The Financial Plan

Operating & Capital Budgets Who works on budgets? Who works on budgets? Sales Sales Operating Costs Operating Costs List fixed costs List fixed costs Capital Budgeting Capital Budgeting Long-term buying Long-term buying

Pro Forma Income Statement Sales Sales How to forecast? How to forecast? Cost of Good Sold Cost of Good Sold Selling Expenses Selling Expenses Salaries & Wages Salaries & Wages Insurance and Other Expenses Insurance and Other Expenses Investors Investors Timeframe Timeframe Estimates Estimates

Pro Forma Cash Flows Why are cash flows necessary? Why are cash flows necessary? Cash v. A/R Cash v. A/R Receipts > Disbursements Receipts > Disbursements Receipts < Disbursements Receipts < Disbursements How to calculate cash and disbursements? How to calculate cash and disbursements? Percentages for each month Percentages for each month

Pro Forma Balance Sheet Assets Assets “Actual cost or amount expended” “Actual cost or amount expended” Current Current Fixed Fixed Liabilities Liabilities Current Long-term Pay immediately? Owner’s Equity Owner’s Equity “Net worth of a business”

Break-Even Analysis Why use it? Why use it? TFC/ (Price-UVC) TFC/ (Price-UVC)

Pro Forma Sources and Applications of Funds Sources Sources Loans Loans Personal funds Personal funds Net Income Net Income +Depreciation +Depreciation Application Application Increase assets Increase assets Decrease L-T liabilities Decrease L-T liabilities Decrease owner’s equity Decrease owner’s equity

Software Microsoft Excel Microsoft Excel Advantages Advantages Other Software and Functions Other Software and Functions Peachtree Peachtree Oracle Business Suite Oracle Business Suite