10-1

Chapter

10

The Financial Plan

10-2

Sequence of Financial Statements

Budgets
Operating- Short-Term Operating- ShortCapital- Long-Term Capital- Long-

Pro Forma Statements

10-3

Pro Forma Statements

Pro Forma Income
Sales Budget By Month Expenses Are Function Of Sales Level

Pro Forma Cash Flow

Cash Receipts Cash Payments

Pro Forma Balance Sheet Pro Forma Sources & Applications of Funds
10-4

Daily Knowledge On Financial Position

Cash Balance On Hand Bank Balance Daily Summaries Of Sales/Cash Receipts Problems In Credit Collections Record Of Money Paid Out
10-5

Weekly Knowledge On Financial Position

SlowSlow-Paying Accounts Receivable Discounts Offered On Accounts Payable Payroll- Hours Worked & Payroll PayrollOwed TaxesTaxes- When Taxes Due & Reports Required
10-6

Monthly Knowledge On Financial Position

Provide Records
Receipts Disbursements Bank Accounts Journals

Balance Petty Cash Account Review Tax Requirements & Make Deposits Review/Age Accounts Receivable
10-7

Review
Income Statement Balance Sheet

Reconcile Checking Account

Sales Budget
Calculate Sales Expectations In Units Utilize
Marketing Research Industry Sales Experience

Forecasting Techniques
Survey of Buyers Sales Force Opinions Expert Opinions Time Series Analysis
10-8

(Cash Flow From Operating Activities)

Net Income Adjustments to NI Noncash/Nonoperating Items +Depreciation Cash Changes in Current Assets/Liabilities +/- Accounts Receivable +/+/- Inventory +/+/- Prepaid Expenses +/+/- Accounts Payable +/Net Cash From Operations XXX

Cash Flow:

XXX XXX XXX XXX XXX XX,XXX

10-9

Cash Flow:
(Cash Flow From Other Activities)
Capital Expenditures (-) (Payments of Debt (-) (Dividends Paid (-) (Sale of Stock Net Cash From Other Activities Net Cash From Operations Net Cash From Other Activities Increase/(Decrease) in Cash (XXX) (XXX) (XXX) XXX (XXX) XXX (XXX) XXX

10-10

Pro Forma Balance Sheet

Assets
Current Assets Cash Accounts Receivable Merchandise Inventory Supplies Total Current Assets $50,400 46,000 10,450 1,200 $108,050
10-11

Pro Forma Balance Sheet (contd)

Fixed Assets Equipment Less Depreciation Total Fixed Assets

$240,000 39,600 $200,400

Total Assets

$308,450 =======
10-12

Pro Forma Balance Sheet (contd)

Total Liabilities & Owners Equity
Current Liabilities Accounts Payable Current Portion of L.T. Debt Total Current Liabilities LongLong-Term Liabilities Notes Payable $23,700 16,800 $40,500

$209,200

Total Liabilities

$249,700
10-13

Pro Forma Balance Sheet (contd)

Owners Equity
C. Peters, Capital K. Peters, Capital Retained Earnings $25,000 25,000 8,700

Total Owners Equity

Total Liabilities & Owners Equity

$58,750
$308,450 =======
10-14

BreakBreak-Even Analysis

B/E(Q) =

Total Fixed Cost SP per Unit VC per Unit

10-15

BreakBreak-Even Graph
BreakBreak-Even =

e ta ta

st st even e

10-16

Pro Forma Sources & Applications of Funds

Sources of Funds
Mortgage Loan Term Loan Personal Funds Net Income From Operations Add Depreciation $150,000 75,000 50,000 8,750 39,600

Total Funds Provided

$323,350
10-17

Pro Forma Sources & Applications of Funds(contd)

Applications of Funds
Purchase of Equipment Inventory Loan Repayment $240,000 10,450 16,800

Total Funds Expended

$267,250

Total Funds Provided $323,350 Total Funds Expended 267,250 Net Increase in Working Capital $56,100 ======
10-18