Create a Financial Section for the attached company using the guide below. Including all below section. 8.1 Start-up Funds The section should identify all the costs associated with starting the busine

Create a Financial Section for the attached company using the guide below. Including all below section.

8.1 Start-up Funds

The section should identify all the costs associated with starting the business, expanding a current business, or taking over a business as well as the sources of investment capital and/or borrowed money. Include a start-up budget or estimate to account for the initial cost of the business.

Elements to consider when preparing a start-up budget include:

• Personnel (costs prior to opening)
• Legal/ Professional Fees
• Occupancy
• Equipment
• Supplies
• Salaries/Wages
• Income
• Utilities
• Payroll expenses
• Licenses/Permits
• Insurance
• Advertising/Promotions
• Accounting

8.2 Financial History and Analysis (current businesses only)

A solid analysis of the past must precede any serious attempt to forecast the future. The Financial History and Ratios spreadsheet allows you to put a great deal of financial information from other statements on a single page for ease of comprehension and analysis. Your financial information is presented in dollars and percentages. Key financial ratios are calculated automatically. You may also enter industry average ratios for comparison.

In an appendix, put year-end balance sheets, operating statements, and business income tax returns for the past 3 years, plus your most current balance sheet and operating statement.

8.3 Current Financial Position (current, takeover or franchise businesses only)

Provide in detail the current financial position of the company. Present the current balance sheet in an appendix. Include all outstanding debts in an easy to understand format. A debt schedule may be useful here.

Debt Schedule

This table gives in-depth information that the financial statements themselves do not usually provide. Include a debt schedule in the following format for each note payable on your most recent balance sheet.

Debt Schedule Table

To Whom Payable

Original Amt.

Original Date

Present Balance

Rate of Interest

Maturity Date

Monthly Payment

Security

Current/Past Due

8.4 Operating Forecast

This section should provide an estimate of the sales and expenses your business will incur for a twelve-month period. (Please refer to Appendix for Financial Projections.)

Be sure to document any sources of information or any assumptions used for calculations.

8.5 Break-Even Analysis

This section should provide a calculation for the break-even point in dollars and units for the business. Include all assumptions upon which your break-even calculation is based. (Please refer to Appendices for Break-Even Analysis spreadsheet.)

A break-even analysis determines sales volume in dollars, at a given price, required to recover total costs.

Expressed as a formula, breakeven is:

Break-even Sales $ =

Fixed Costs

1- Variable Costs

Fixed costs are expressed in dollars but variable costs are expressed as a percent of the total sales dollar amount. To obtain the break-even point in terms of number of sales, simply divide the break-even sales (dollar amount) by the price of your product.

8.6 Balance Sheet

The balance sheet is a "snapshot" of what you own and what you owe on a specific date. A "Pro Forma Balance Sheet" shows how things will be in the future, under given conditions, rather than how they are now.

A balance sheet follows a standard format (please refer to the appendix for Balance Sheet template), however, it may contain additional items depending on circumstances relating to the business for which it is prepared. State the assumptions you used for all major changes between your last historical balance sheet and the projection.

8.7 Income Statement

The income statement is a financial statement that reveals whether or not a business has earned a profit or has suffered a loss after a specified period. (Please refer to the appendix for Income Statement template.)

An income statement may also be referred to as a "profit and loss statement" (PNL) or an "operating statement.”

A "Pro Forma Income Statement" is used to show how things will be under given conditions rather than how they are at present.

Be sure to state any assumptions when creating your Income Statement.

8.8 Cash Flow

A cash flow statement identifies monthly inflows and outflows of cash. It reveals whether a company will have enough money to meet its needs on a monthly basis. (Please refer to the appendix for Cash Flow template.)

Use the Income Statement as a starting point. For each item, determine when you actually expect to receive cash (for sales) or when you will actually have to write a check (for expense items).

Your cash flow will show you whether your working capital is adequate. Clearly if your cash on hand goes negative, you will need more. It will also show when and how much you need to borrow.

Explain your major assumptions, especially those which make the cash flow differ from the Profit and Loss Statement, such as:

• If you make a sale in month 1, when do you actually collect the cash? When you buy inventory or materials, do you pay in advance, upon delivery or much later?
• How will this affect cash flow?
• Are some expenses payable in advance?
• Are there irregular expenses, equipment purchase or inventory buildup which should be budgeted?