Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Chapter 6 - Financial Planning: Long-Term and Short-Term

14,565 views

Published on

  • Follow the link, new dating source: ❤❤❤ http://bit.ly/36cXjBY ❤❤❤
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Dating direct: ❶❶❶ http://bit.ly/36cXjBY ❶❶❶
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • DOWNLOAD THAT BOOKS INTO AVAILABLE FORMAT (2019 Update) ......................................................................................................................... ......................................................................................................................... Download Full PDF EBOOK here { http://bit.ly/2m6jJ5M } ......................................................................................................................... Download Full EPUB Ebook here { http://bit.ly/2m6jJ5M } ......................................................................................................................... Download Full doc Ebook here { http://bit.ly/2m6jJ5M } ......................................................................................................................... Download PDF EBOOK here { http://bit.ly/2m6jJ5M } ......................................................................................................................... Download EPUB Ebook here { http://bit.ly/2m6jJ5M } ......................................................................................................................... Download doc Ebook here { http://bit.ly/2m6jJ5M } ......................................................................................................................... ......................................................................................................................... ................................................................................................................................... eBook is an electronic version of a traditional print book that can be read by using a personal computer or by using an eBook reader. (An eBook reader can be a software application for use on a computer such as Microsoft's free Reader application, or a book-sized computer that is used solely as a reading device such as Nuvomedia's Rocket eBook.) Users can purchase an eBook on diskette or CD, but the most popular method of getting an eBook is to purchase a downloadable file of the eBook (or other reading material) from a Web site (such as Barnes and Noble) to be read from the user's computer or reading device. Generally, an eBook can be downloaded in five minutes or less ......................................................................................................................... .............. Browse by Genre Available eBooks .............................................................................................................................. Art, Biography, Business, Chick Lit, Children's, Christian, Classics, Comics, Contemporary, Cookbooks, Manga, Memoir, Music, Mystery, Non Fiction, Paranormal, Philosophy, Poetry, Psychology, Religion, Romance, Science, Science Fiction, Self Help, Suspense, Spirituality, Sports, Thriller, Travel, Young Adult, Crime, Ebooks, Fantasy, Fiction, Graphic Novels, Historical Fiction, History, Horror, Humor And Comedy, ......................................................................................................................... ......................................................................................................................... .....BEST SELLER FOR EBOOK RECOMMEND............................................................. ......................................................................................................................... Blowout: Corrupted Democracy, Rogue State Russia, and the Richest, Most Destructive Industry on Earth,-- The Ride of a Lifetime: Lessons Learned from 15 Years as CEO of the Walt Disney Company,-- Call Sign Chaos: Learning to Lead,-- StrengthsFinder 2.0,-- Stillness Is the Key,-- She Said: Breaking the Sexual Harassment Story That Helped Ignite a Movement,-- Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones,-- Everything Is Figureoutable,-- What It Takes: Lessons in the Pursuit of Excellence,-- Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!,-- The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness,-- Shut Up and Listen!: Hard Business Truths that Will Help You Succeed, ......................................................................................................................... .........................................................................................................................
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here

Chapter 6 - Financial Planning: Long-Term and Short-Term

  1. 1. Chapter 6 FINANCIAL PLANNING: LONG-TERM AND SHORT-TERM © 2003 South-Western College Publishing ENTREPRENEURIAL FINANCE Leach & Melicher
  2. 2. CHAPTER 6: LEARNING OBJECTIVES <ul><li>Understand the concept of a sustainable sales growth rate </li></ul><ul><li>Understand the process of identifying when and how much additional funds will be needed to support the venture’s sales forecasts </li></ul><ul><li>Develop an understanding of the impact of varying sales growth rates on the amount and timing of additional funds needed </li></ul>
  3. 3. CHAPTER 6: LEARNING OBJECTIVES <ul><li>Describe the percent of sales method for preparing long-term financial plans </li></ul><ul><li>Explain why projected statements of cash flows are important to the entrepreneur </li></ul><ul><li>Describe how projected statements of cash flow relate to cash budgets </li></ul>
  4. 4. VENTURE LIFE CYCLE DEVELOPMENT STAGE STARTUP STAGE SURVIVAL STAGE LIQUIDATE RESTRUCTURE RAPID GROWTH STAGE GO PUBLIC SELL OR MERGE MATURITY STAGE
  5. 5. VENTURE LIFE CYCLE: OPERATING AND FINANCIAL DECISIONS <ul><li>Development Stage: </li></ul><ul><li>Screen Business Ideas </li></ul><ul><li>Prepare Business Plan </li></ul><ul><li>Obtain Seed Financing </li></ul><ul><li>Startup Stage: </li></ul><ul><li>Choose Organizational Form </li></ul><ul><li>Prepare Initial Financial Statements </li></ul><ul><li>Obtain First Round Financing </li></ul>
  6. 6. VENTURE LIFE CYCLE: OPERATING AND FINANCIAL DECISIONS <ul><li>Survival Stage: </li></ul><ul><li>Monitor Financial Performance </li></ul><ul><li>Project Cash Needs </li></ul><ul><li>Obtain First Round Financing </li></ul><ul><li>>Possible Actions: Liquidate v. Restructure </li></ul><ul><li>Rapid Growth Stage: </li></ul><ul><li>Create and Build Value </li></ul><ul><li>Obtain Additional Financing </li></ul><ul><li>Examine Exit Opportunities </li></ul><ul><li>>Possible Actions: Go Public v. Sell/Merge </li></ul>
  7. 7. VENTURE LIFE CYCLE: OPERATING AND FINANCIAL DECISIONS <ul><li>Maturity Stage: </li></ul><ul><li>Manage Ongoing Operations </li></ul><ul><li>Maintain and Add Value </li></ul><ul><li>Obtain Seasoned Financing </li></ul>
  8. 8. FORECASTING SALES OR REVENUES <ul><ul><ul><li>Forecasting for Early Stage Ventures: Firms that are in either </li></ul></ul></ul><ul><ul><ul><li>their development, startup, or survival stage, or just entering </li></ul></ul></ul><ul><ul><ul><li>into their rapid growth stage of their life cycle. </li></ul></ul></ul><ul><ul><ul><li>Industry Probability of Sales Component </li></ul></ul></ul><ul><ul><ul><li>Sales Scenario Occurrence Growth Rate Weight </li></ul></ul></ul><ul><ul><ul><li>Optimistic forecast .30 X 60% = 18.0% </li></ul></ul></ul><ul><ul><ul><li>Most likely forecast .40 X 50% = 20.0% </li></ul></ul></ul><ul><ul><ul><li>Pessimistic forecast .30 X 40% = 12.0% </li></ul></ul></ul><ul><ul><ul><li> 1.00 Expected Value = 50.0% </li></ul></ul></ul>
  9. 9. ESTIMATING SUSTAINABLE SALES GROWTH RATES <ul><li>Internally Generated Funds: Net income or profits after taxes earned over an accounting period </li></ul><ul><li>Sustainable Sales Growth Rate: Rate at which a firm can grow sales based on the retention of profits in the business </li></ul>
  10. 10. ESTIMATING SUSTAINABLE SALES GROWTH RATES
  11. 11. ESTIMATING SUSTAINABLE SALES GROWTH RATES
  12. 12. ESTIMATING SUSTAINABLE SALES GROWTH RATES
  13. 13. ESTIMATING ADDITIONAL FINANCING NEEDED TO SUPPORT GROWTH <ul><li>Financing Capital Needed (FCN): financial funds needed to acquire assets necessary to support a firm’s sales growth </li></ul><ul><li>Spontaneously Generated Funds: increases in accounts payables and accruals (wages and taxes) that occur with a sales increase </li></ul>
  14. 14. ESTIMATING ADDITIONAL FINANCING NEEDED TO SUPPORT GROWTH <ul><li>Additional Funds Needed (AFN): financial funds still needed to finance asset growth after spontaneously generated funds and any increase in retained earnings have been used </li></ul><ul><li>AFN = Required Increase in Assets – Spontaneously Generated Funds – Increase in Retained Earnings </li></ul>
  15. 15. AFN EQUATION
  16. 16. AFN CALCULATIONS <ul><li>Sales last year = $1,600,000 </li></ul><ul><li>Asset investment = $1,000,000 </li></ul><ul><li>Net Income = $160,000 </li></ul><ul><li>Current Assets = $520,000 </li></ul><ul><li>Fixed Assets = $480,000 </li></ul><ul><li>Accounts Payable = $48,000 </li></ul><ul><li>Accrued Liabilities = $32,000 </li></ul><ul><li>Projected next year sales = $2,080,000 </li></ul>
  17. 17. AFN CALCULATIONS
  18. 18. PROJECTING OR FORECASTING FINANCIAL STATEMENTS <ul><li>Percent of Sales Method: make projections based on the assumption that certain costs and selected balance sheet items are best expressed as a percentage of sales </li></ul><ul><li>Constant Ratio Method: variant of the percent of sales method that projects selected cost and balance items at the same growth rate as sales </li></ul>
  19. 19. PROJECTING OR FORECASTING FINANCIAL STATEMENTS <ul><li>FINANCIAL FORECASTING PROCESS TO PROJECT FINANCIAL STATEMENTS </li></ul><ul><li>1. Forecast sales </li></ul><ul><li>2. Project income statement </li></ul><ul><li>3. Project balance sheet </li></ul><ul><li>4. Project statement of cash flows </li></ul>
  20. 20. GAME TOY INCOME STATEMENTS (2001 Actual, 2002 Projected)
  21. 21. GAME TOY BALANCE SHEETS (2001 Actual, 2002 Projected)
  22. 22. SHORT-TERM CASH PLANNING TOOLS <ul><li>Sales Schedule </li></ul><ul><li>Purchase Schedule </li></ul><ul><li>Wages and Commission Schedule </li></ul><ul><li>Cash Budget </li></ul>
  23. 23. PDC COMPANY OPERATING & CASH BUDGET
  24. 24. PDC COMPANY OPERATING & CASH BUDGET
  25. 25. PDC COMPANY OPERATING & CASH BUDGET
  26. 26. PDC COMPANY OPERATING & CASH BUDGET
  27. 27. PDC COMPANY OPERATING & CASH BUDGET

×