Entrepreneurship Mr. Bernstein Managing Your Finances, pp June 11, 2013

Entrepreneurship Mr. Bernstein Pro Forma Cash Flow Statement Becomes a budget tool: Must have a sales forecast Must include estimates of all expenses Comparison with results highlights areas where changes may need to be made Must include entries for capital expenses Helpful in developing Pro Forma Balance Sheet 2

Entrepreneurship Mr. Bernstein Cash Flow Statement and Budgeting Controlling costs: Variable vs. Fixed Expenses AKA “marginal” and “sunk” costs Airlines: Example of High Fixed Expenses Large upfront costs, pure profit after reaching breakeven point Farmer’s Market: Example of High Variable Expenses Low upfront costs, profit from markup on each item What type of expenses are favored by Startup Entrepreneurs? 3