Finance Citi Funded Entrepreneurship Training Program UNIVERSITY OF DUBAI Dr. Zahi Yaseen

Finance 1.Financial Planning 2.Financial Analysis 3.Principles of Investments 4.Cash Management& Control 5.Financial Forecasting a.Cost projection  Start-up costs  Monthly expenses  Working Capital  Variable cost  Sales projection b. Breakeven point c. Pro Forma financial statements  Income Statement  Balance Sheet  Cash Flows d. Ratio Analysis  ROI  ROE  Net Working Capital  Other Ratios e. Capital Requirements 6. Financial Risk Management

Cash Management & Control Common cause of business failure: Cash crisis! A business can be earning a profit and be forced to close because it runs out of cash! Cash management – forecasting, collecting, disbursing, investing, and planning for the cash a company needs to operate smoothly. Finance Citi Funded Entrepreneurship Training Program UNIVERSITY OF DUBAI Dr. Zahi Yaseen

 Cash ≠ profits.  Profit is the difference between a company’s total revenue and total expenses.  Cash is the money that is free and readily available to use.  Cash flow measure a company’s liquidity and its ability to pay it bills. Cash and Profits

1. Determine a Minimum Cash Balance 2. Forecast Sales 3. Forecast Cash Receipts 4. Forecast Cash Disbursements 5. Estimate End-of-Month Cash Balance Cash control

Cash Flow Cash Accounts Payable Decrease in Cash Production/Cash Purchases Inventory Accounts Receivable Cash Sales Increase in Cash Leakage Leakage FIGURE 12.3

The “Big Three” of Cash Management 1. Accounts Receivable 2. Accounts Payable 3. Inventory Forecast Sales: The heart of the cash budget Prepare three sales forecasts: Pessimistic, Optimistic, Most Likely Cash control

FIGURE Cash Flow Concerns Source: Based on American Express Corporation, 2012.

The “Big Three” of Cash Management 1. Accounts Receivable 2. Accounts Payable 3. Inventory Forecast Sales: The heart of the cash budget Prepare three sales forecasts: Pessimistic, Optimistic, Most Likely Cash control

Cash management Activities: -Use online banking & SMS tracking your accounts -Implement an automatic cash application system -Verify cash discounts -Collect receivables on time Finance Citi Funded Entrepreneurship Training Program UNIVERSITY OF DUBAI Dr. Zahi Yaseen

Cash flow controls tips for cash disbursement Reconcile bank statements Require authorization and manual signature on large checks Verify that all checks ordered have been received Finance Citi Funded Entrepreneurship Training Program UNIVERSITY OF DUBAI Dr. Zahi Yaseen

Cash flow controls tips for Cash receipt Review and sign cash refunds Collect cash daily Deposit cash daily to the bank Settle cash to cash register Finance Citi Funded Entrepreneurship Training Program UNIVERSITY OF DUBAI Dr. Zahi Yaseen

Cash flow controls tips for Petty cash Require valid expense receipts as well as a signature on every petty cash receipt Minimize on-hand petty cash balance and restrict petty cash reimbursements Periodically audit petty cash Finance Citi Funded Entrepreneurship Training Program UNIVERSITY OF DUBAI Dr. Zahi Yaseen

“Cash is King” Cash and profits are not the same. Entrepreneurial success means operating a company “lean and mean.” Trim wasteful expenditures. Trim wasteful expenditures. Invest surplus funds. Invest surplus funds. Plan and manage cash flow. Plan and manage cash flow. Finance Citi Funded Entrepreneurship Training Program UNIVERSITY OF DUBAI Dr. Zahi Yaseen

References Scarborough, Norman M (2013) “Essentials of Entrepreneurship and Small Business Management, 7 th Edition, Pearson Education. New York. Jeffrey R Cornwall and David O Vang (2012) “Entrepreneurial Financial Management: An Applied Approach; 3 edition; Routledge. Finance Citi Funded Entrepreneurship Training Program UNIVERSITY OF DUBAI Dr. Zahi Yaseen