Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 12 1 CHAPTER Financial Planning Financial Records and Financial Statements Payroll Management Financial Decision-Making Financial Management

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 12 2 Financial Planning Goals Recognize important financial questions that must be answered in a business. List the steps in budget preparation. Describe three types of business budgets. 12-1

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 12 3 Key Terms revenue expenses budget start-up budget operating budget cash budget

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 12 4 FINANCIAL PLANNING Beginning a business Ongoing operations Business expansion

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 12 5 BASIC FINANCIAL EQUATION Revenue – Expenses = Profit or Loss

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 12 6 DEVELOPING BUSINESS BUDGETS Sources of budget information Budget preparation

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 12 7 TYPES OF BUDGETS Start-up budget Operating budget Cash budget

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 12 8 Financial Records and Financial Statements Goals Identify several types of financial records needed by businesses. Describe the differences between an income statement and a balance sheet. 12-2

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 12 9 Key Terms financial records assets liabilities owner’s equity balance sheet income statement

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter FINANCIAL RECORDS Types of records Asset records Depreciation records Inventory records Records of accounts Cash records Payroll records Tax records Maintaining financial records

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter FINANCIAL STATEMENTS The balance sheet The income statement

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter Balance Sheet

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter Income Statement

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter Payroll Management Goals Describe the components of a business’ payroll system. Identify information included in payroll records and paychecks. 12-3

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter PAYROLL SYSTEMS Income taxes Social Security and Medicare Unemployment taxes

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter PREPARING A PAYROLL Payroll records Preparing paychecks

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter Paycheck and Earnings Report Sample Paycheck Sample Earnings Report

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter Financial Decision-Making Goals Recognize important financial information managers use to make decisions. Identify the steps in making financial decisions in business. 12-4

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter USING FINANCIAL INFORMATION Important financial information Understanding financial performance ratios Current ratio Debt to equity ratio Return on equity ratio Net income ratio

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter Financial Performance Ratios

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter MAKING FINANCIAL DECISIONS Prepare a budget Look for discrepancies between actual and budgeted performance Make needed adjustments