Chapter 12 - Financial Management


9 Νοε 2013 (πριν από 5 χρόνια και 5 μήνες)

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Financial Management

Starting Your Own Business

Chapter 12

Learning Objectives

Create a cash budget

Improve your business’s cash flow

Analyze your business's financial

Calculate the level of sales you need to
achieve a profit

Find professionals who can help you

Identify the types of services financial
experts provide

Manage Your Cash Flow

Construct a Cash Budget

Three columns
are used to show the estimated cash flow,
actual cash flow, and the difference
between the two.

Helps you budget your resources

Improve Your Cash Flow

Increase Your Cash Receipts

Offer discounts on bills paid right away.

Establish tighter credit policies.

Establish a follow
up system for
collecting unpaid accounts receivable.

Hold shipments to customers with large
unpaid bills or demand that bills be
paid in advance.

Improve Your Cash Flow

Increase your capital.

Take out a loan.

Financing your
business with your own

Find investors willing
to invest for a share of
future profits.

Reduce Your Disbursements

Control Inventory and Payroll

Check to make sure you are not carrying too
much inventory.

Reduce the size of your work force.

Slow Bill Payment

Consider taking advantage of longer credit

Cut Other Expenses

Control variable expenses

Analyze Financial Statements

Analyze Your Sales

Analyze Sales by Product.

Analyze Net Profit on Sales by Calculating
Net Sales

Gross Sales

$ amount of all sales including

Net Sales

$ amount of all sales after returns
are subtracted.

Gross Sales

Returns = Net Sales

Analyze Financial Statements

Calculate Net Income After Taxes

Gross Profit

Profit before operating
expenses are deducted.

Gross Profit

operating expenses = Net
income from operations.

Net Profit on Sales Ratio

Net income after taxes / Net sales = Net Profit
on Sales

Perform Break
Even Analysis

Even Point is the volume of sales
that must be made to cover all of the
expenses of a business.

Below the break
even point, your expenses
will exceed your revenues.

Once you reach the break
even point, your
sales will reach all of your expenses.

Once you exceed the break
even point, you
will begin to earn a profit.

Measure Costs, Sales and Profits

To Calculate Break
Even Point, you need
to know Total Fixed Costs, Selling Price
per Unit, Variable Cost per Unit

Total Variable Costs / Number of Units =
Variable Cost per unit

To calculate Break
Even Point

Total Fixed Costs / Selling Price per Unit

Variable Cost per Unit

Hiring A Professional


Ways to increase profits


Keep you informed of
changes in specific laws


Prepare financial

Financial Planners

Help manage
your assets

Investment Brokers

Advice on
investing excess cash

How to Choose a Financial Advisor

Research Financial Management so
that you are familiar with issues you
need to deal with.

Consult other people in your

Consider choosing a financial
advisor who charges a fee, not a
commission for services.

Services of Financial Experts

Financial Planning

Analyzing financial
statements in order to make decisions
about the future.

Strategic Planning

Involves making
decisions that affect your business in the
long term.

Tax Planning

Filing your income tax
return correctly to avoid paying too much
or too little tax.

Tax Audit

An IRS investigation of a tax