Presentation on theme: "Managing Business Finance"— Presentation transcript:
1 Managing Business Finance Chapter 17Managing Business Finance
2 Financial PlanningFinancial plan = outline of your expenses, needs, and goals, and how you expect to meet themFinancial planning1st step – identifying your assetsAsset = any property or item of value that your business ownsExamples: cash, equipment, buildings, supplies, inventory, land2nd step – purchasing your assetsDo you need to borrow money?3rd step – recognizing the financial records you need to keepFinancial forecast = estimate of what business conditions will be like in the future
3 AccountingAccounting = systematic process of recording and reporting the financial position of a business.Financial manager = person in charge of a business’s financial planning, funding, and accounting.Budget = written plan of what you expect your income and expenses to be over a certain period of time.
4 Financial Records Fiscal year = reports are for one year Summarize the year with an income statement and a balance sheet.
5 Financial Statements Assets = Liabilities + Owner’s Equity The two sides of the equation must always balanceLiability = amount your business owes (debt)Owner’s Equity = equal to the assets minus liabilities (what the business is worth)
6 Income StatementIncome Statement = a report of net income or net loss over an accounting periodIncludes revenue and expensesIf revenue is greater than expenses, you have a net incomeIf expenses are greater than revenue, you have a net lossExample on next slide
8 Balance SheetBalance Sheet= a report of the financial state of your business on a certain date.Includes assets, liabilities, and owner’s equityAssets on the left sideLiabilities and owner’s equity on the right sideThe two sides must equal, or balanceExample on next slide