Financial Management - capebit

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10 Νοε 2013 (πριν από 3 χρόνια και 9 μήνες)

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12
-
1

Financial Planning

12
-
2

Financial Records and Financial Statements

12
-
3

Payroll Management

12
-
4

Financial Decision
-
Making

Financial Management

12

LESSON 12
-
1

Financial Planning

Chapter 12

Slide
2

Goals


Recognize important financial questions
that must be answered in a business.


List the steps in budget preparation.


Describe three types of business budgets.

Key Terms

Chapter 12

Slide
3


revenue


expenses


budget


start
-
up budget


operating budget


cash budget

FINANCIAL PLANNING

Chapter 12

Slide
4


Beginning a business


Questions?


How much money will be needed to start?


Where will financing come from?


How will funds be obtained to operate for months or years
until profitable?


What will be the best sources of sales and other income?


What will be the major expenses?


Many businesses fail due to poor financial planning

FINANCIAL PLANNING

Chapter 12

Slide
5


Ongoing operations


Every business activity costs money


All income that a business receives over a
period of time is called
revenue
.


The costs of operating a business is called
expenses
.

BASIC FINANCIAL EQUATION

Chapter 12

Slide
6

Revenue


Expenses
=

Profit or Loss

FINANCIAL PLANNING

Chapter 12

Slide
7


Business expansion


Successful businesses expand to :



Serve more customers


Reach
unserved

markets


Sell new products


Expansion costs money


Research


New buildings and equipment (capital)


Additional employees and training


Marketing activities to distribute and promote

>>

C H E C K P O I N T

Chapter 12

Slide
8

What is the basic financial equation for businesses?

DEVELOPING BUSINESS BUDGETS

Chapter 12

Slide
9


Budget



provides detailed plans for the financial
needs of individuals, families, and businesses


Has 2 main purposes:


Anticipate sources and amounts of income


Predict the types and amounts of expenses for a specific
business activity or the entire business.


To be successful revenue must be available to pay all
expenses.

DEVELOPING BUSINESS BUDGETS

Chapter 12

Slide
10


Sources of budget information


Information is needed to predict income and
expenses


Planning tools for a new business can be obtained
from


SBA


Private business sources


Dun and Bradstreet, Value Line, Standard and Poor’s


Business magazines and newspapers


Fortune, Forbes, Entrepreneur, Black Enterprise, The Wall Street Journal

DEVELOPING BUSINESS BUDGETS

Chapter 12

Slide
11


Budget preparation


Allows the owner to determine if the
business is making progress toward its
financial destination


Compares the business’ financial
performance to the budget to determine if
corrections need to be made


THE BUDGETING
PROCESS

Chapter 12

Slide
12

1.
Prepare a list of each type of income and expense that
will be a part of the budget.

2.
Gather accurate information from business records
and other information sources for each type of
income and expense.

3.
Create the budget by calculating each type of income,
expense, and the amount of net income or loss.

4.
Explain the budget to people who need financial
information to make decisions.


>>

C H E C K P O I N T

Chapter 12

Slide
13

What are the four steps in preparing a business budget?

TYPES OF BUDGETS

Chapter 12

Slide
14


Start
-
up budget


Operating budget


Cash budget


TYPES OF BUDGETS: Start
-
up

Chapter 12

Slide
15


Plans income and expenses from the beginning of a new
business or a major business expansion until it becomes
profitable.


Provides funds for the purchase and use of:


Buildings, equipment, inventory, supplies, advertising,
transportation, salaries, utilities, licenses, etc.


Sources of financing for all expenditures must be identified
from either inside the company or outside financial sources.


The amount of start
-
up must be realistic so money is
available until the business produces adequate income.

TYPES OF BUDGETS: Operating

Chapter 12

Slide
16


Describes the financial plan for ongoing operations
of the business for a specific period…3 months, 6
months, or a year.


Prepared for the entire business


Each department will develop and follow its own
operating budget.


Used to manage the operations of the company for
the period specified.


TYPES OF BUDGETS: Cash

Chapter 12

Slide
17


An estimate of the actual money received and paid
out for a specific period.


Anticipates cash coming in and going out each week
or month.


Determines if a business has adequate financial
resources on hand to pay bills on time or if money is
needed to be borrowed.


It also shows when investing can take place
.


>>

C H E C K P O I N T

Chapter 12

Slide
18

Identify and describe the three types of budgets
needed by all businesses.