1. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 12 1 CHAPTER 12 12-1 12-1Financial Planning 12-2 12-2Financial Records and Financial Statements 12-3 12-3Payroll Management 12-4 12-4Financial Decision-Making Financial Management

2. 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

3. 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

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

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

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

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

8. 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

9. 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

10. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 12 10 FINANCIAL RECORDS Types of records Asset records Depreciation records Inventory records Records of accounts Cash records Payroll records Tax records Maintaining financial records

11. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 12 11 FINANCIAL STATEMENTS The balance sheet The income statement

12. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 12 12 Balance Sheet

13. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 12 13 Income Statement

14. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 12 14 Payroll Management Goals Describe the components of a business’ payroll system. Identify information included in payroll records and paychecks. 12-3

15. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 12 15 PAYROLL SYSTEMS Income taxes Social Security and Medicare Unemployment taxes

16. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 12 16 PREPARING A PAYROLL Payroll records Preparing paychecks

17. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 12 17 Paycheck and Earnings Report Sample Paycheck Sample Earnings Report

18. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 12 18 Financial Decision-Making Goals Recognize important financial information managers use to make decisions. Identify the steps in making financial decisions in business. 12-4

19. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 12 19 USING FINANCIAL INFORMATION Important financial information Understanding financial performance ratios Current ratio Debt to equity ratio Return on equity ratio Net income ratio

20. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 12 20 Financial Performance Ratios

21. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 12 21 MAKING FINANCIAL DECISIONS Prepare a budget Look for discrepancies between actual and budgeted performance Make needed adjustments