Tools of Financial Planning

This manual introduces the tools required to prepare a financial plan for your business’s development, including the following:

  • Basic Financial Statements–the Balance Sheet and Statement of Income
  • Ratio Analysis–a means by which individual business performance is
  • compared to similar businesses in the same category
  • The Pro Forma Statement of Income–a method used to forecast future
  • profitability
  • Break-Even Analysis–a method allowing the small business person to
  • calculate the sales level at which a business recovers all its costs or
  • expenses
  • The Cash Flow Statement–also known as the Budget identifies the flow of
  • cash into and out of the business
  • Pricing formulas and policies–used to calculate profitable selling
  • prices for products and services
  • Types and sources of capital available to finance business operations
  • Short- and long-term planning considerations necessary to maximize profits

The business owner/manager who understands these concepts and uses them effectively to control the evolution of the business is practicing sound financial management thereby increasing the likelihood of success.

 

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