module 6, each one is mandatory for the competition. A step-by-step guide can be found on the E-Spirit website. >The goal of the Start-Up costs section is to show potential financer’s how much it will take to get your business off the ground. >It shows what you need to start-up your business along with detailing costs for doing so. For the purpose of example we will now look at Lizzy’s Insurance Brokerage

9. 9Aboriginal Banking Module 6 – Start-Up Example Start-Up Costs for Lizzy’s Insurance Brokerage

10. 10Aboriginal Banking Module 6 - Financing >The purpose of this is to determine how much money you will need to borrow and how you intend to pay it back >It shows your lending amount (principal), monthly payments, loan term, interest rates, and the financing options you’ve pursued.

11. 11Aboriginal Banking Module 6 – Financing Examples Equity, Other Contributions, Loan Amount, and Repayment Terms Our total start-up costs are: $14,580.00 Our equity contribution should be: $1,458.00 We are eligible for an ABC contribution of: $1,458.00 Our loan amount should be: $11,664.00 We have investigated the loan and monthly payments of: $240.24 over a 60-month term at 7.5% Rate of Interest Loan Calculator

12. 12Aboriginal Banking Module 6 - Cash Flow Forecast >A cash flow forecast shows how much money have coming in per month (inflow) vs. money going out per month (outflow), along with total profit or lose at the end of the period. >It also shows where your spending your money and how much money in sales your are making.

13. 13Aboriginal Banking Module 6 – Cash Flow Examples Four Month Cash Flow for Lizzy’s Insurance Brokerage

14. 14Aboriginal Banking Module 6 - Projected Income Statement >Your projected or estimated Income statement is a financial statement that tries to give a reasonably accurate idea of what your financial situation is in a fairly condensed form. >It gives a fairly quick snapshot of profits, spending, and gross and net income. Recommended Video: http://www.youtube.com/watch?v=VlGHoPv8BBQ

15. 15Aboriginal Banking Module 6 – Income Statement Example Lizzy’s Insurance Brokerage Projected Income Statement For 4-month period ending April

16. 16Aboriginal Banking Module 6 - Balance Sheet >A balance sheet is a “snapshot” of a company’s financial condition. It essentially measures how much money your business has in comparison to how much it owes. >An asset is something your business has either acquired or obtained that has monetary value. >Liabilities are money that you owe and have going out of your business

17. 17Aboriginal Banking Module 6 – Balance Sheet Example Balance Sheet For Period Ending April

18. 18Aboriginal Banking E-Spirit www.bdc.ca/en/espirit