04 fin plan

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Financial Planning

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04 fin plan

  1. 1. Principles of Business, Marketing, andPrinciples of Business, Marketing, and FinanceFinance Lesson FourLesson Four Financial PlanningFinancial Planning UNT in partnership with TEA, Copyright ©. All rights reserved
  2. 2. Financial Questions a BusinessFinancial Questions a Business Must AnswerMust Answer • How much money is needed for start-up? • Where to obtain financing? • How will funds be obtained to run the business • for the months or years until it becomes profitable? • What will be the best sources of sales and other income? • What will be the expenses and when will they be paid? UNT in partnership with TEA, Copyright ©. All rights reserved 2
  3. 3. Four Steps for BudgetFour Steps for Budget PreparationPreparation • Prepare a list of income and expenses. • Gather accurate information for each income and expense. • Create the budget by calculating each type of income, expense, and amount of net income or loss. • Show and explain the budget • to people who need financial • information to make decisions.. UNT in partnership with TEA, Copyright ©. All rights reserved 3
  4. 4. Three Types of BusinessThree Types of Business BudgetsBudgets • Start-up Budget • Operating Budget • Cash Budget UNT in partnership with TEA, Copyright ©. All rights reserved 4
  5. 5. Financial Records andFinancial Records and Financial StatementsFinancial Statements • Recognize and Analyze the Financial Performance of a Business – Assets – Depreciation – Inventory – Account – Cash – Payroll – Tax records UNT in partnership with TEA, Copyright ©. All rights reserved 5
  6. 6. Important FinancialImportant Financial StatementsStatements • Income statement – Revenue – Expenses – Net profit or loss • Balance Sheet – Assets – Liabilities – Net worth UNT in partnership with TEA, Copyright ©. All rights reserved 6
  7. 7. Financial PerformanceFinancial Performance RatiosRatios • Current ratio (current assets/current liabilities) • Debt to Equity Ratio (total liabilities/owner’s equity) • Return on Equity Ratio (net profit/owner’s equity) • Net Income Ratio (total assets/net income) UNT in partnership with TEA, Copyright ©. All rights reserved 7
  8. 8. Payroll ManagementPayroll Management • Financial records of employee compensation, deductions, and net pay • Information on each employee to calculate the company’s payroll and to make the necessary payments to each employee • Payroll record-form used to document each employee’s pay history – Name of employee – Social security number – Address – Tax and benefit records UNT in partnership with TEA, Copyright ©. All rights reserved 8
  9. 9. Financial Decision-MakingFinancial Decision-Making • Company Strength-assets, liabilities, owner’s equity, sales, profits • Calculate financial performance ratios to make decisions that result in the wise use of the company’s money • Steps in Financial Decision Making – Prepare a budget – Use the budget as a guide to – the operations of the business – Make needed adjustments UNT in partnership with TEA, Copyright ©. All rights reserved 9
  10. 10. Financial Decision-MakingFinancial Decision-Making • Company Strength-assets, liabilities, owner’s equity, sales, profits • Calculate financial performance ratios to make decisions that result in the wise use of the company’s money • Steps in Financial Decision Making – Prepare a budget – Use the budget as a guide to – the operations of the business – Make needed adjustments UNT in partnership with TEA, Copyright ©. All rights reserved 9

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