BAEB510 Chapter 9: Financial Plan

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BAEB510 Chapter 9: Financial Plan

  1. 1. BAEB501 : ENTREPRENEURSHIPCHAPTER 9:Financial Plan © 2010 Cosmopoint
  2. 2. Chapter 9: Financial PlanTopic Outlines 9.1 Financial Plan 9.2 Relationship Operating Budget and Financial Budget 9.3 Good Financial Plan 9.4 The importance of a financial plan 9.5 Process of developing Financial Plan 9.6 Components of Project Implementation Cost 9.7 Cash flow statement 9.8 Elements in Cash Flow 9.9 Elements in the Cash Outflow © 2010 Cosmopoint Slide 2 of [11]
  3. 3. Chapter 9: Financial PlanLearning Outcomes  After completing this chapter, student should be able to:  Explain the basic information of Financial Plan  Understand the Financial in Entrepreneurship  Apply the concepts learnt © 2010 Cosmopoint Slide 3 of [11] Topics
  4. 4. Chapter 9: Financial Plan9.1 Financial Plan  What is financial plan?  A financial plan incorporates all financial data derived from operating budgets such as the marketing, production (or operation) and administrative budgets. © 2010 Cosmopoint Slide 4 of [11] Topics
  5. 5. Chapter 9: Financial Plan9.2 Relationship Operating Budget and Financial Budget © 2010 Cosmopoint Slide 5 of [11] Topics
  6. 6. Chapter 9: Financial Plan9.3 Good Financial Plan  Good financial plan may contain the following:  Total project implementation costs  Total amount of financing required and the proposed sources of finance.  Capital structure of the new firm  Amount of depreciation on fixed assets  Amount of loan and hire purchase repayments  Cash inflow and outflow for the planned period  Profit and loss at the end of the planned period  Financial position at the end of the planned period  Financial viability of the proposed project © 2010 Cosmopoint Slide 6 of [11] Topics
  7. 7. Chapter 9: Financial Plan9.4 The importance of a financial plan  The importance is summarized as follows:  To determine the size of investment example the project implementation cost.  To identify and proposed the relevant sources of finance  To ensure that the initial capital is sufficient  To appraise the viability of the project before actual investment is committed  To be used as guideline for implementation © 2010 Cosmopoint Slide 7 of [11] Topics
  8. 8. Chapter 9: Financial Plan9.5 Process of developing Financial Plan  There are 7 steps involve: 1. Gather all financial input 2. Prepare the project implementation cost schedule 3. Prepare the source of finance schedule 4. Prepare the cash flow statement 5. Prepare the income statements 6. Prepare the balance sheet 7. Perform financial analysis based on above statements. © 2010 Cosmopoint Slide 8 of [11] Topics
  9. 9. Chapter 9: Financial Plan9.6 Components of Project Implementation Cost  There are four component involve: 3. Capital Expenditure 5. Working capital requirements 7. Other expenditure 9. Contingency cost. © 2010 Cosmopoint Slide 9 of [11] Topics
  10. 10. Chapter 9: Financial Plan9.7 Cash flow statement  The cash flow statement must be able to show the following information: 3. Cash inflows – the projected amount of cash flowing into the company 4. Cash outflows – the projected amount of cash flowing out of the company 5. Cash deficit or surplus – the difference between cash flows and cash outflows. 6. Cash position – the beginning and ending cash balances for a particular period. © 2010 Cosmopoint Slide 10 of [11] Topics
  11. 11. Chapter 9: Financial Plan9.8 Elements in Cash Flow  The cash inflow is generally made up of the following: 3. Equity contribution in cash 5. Term loan 7. Cash sales 9. Collection of receivables 11. Sales of assets © 2010 Cosmopoint Slide 11 of [11] Topics
  12. 12. Chapter 9: Financial Plan9.9 Elements in the Cash Outflow  The cash outflow is generally made up of the following elements: 3. Operations expenditure 4. Marketing expenditure 5. Administrative expenditure 6. Term loan repayment 7. Hire purchase repayment 8. Purchase of fixed assets 9. Pre-operating expenditure 10. Payments for deposits 11. Miscellaneous expenditure © 2010 Cosmopoint Slide 12 of [11] Topics
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