Financial

Analysis
 What is a Financial Plan
Contents
Why it is important

Tools of a Financial Plan

Definition
Overview of your current business financials

Overview of your projections for growth

Why…
Inform the short-term and long-term financial goals

Set realistic expectations

Attract investors
 Profit and Loss Statement
Components
of a Balance Sheet

Financial Cash Flow Statement

Plan
Break-even analysis
 Profit and Loss Statement

Income Statement
Pro forma income statement

P&L
 Profit and Loss Statement

an explanation of how
your business made a
profit (or incur a loss) Definition
over a certain period
of time.
 Revenue = Sales COGS = Direct
cost of producing
the goods sold

Gross Profit =
Revenue - COGS
Operating Expenses
expenses associated
with running your
business that isn’t
NIBT = Gross Profit – directly associated
Operating Expense
with making a sale

Net income =
Net Profit
Balance
Sheet
Balance Sheet

shows a business’ financial health

at a single point in time
Balance Sheet
Informs you what things of value a
company controls (assets) and who
owns those assets: someone else
(liabilities) or the business owner
(owner’s equity)
Assets
Resources that a business owns

Accounts Prepaid
Cash Inventory
Receivable Expense

Land Buildings Equipment Vehicle

 Liabilities
Debts you owe to other people.

Buys products from vendors/suppliers on credit

How Do you
Take financing from banks
get liabilities?

Used services and pay for them at later dates

Owner’s Equity
Owners’ portion of the business
after all the Debts/Liabilities have
been paid off
Balance Sheet Equation
Example: A business bought a new vehicle

Balance Sheet before addition of new vehicle

Example: A business bought a new vehicle
Example: A business bought a new vehicle
Cash Flow
Statement
 Cash Flow Statement

An explanation of…
How much cash your business brought in
Definition
How much cash it paid out

What its ending cash balance was

Why do we need cash
flow statement if we
have already got the
income statement?
 Cash Flow Statement

Shows us the ACTUAL cash situation

of the business
CF Operating Activities
This is your net income from your
P&L
CF Investing Activities

Investing = spending of cash on

non-current assets

Buying of new equipment

Sale of equipment
Replacement of equipment
CF Financing Activities

Financing = source of the cash

that we will be using to invest in
non-current assets

Owner’s Equity
Liabilities
How does the three
statements inter-RELATED?
Break-Even
Analysis
Break-Even Analysis
Break-Even Analysis

A point where you neither makes

profits nor losses
Break-Even Analysis

Fixed Cost = costs are costs to keep your business

operating, even if you didn't produce any products

Variable Cost = costs associated with making the

product or buying it wholesale
What Happens to the Breakeven
Point If Sales Change

Change your price

Find ways to cut cost (VC or FC)
In Conclusion
It’s all about management of your financial and cash

Plan from the START!

Get EXPERT when you need it