Developing Financial Projections

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PUBLIC COMPANY MANAGEMENT SERVICES
WHITE PAPER
Developing Financial Projections for NonFinance People
This White Paper gives you the tools to answer the two most important questions any business must ask: “Are you financially prepared to begin? Are we able to sustain ourselves?”
You’ll learn:


What’s on financial statements and how they get there



How to develop and understand income statements



How to set up and read balance sheets



How to use common formulas to evaluate cash flow



How to create a budget using standard guidelines



How to read and evaluate income projections



How to develop your own financial projections through a “fill in the blanks” approach”



How to accurately determine the value of your idea or business

This memorandum is provided by Public Company Management Services for educational purposes only and is not intended and should not be construed as legal advice.
2004 © Public Company Management Services
5770 El Camino Road.
Las Vegas, NV 89118
Phone: (702) 222-9076
http://www.pubcowhitepapers.com
http://www.pcms-team.com
http://www.foreigncompanylisting.com
http://www.gopublictoday.com

A Budget and Financial Worksheet Overview
Managers must ask, ‘is the business financially prepared to begin/continue’? Understanding basic budgeting guidelines, income projection statements, balance sheets and common formulas to evaluate cash flow help ensure successful operations. This financial knowledge significantly impacts a company’s short term and long term success.

START-UP BUDGET














personnel (costs prior to opening)
legal/professional fees
occupancy
licenses/permits
equipment
insurance
supplies
advertising/promotions
salaries/wages
accounting
income
utilities
payroll expenses

An operating budget is prepared when you are actually ready to open for business. The operating budget will reflect your priorities in terms of how you spend your money, the expenses you will incur and how you will meet those expenses (income). Your operating budget also should include money to cover the first three to six months of operation. It should allow for the following expenses.

OPERATING BUDGET











personnel
insurance
rent
depreciation
loan payments
advertising/promotions
legal/accounting
miscellaneous expenses
supplies
payroll expenses

Developing Projections

www.publiccompanywhitepapers.com

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May 20,2003







salaries/wages
utilities
dues/subscriptions/fees
taxes
repairs/maintenance

Other questions that you will need to consider are:
• What type of accounting system will your use? Is it a single entry or dual entry system? • What are your sales and profit goals for the coming year? If a franchise, will the franchisor set your sales and profit goals? Or, will he or she expect you to reach and retain a certain sales level and profit margin?

• What financial projections will you need to include in your business plan? • What kind of inventory control system will you use?
Sample balance sheets, income projections (profit and loss statements) and cash flow statements are included below along with detailed instructions for completing same. INCOME PROJECTION STATEMENT


























Total net sales (revenues)
Costs of sales
Gross profit
Gross profit margin
Controllable expenses
Salaries/wages
Payroll expenses
Legal/accounting
Advertising
Automobile
Office supplies
Dues/Subscriptions
Utilities
Miscellaneous
Total controllable
expenses
Fixed expenses
Rent
Depreciation
Utilities
Insurance
License/permits
Loan payments
Miscellaneous



Total fixed expenses

Total expenses


Net profit (loss) before taxes

Taxes


Net profit (loss) after taxes

INSTRUCTIONS FOR INCOME PROJECTIONS STATEMENT
The income projections (profit and loss)...
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