Department of Education: Republic of The Philippines

Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF BATANGAS
LEARNING ACTIVITY SHEET IN BUSINESS FINANCE

Introduction to Financial Management
Name of Learner: ____________________________________
Grade Level: 12__________________________________
Strand/Track: ABM- ACADEMIC_____________________
Section: ____________________________________
Date: SEPTEMBER 8-13, 2020_______________
A. Background Information for Learners
This activity is about the Financial Planning Process. In this lesson we are going to
prepare budget such as projected collection, sales budget, statement of
comprehensive income, projected statement of financial position and projected cash
flow statement.
B. Learning Competency with code
The learners shall be able to illustrate the formula and format for the preparation of
budget and projected financial statements. (ABM_BF12-IIIc-d-11)
C. Directions/ Instructions
While going through this activity sheet, you are expected to:
1. Read and follow each direction carefully.
2. Accomplish each activity for the mastery of competency.
3. Use the Learning Activity Sheets with care.
4. Record your points for each activity
5. Always aim to get at least 80% of the total number of given items.
6. If you have any questions, contact, or see your teacher through messenger or
text
______________________DAY 1_________________________________
D. Exercises / Activities
D.1 INTRODUCTION
a. What I need to Know
After going through with this unit, you are expected to:
1. Know and apply the tools used in planning and forecasting.
2. Know and apply the tools used in budgeting.
Address: Provincial Sports Complex, Bolbok, 4200 Batangas City

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www.depedbatangas.org
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Activity 1: I Remember…
Direction: Give your insights on the following questions
1. What is long term financial plan?

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2. What is the short term financial plan?
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3. What are the steps in planning?
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______________________DAY 2_________________________________
b. What’s New?
Activity 3: Let me think
Directions: Give your insights.
1. Assume that you want to buy a brand new phone next month. To make it possible
for you to make it happen what is the most important thing you must consider?
Explain your answer.
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D.2 DEVELOPMENT

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a. What I Know
Activity 4: I Know It!
Direction: Give your insights

1. What is a budget?
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2. What is the important of budget?
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3. What will happen if the budget is not meet?
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b. What’s In?
Activity 4: Call a friend
Directions: From the concepts in the activity 3, ask the students to find any research
book that will give them clarifications to the concepts vague to them. They are allowed
to call a classmate, a friend, a professor, a college student in the house hold or through
chat, text message, if possible. Then in a piece of paper, write the new understanding
they have acquired. Do not forget to express gratitude after each conversation.
______________________DAY 3_________________________________
c. What is It?
Activity 5: Read and Understand
Directions. Refer on the lecture below to have a better understanding about the topic.
Please analyze carefully and thoroughly the ideas and information being presented on
this lecture.
A. Introduction

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Just like in the business operation, plan is useless if not quantified. A quantified plan
is represented through budgets and projected or pro formula of financial statements in
the business. These budgets and pro forma financial statements are useful for
controlling. They serve as a basis for monitoring actual performance. Meeting a plans
is good however failing to meet the plan is not equivalent to failure especially when the
reason for not meeting the plan can be justified especially when the reason are
fortuitous in nature and are beyond the control of the management.
-Measuring actual performance vis a vis the plans even at the early start of the year allows
the management to assess the company’s performance and come up with remedial actions if
warranted (Cayanan, 2015).
B. Sales Budget
The most important account in the financial statement in making a forecast is sales since
most of the expenses are correlated with sales. Given the importance of the sales forecast,
the financial manager must be able to support this figure with reasonable assumptions. The
following external and internal factors should be considered in forecasting sales:
To explain the table
Macroeconomic Variables (external)
Macroeconomic variables such as the GDP rate, inflation rate, and interest
rates, among others play an important role in forecasting sales because it
tells us how much the consumers are willing to spend. A low GDP rate
coupled by a high inflation rate means that consumers are spending less on

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their purchases of goods and services. This means that we should not
forecast high sales of the periods
of low GDP.
Developments in the Industry (external)
Products and services which have more developments in its industry would likely
have a higher sales forecast than a product or service in slow moving industry.
Consumer trends are always changing, thus the industry should be competitive to be
able to appeal to more customers and stay in the market.
Competition (external)
Suppose you are selling bread and you know that each person in your community
eats an average of one loaf of bread a day. The population of your community is 500
people. If you are the only person selling bread in your town, then your sales
forecast is 500 units of bread. However, you also have to take account your
competition. What if there are 4 other sellers of bread? You will need to have to
divide the sales between the 5 of you. Does this mean your new forecast should be
100 units of bread? Not necessary. You should also know the preference of your
consumers. If more of them would prefer to buy more bread from you, then you
should increase your sales forecast.
Production Capacity and man power (internal)
Suppose that you have already evaluated the macroeconomic factors and identified
that there is a very strong market for your product and consumers are very likely to
buy from you. You forecasted that you will be able to sell 1,000 units of your
product. However, you only have 20 employees who are able to produce 20 units
each. Your capacity cannot cover your expected demand hence, you are limited by
it. To be able to increase capacity, you should be able to expand your operations.
-It is important to consider this factors because it has a big implication to sales forecast. If
understated, there can be lost opportunities in the form of forgone sales. If it is too
optimistic, the management may decide to unnecessarily increase capacity or hire more
employees and end up with more inventories.
C. Production Budget
A production budget provides information regarding the number of units that should be
produced over a given accounting period based on expected sales and targeted level of
ending inventories.
To get the Production Budget (Forecasted)
Given data are as follows:

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-A Company forecast sales in units for January to May as follows:
TABLE 1
Months Jan Feb Mar Apr May
Units 2,000 2,200 2,500 2,800 3,000
(This given data is based on the sales budget forecasted with the consideration of the external and internal
factors that influence sales. In this example they projected to have an increase sales.)
- A company would like to maintain 100 units in its ending inventory at the end
of each month.
- Beginning inventory at the start of January amounts is equivalent to 50 units
To get how many units should A Company must produce to fulfill the expected
(forecasted) sales of the company. Using the formula,
Required production in units = Expected Sales + Target Ending Inventories - Beginning Inventories
TABLE 2
Notice…
-Projected Sales as given
-Target level of ending inventories as given (100 units)
-Total is obtain by adding the Projected Sales and Target level of Inventories
-Beginning inventories of January as given (50 units)
-The beginning inventory of the succeeding month came from the ending inventory of
previous month meaning the Target level of ending inventories of January will be the
beginning inventory for the month of Feb. Same goes to the remaining months.
-Required production is obtained by simply deducting the Total from the Beginning
Inventories.
D. Operation budget

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Operations budget refers to the variable and fixed costs needed to run the operations of the
company but are not directly attributable to the generation of sales.
Examples of this are the following:
• Rent payments
• Wages and Salaries of selling and administrative personnel
• Administrative Costs
• Travel and representation expenses
• Professional fees
• Interest Payments
• Tax Payments
E. Cash Budget
The cash budget, or cash forecast, is a statement of the firm’s planned inflows and
outflows of cash. It is used by the firm to estimate its short-term cash requirements,
with particular attention being paid to planning for surplus cash and for cash
shortages.(Gitman & Zutter, 2012). Do recall that in our previous activity you are
asked how much allowance you have and how much is your expenses. This way you
are able to identify whether you have excess cash or you have a deficit. Just like in
preparation of cash budget for the business enterprise, having the right amount of cash
is important since cash is used to make payments for purchases, for operational expenses, to
creditors, and for other transactions. The cash budget forecasts the timing of these cash
outflows and matches them with cash inflows from sales and other receipts. The cash
budget is also a control tool to monitor the way the company handles cash.
Below is the general form of the Cash Budget:
TABLE 3

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Steps in formulating a Cash Budget
1. Form a sales forecast.

Sales maybe in the form of cash or credit. Cash sales are translated to cash at the
point of sale while credit sales are collected depending on the credit period. Credit
periods may range from 10 days to more than a month depending on the strategy of the
company.
Let us use the previous example for the sales forecast. Assume that the selling
PHP 100/unit. Sales for each month are expected to be collected as follows:
-Month of sales: 20%
-A month after sales: 50%
-2 months after sales: 30%
We will find out how much is the total cash receipt from sales (see
General form for Cash Budget)
TABLE 4
TOTAL
May
Feb
Mar
Jan
Apr
UNITS 2,000 2,200 2,500 2,800 3,000 12,250

(FROM EXAMPLE AT
PRODUCTION BUDGET-
SALES FORECAST)
SALES IN PESO
200,000 220,000 250,000 280,000 300,000 1,250,000
COLLECTION FROM
MONTHS OF SALES 40,000 44,000 50,000 56,000 60,000 250,000
(20%)
COLLECTION FROM
MONTH AFTER SALES 100,000 110,000 125,000 140,000 475,000
(50%)
COLLECTION FROM
TWO MONTHS AFTER 60,000 66,000 75,000 201,000
SALES (30%)
TOTAL COLLECTION
OF SALES 40,000 144,000 220,000 247,000 275,000 926,000
Notice…
-Data of Units from table 2.
- Sales in Peso is obtained by multiplying the quantity of units to price per unit
- Sales of January amounted to 200,000 but it is expected that the sales on
cash for this month will only 40,000 which is equivalent to 20% of the total
sales. And the remaining 70% is obviously sales on credit.
-As stated on company credit periods, credit to the customer is extended up
to two months. From January sales we are going to collect the 50% on
February and the remaining 30% on the month of March.(refer to the color
legend)
2. Identify the other receipts.

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Aside from sales, the company might have another source of cash.
Example are:
- Interest received
-Returned on principal investment
-Proceeds of sales from non-operating assets
- Issuance of Capital Stock
-Proceeds from the borrowings
Add these receipts to the collection from sales to get the total receipts.
Since that there are no other identified Cash receipt, we can now fill the row
Of Cash Receipt in our CASH BUDGET FORM (table 3)
Jan Feb Mar Apr May

Cash Receipts
40,000 144,000 220,000 247,000 275,000
Less: Cash
disbursements
Net Cash Flow
Add: Beginning
Cash
Ending Cash
Required Ending
Cash
Required Total
Financing
Excess Cash
Balance
3. Identify the purchases made from the production budget.

Identify how much of the purchases made will be paid by the company on the cash
budget period. Like sales, purchases may be made in cash or on credit depending on
the supplier’s credit terms.
-continuing from our previous example, we already have the required

production (see Table 2)
- assume that the cost in peso for very unit of production is PHP 50.
-based on supplier credit periods all purchases made will be paid fully next
month.

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Let us compute for the cash disbursement (cash to paid) to the purchases
made.
TOTA
May
Mar
Feb
Jan
Apr
L
Required 2,050 2,200 2,500 2,800 3,000 12,250
Units
(FROM EXAMPLE AT
PRODUCTION BUDGET-
SALES FORECAST)
COST IN PESO
102,000 110,000 175,000 140,000 150,000 625,000
PAYMENT FROM
CURRENT - 102,000 110,000 175,000 140,000 477,500
PURCAHSES
TOTAL PAYMENTS
102,000 110,000 175,000 140,000 477,500
FOR PURCHASES
Notice…
-Data of Required Units are from table 2(Required Production)
-Cost in Peso is obtained by multiplying the Required Units to the cost
of production per unit
-As stated, the supplier credit period terms is that you have to paid the
Purchases in full one month after. (See the color legend)
4. From the operation budget, identify which expenses will be made in cash during
the cash budget period.
-This expenses is somehow directly related to operation
In our example let us assume that this is the other expenses item to be paid in
cash.
1. Rent payments: Rent of PHP5, 000 will be paid every month
2. Fixed Salaries: Salaries of PHP 8, 000 every month
3. Wages: 10% of monthly sales
4. Tax Payments: Taxes of PHP 25,000 payable in April.
5. Identify all other cash payments to be made.

Examples are:
-Fixed Assets Purchases
-Cash dividends payments
-Principal Payments (loan payments)
-Interest Payments (loan payments)
-Assume that we have identify this other cash payments.

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1. Fixed-asset outlays: New machinery costing PHP130, 000 will be

purchased and paid for in April.
2. Interest payments: An interest payment of PHP10, 000 is due in
May.
3. Cash dividend payments: Cash dividends of PHP20, 000 will be
paid in January.
4. Principal payments (loans): A PHP20, 000 principal payment is due
in February.
Now that we already identify the production budget and other related expenses,
we can now get the Cash Disbursement Schedule.
6. Match the receipts and disbursements on the periods they become collectible and
Payable respectively.
Now that we have the schedule for Cash Disbursements we can now fill the
row of Total Cash disbursements from the Table 3.
Jan Feb Mar Apr May
Cash Receipts
40,000 144,000 220,000 247,000 275,000
Less: Cash 53,000 157,500 148,000 321,000 193,000
disbursements
Net Cash Flow (13,000) (13,500) 72,000 (74,000) 82,000

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Add: Beginning
Cash
Ending Cash
Required Ending
Cash
Required Total
Financing
Excess Cash
Balance
7. Set a minimum required cash balance. This balance is maintained in case

contingencies arise. Recall from the steps in planning that we should also plan for
contingencies.
- For our example let us set PHP100, 000 as our minimum cash balance.
-Given also that our cash ending balance for the previous month of operation is
PHP 80,000(Month of December, Previous year)
- The ending previous ending balance will be regarded as our beginning cash
balance.
Jan Feb Mar Apr May
Cash Receipts
40,000 144,000 220,000 247,000 275,000
Less: Cash 53,000 157,500 148,000 321,000 193,000
disbursements
Net Cash Flow
Add: Beginning 80,000

Cash
Ending Cash
Required Ending 100,000 100,000 100,000 100,000 100,000

Cash
Required Total
Financing
Excess Cash
Balance
Now to prepare the CASH BUDGET

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TABLE 5
Jan Feb Mar Apr May
Cash Receipts
40,000 144,000 220,000 247,000 275,000
Less: Cash 53,000 157,500 148,000 321,000 193,000
disbursements
Net Cash Flow (13,000) (13,500) 72,000 (74,000) 82,000
Add: Beginning 80,000 67,000 53,500 125,500 51,500

Cash
Ending Cash 67,000 53,500 125,500 51,500 133,500
Required (100,000) (100,000) (100,000) (100,000) (100,000)

Ending
Cash(less)
Required Total (33,000) (46,500) (48,500)
Financing
Excess Cash 25,500 33,500
Balance
8. Evaluating the cash budget

-If the ending cash balance after payment of all required disbursements is less
than the required ending balance, the company needs to borrow additional cash
from short term borrowings to meet its required ending balance. Should the
ending cash balance exceed the company’s minimum cash requirement the next
period, the company may be able to repay the loan plus accrued interest.
-Should the Company have excess cash above its required maintaining cash
balance, the company may invest this cash on short term investments so that it
will have an opportunity to earn additional profits. If the company’s cash balance
would then fall below its minimum cash requirement, the company may withdraw
the investment to be able to meet the required cash balance.
F. Projected Financial Statements
Projected financial statements is a tool of the company to set an overall goal of what
the company’s performance and position will be for and as of the end of the year. It
sets targets to control and monitor the activities of the company. The following
reports may be forecasted:
‣ Projected Income Statement
‣ Projected Statement of Financial Position
‣ Projected Statement of Cash Flows
Example of Income Statement
TABLE 6

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Example of Statement of Financial Position

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TABLE 7
Steps on Financial Statement Projection

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1. Forecast Sales
This must be easy for you now because we already discuss this earlier. See
the steps on how to make Cash Budget.
Below are the format for Income statement
TABLE 8
A Company
Projected Income Statement
For the Year Ending December 31
Net Sales
(less)Cost of Sales
Gross Profit
(less)Operating Expenses
Operating Income
(less)Interest Expense
Income Before Taxes
(less)Taxes
Net Income
On our example at Table 6 we have this data.
A Company
Income Statement
For the Year Ending December 31,2014
Net Sales 5,250,000
(less)Cost of Sales 4,305,000
Gross Profit 945,000
(less)Operating Expenses 314,750
Operating Income 630,250
(less)Interest Expense 250,000
Income Before Taxes 380,250
(less)Taxes 114,075
Net Income 266,175
Now let us prepare the Projected Income Statement for 2015 with the
information below
Sales are expected to increase by 10% in 2015 from the 2014 sales level.
This growth assumption is based on the assessment of the external and
internal factors related to the Company and the historical growth of the
company. The company’s sales grew by 10.3% annually from 2010 to
2014.
To make the sales projection for 2015. Below is the computation.
Projected Sales in 2015 = 5,250,000 x (1+10%)

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=5,775,000
So we can have…
A Company
Net Sales 5,775,000
(less)Cost of Sales
Gross Profit
(less)Operating Expenses
Operating Income
(less)Interest Expense
Income Before Taxes
(less)Taxes
Net Income
2. Forecast Cost of Sales and Operating Expenses

In determining the cost of sales and operating expenses, variable and fixed
costs should be identified. Cost of sales are direct costs associated in the
generation of sales. One way of projecting cost of sales is using the cost of
sales ratio. Companies would generally have a consistent historical cost of
sales ratio. The company may use this as a starting point.
Now to continue our sample problem, suppose that the company has an
average of 60% cost of sales ratio. In doing projections, the financial manager will
use the same average ratio.
Operation costs are a mix of variable and fixed costs. Variable costs usually
vary with sales. To project these costs, the percentage of sales method may
be used. On the other hand, fixed costs remain the same no matter how the
volume of sales has changed.
Other given data are as follows
-The Company wants to maintain the same gross profit per year as 2014.
-Variable operating expense is 5% of sales.
-Depreciation expense is 5% of the gross beginning balance of property,
plant and equipment. As of December 31, 2014, the gross balance of PPE
is PHP5, 200,000. For January 2015, PHP1, 000,000 new PPE will be
acquired.
-It is the policy of the company that PPE acquired in the first half of the year
will be depreciated for one full year
Compute for Cost of Sales, Variable Operating Expense, and Depreciation Expense.

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To get the ratio that we are going to apply in 2015 projection we need to get
the sales and cost of sales ratio of 2014.
Cost of sales percentage in 2014 = 4,305,000 ÷ 5,250,000) x 100%

Cost of sales percentage in 2014 = 82%
Notice that earlier it is mentioned that the company wants to maintain the same
gross profit ratio.
Applying the same ratio to 2015 projection we can have this computation…
Projected cost of sales in 2015 = 82% x 5,775,000

Projected cost of sales in 2015 = 4,735,500
To compute for the variable cost we have…
Variable (5% x Sales of 5,775,000) = 288,750
To compute for the fixed cost we have the Deprecation Cost…
Fixed (depreciation expense) = (5,200,000 + 1,000,000) x 5%= 310,000
Combining the Variable and Fixed Cost, We can have a total Operating expenses of
PHP 598,750
Compute for net PPE.
PPE net, beginning 2,440,000

Additions 1,000,000
Less: Depreciation (310,000)
PPE net, end 3,130,000
Please take note of the data for Net PPE because we will be using that later. For the
meantime let us focus first on the Accounts for Income Statement.
TABLE 9
A Company
Net Sales 5,775,000
Gross Profit 1,039,500
(less)Interest Expense ?
Income Before Taxes
(less)Taxes
Net Income

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______________________DAY 6_________________________________
3. Forecast Net Income and Retained Earnings.

To forecast net income, interest expense and income tax expense should also be
considered using the relevant interest and tax rates. Retained earnings is arrived at
by adding projected net income to beginning retained earnings then deducting
dividends to be declared during the year.
To continue our sample problem...
Income tax rate is 30% of the income before taxes.
Since we do not have yet the data for the interest expense we will return to this
after getting the data needed.
4. Determine balance sheet items that will vary with sales or whose balances will
be highly correlated to sales.
Balance sheet items that may vary with sales or will be highly correlated with sales
are cash, accounts receivable, inventories, accounts payable, and accrues expenses
payable.
Compute as follows:
The following financial statement accounts are expected to
vary with sales based on the 2014 financial statements:
A. Cash
B. Trade accounts receivable
C. Inventories
D. Other current assets
E. Trade accounts payable
Take note that we are going to use the same ratio based on 2014 data.
Please refer to TABLE 7 for the given data of 2014
Cash
Cash as a percentage of sales in 2014 = (1,060,000 ÷ 5,200,000) x 100%
Cash as a percentage of sales in 2014 = 20.19%
Projected cash in 2015 = 20.19 % x 5,775,000
Projected cash in 2015 = 1,165,973
Accounts receivable
Accounts receivable as a % of sales in 2014 = (2,300,500 ÷ 5,200,000)x100%
Accounts receivable as a % of sales in 2014 = 43.82%
Projected accounts receivable in 2015 = 43.82% x 5,775,000
Projected accounts receivable in 2015 = 2,530,605

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Inventories
Inventories as a % of sales in 2014 = (4,850,000 ÷ 5,200,000) x 100%
Inventories as a % of sales in 2014 = 92.38%
Projected inventories in 2015 = 92.38% x 5,775,000
Projected inventories in 2015 = 5,334,945
Other current assets

Other current assets as a % of sales in 2014 =(1,050,000 ÷ 5,200,000)x100%
Other current assets as a % of sales in 2014 = 20%
Projected other current assets in 2015 = 20% x 5,775,000
Projected other current assets in 2015 = 1,155,000
Accounts payable
Accounts payable as a % of sales in 2014=(5,050,000.00 ÷ 5,200,000)x100%
Accounts payable as a % of sales in 2014 = 96.19%
Projected accounts payable in 2015 = 96.19% x 5,775,000
Projected accounts payable in 2015 = 5,554,973
5. Determine payment schedule for loans.(if there is any)

We are going to compute for the interest expense
To continue our sample problem, please consider the given below
As of December 31, 2014, there are two long-term loans. Both have an
annual interest rate of 8%.
A. The first loan will mature on June 30, 2015 and the remaining principal
balance to be paid on June 30, 2015 is
PHP 1,250,000.
B. The second loan which was incurred on December 31, 2014 is paid at
the rate of PHP 500,000 principal balance every June 30 and December
31.New loans of PHP 3,500,000 will be incurred on December 31, 2015
payable at the rate of PHP 500,000 every June 30 and December 31.
Annual interest rate is expected at 8%.
To show the computation…
First Loan
Interest from January 1 to June 30, 2015
1,250,000 x 8% x (6 mos. ÷ 12 mos.) = 50,000
Second Loan
Interest from January 1 to June 30, 2015
(1,000,000 + 2,000,000) x 8% x (6 mos. ÷ 12 mos.) = 120,000
Interest from July 1 to December 31, 2015

(500,000 + 2,000,000) x 8% x (6 mos. ÷ 12 mos.) = 100,000

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Total interest expense for 2015 = 270,000
Let us also compute for current and non-current portion of long term assets:
Loan Current Long term Total

portion portion
Loan incurred on December 31, 2014 of PHP3 1,000,000 1,000,000 1,000,000
million
Loan of PHP3.5 million to be incurred on 1,000,000 2,500,000 3,500,000
December
31, 2015
Total 2,000,000 3,500,000 5,500,000
Now that we have our Interest Expense we can now complete the Income Statement.
(Go back to TABLE 9)
TABLE 10
A Company
Net Sales 5,775,000
(less)Taxes ?
Net Income
Now we have the Income before Taxes we can now complete our Projected Income
Statement for 2015. (Refer to step 3)
Income tax rate is 30% of the income before taxes.
To compute for the Taxes…
Projected Income Tax Payable in 2015: 170,750 x 30% = 51,225
TABLE 11
A Company

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CRN 44 100 18 93 0045

Net Sales 5,775,000

(less)Taxes 51,225
Net Income 119,525
Our Projected Income Statement are now complete.
Check for other information.

Let us have this sample for other information that can affect the CASH.
Cash dividends of PHP 300,000 will be paid for 2015.
Other non-current assets and other current liabilities will remain unchanged.
Let us compute for the Retained Earnings
Retained earnings, beginning 2,122,069

Add: Net Income 119,525
Less: Dividends (300,000)
Retained earnings, end 1,941,594
Please take note of the data that we have gathered in this entire steps. We will
be needing that later to other financial statement report.
6. Determine external funds needed (EFN).

Determine if the company needs additional funding or the company has the
excess funding.
A positive value for EFN, means that the company needs more funds
equivalent to the positive value of EFN. As to how this will be raised depends
on the management and the company’s ability to access funds. This EFN can
be raised in the form of short term borrowing, long term borrowing or equity,
or a combination of all sources. The projected balance sheet which generated
this EFN is just the first iteration in preparing a pro-forma balance sheet.
A negative value for EFN, means that the company has excess cash. As to
how this excess cash will be distributed will be the subject of the next iteration
for the pro-forma balance sheet. This can be disposed by adding it to the
projected cash balance or it can be used to retire some of the debt if pre-
termination is allowed.
7. Determine how external funds needed may be financed.

(043)722-1840/722-1796/722-1437/722-2675/722-1662
CRN 44 100 18 93 0045

External Funds Needed is a plug figure to make projected assets equal

projected liabilities and shareholders’ equity.
EFN = change in total assets – (change in total liabilities + total change in

stockholders’ equity)
Or
EFN = Squeeze figure to balance assets to Liabilities and equity
Below are the SFP 2014(refer to table 7) and a Projected SFP 2015.
TABLE 12
A Company
Statement of Financial Positions
As of December 31
2015 2014
Assets
Current Assets
Cash 1,165,973 1,060,000
Receivables 2,530,605 2,300,500.00
Inventories 5,334,945 4,850,000.00
Other current assets 1,155,000 1,050,000.00
Total Current Assets 10,186,523 9,260,500.0
Non-current Assets
Property, plant, and equipment, net 3,130,000 2,440,000.00
Other noncurrent assets 835,689 835,689.00
Total non-current assets 3,965,689 835,689.00
Total assets 13,152,212 266,175.00
Liabilities and Equity
Current Liabilities
Notes payable (external funds needed) 57,239
Trade payables 5,554,973 5,050,000.00
Income taxes payable 12,806 28,520.00
Current portion of long-term debt 2,000,000 2,250,000.00
Other current liabilities 85,600 85,600.00
Total Current Liabilities 7,710,618
Non-current Liabilities
Long-term debt, net of current portion 3,500,000 2,000,000.00
Total liabilities 11,210,618 9,414,120.00
Stockholders’ equity
Capital stock 1,000,000 1,000,000.00
Retained earnings 1,941,594 2,122,069.00
Total stockholders’ equity 2,941,594 3,122,069.00
Total liabilities and stockholders’ equity 13,152,212 12,536,189.00
After this, we can now prepare for the Projected Statement of Cash Flow
TABLE 13

(043)722-1840/722-1796/722-1437/722-2675/722-1662
CRN 44 100 18 93 0045

A Company
Projected Statement of Cash Flows
For the Year Ending December 31, 2015
Cash flows from operating activities
Income before taxes
Adjustments:
Depreciation
Changes in the following accounts
Decrease (Increase) in accounts receivable
Decrease (Increase) in inventories
Decrease (increase) in other current assets
Increase (decrease) in accounts payable
Increase (decrease) in other current liabilities
Income taxes paid
Cash flows from operating activities
Cash flows from investing activities

Acquisitions of PPE
Acquisition of other non-current assets

Cash flows from investing activities
Payment of cash dividents
Short-term notes payable (EFN)
Loans, net of payments
Cash flows from financing activities
Net change in cash
Cash, beginning
Cash, ending
______________________DAY 7_________________________________
b. What I Can Do?
Activity 6: Preparing Cash Budget

Direction: Prepare the CASH BUDGET using the step by step procedure. Please refer
to TABLE 3 for the format.
ABCD Company is preparing a cash budget for first six months of incoming year. The
following data have been forecasted. For January – June forecasted units of sales are
200,350,400,600,650 and 750 respectively. The cost per unit is PHP 55 in which 60%
is marked up to determine the selling price. Sales of each month are expected to be
collected 50% for a month of sales and the remaining 50% after a month. Same
scheme are applied when it comes to the payment to the supplier wherein the company

(043)722-1840/722-1796/722-1437/722-2675/722-1662
CRN 44 100 18 93 0045

has to pay 50% in the month of purchase and another 50% after a month of purchase.
Other identified cash payments are the monthly rental amounting to PHP 5,000.00,
monthly salary of two regular employees amounting to PHP 8,000.00 and the 30%
taxes based on gross sales to be paid in the month of June. The company recorded a
beginning balance of PHP 50,000 and wants to maintain PHP 70,000 cash to carry on
normal operation of the business.
______________________DAY 8_________________________________
c. What Other Enrichment Activities Can I Engage In?
Activity 10: Advanced Reading
Directions: Make some research on what is the importance of holding a cash in

business operation. Put here some of your idea based on your research.
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
D.4 ASSIMILATION
a. What I Have Learned
Activity 11: Essay
Direction: Answer the question.

Do you think having a forecasted financial statements are necessary? Explain your
answer.
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
b. What I Can Show
Activity 12: Essay
Direction: In your own words, rewrite/retell briefly the steps in preparing the .

(043)722-1840/722-1796/722-1437/722-2675/722-1662
CRN 44 100 18 93 0045

E. Guide Questions (if necessary)
Activity 13: Your Learning
Direction: Respond to the following question.
1. Why it is necessary for the company to always have stategic financial planning?
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
2. What is the importance of tactical planning (short term financial plans)?

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
F. Rubric for scoring
20 NO Acceptable Good Satisfactory

OUTPUT
5-8 9-13 14-20
0
TOPIC (35%) Unclear of Basic and Clear topic

the topic minimal sentences. Full
sentences( understanding understanding
/knowledge of of the topic.
the topic
EXPLANATION One Minimal/Few Complete

(50%) sentence explanation of explanation
explanation the topic
to the topic

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SUPPORT (15%) One Two relevant Three or more

supporting supporting supporting
arguments details details
about the
topic
G. Reflection
Activity 12: I have learned.

Direction: Complete the sentence based on what you have learned.
Planning is
Long term financial plan is
while short term financial plan is
Steps in planning are.
H. References
Downloads Materials
DepEd Teacher’s Guide, Business Finance pages 199-138
Electronic Sources:
Strategic vs. Tactical planning

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https://www.shrm.org/resourcesandtools/tools-and-samples/hr-
qa/pages/couldyouexplainthedifferencebetweenstrategicandtacticalplansandgiveexa
mplesofeach.aspx#:~:text=A%20strategic%20plan%20supports%20the,level%20plan
%20to
Prepared by:
Roselyn Espinol Alzate

Writer
Checked by:
LINA P. FALTADO
Head Teacher IV – BTIHS
Noted by:
GABRIEL R. ROCO EdD

Principal IV – BTIHS

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LEARNING ACTIVITY SHEET IN BUSINESS FINANCE

A. Background Information for Learners

B. Learning Competency with code

Address: Provincial Sports Complex, Bolbok, 4200 Batangas City

CRN 44 100 18 93 0045

1. What is long term financial plan?

Address: Provincial Sports Complex, Bolbok, 4200 Batangas City

CRN 44 100 18 93 0045

Direction: Give your insights

Address: Provincial Sports Complex, Bolbok, 4200 Batangas City

CRN 44 100 18 93 0045

To explain the table

Macroeconomic Variables (external)

Address: Provincial Sports Complex, Bolbok, 4200 Batangas City

CRN 44 100 18 93 0045

Developments in the Industry (external)

Production Capacity and man power (internal)

To get the Production Budget (Forecasted)

Given data are as follows:

Address: Provincial Sports Complex, Bolbok, 4200 Batangas City

CRN 44 100 18 93 0045

-A Company forecast sales in units for January to May as follows:

Address: Provincial Sports Complex, Bolbok, 4200 Batangas City

CRN 44 100 18 93 0045

Examples of this are the following:

Below is the general form of the Cash Budget:

Address: Provincial Sports Complex, Bolbok, 4200 Batangas City

CRN 44 100 18 93 0045

Steps in formulating a Cash Budget

1. Form a sales forecast.

UNITS 2,000 2,200 2,500 2,800 3,000 12,250

2. Identify the other receipts.

Address: Provincial Sports Complex, Bolbok, 4200 Batangas City

CRN 44 100 18 93 0045

Jan Feb Mar Apr May

3. Identify the purchases made from the production budget.

-continuing from our previous example, we already have the required

Address: Provincial Sports Complex, Bolbok, 4200 Batangas City

CRN 44 100 18 93 0045

5. Identify all other cash payments to be made.

-Assume that we have identify this other cash payments.

Address: Provincial Sports Complex, Bolbok, 4200 Batangas City

CRN 44 100 18 93 0045

1. Fixed-asset outlays: New machinery costing PHP130, 000 will be

Address: Provincial Sports Complex, Bolbok, 4200 Batangas City

CRN 44 100 18 93 0045

7. Set a minimum required cash balance. This balance is maintained in case

Add: Beginning 80,000

Required Ending 100,000 100,000 100,000 100,000 100,000

Now to prepare the CASH BUDGET

Address: Provincial Sports Complex, Bolbok, 4200 Batangas City

CRN 44 100 18 93 0045

Add: Beginning 80,000 67,000 53,500 125,500 51,500

Required (100,000) (100,000) (100,000) (100,000) (100,000)

8. Evaluating the cash budget

F. Projected Financial Statements