Financial Feasibility Presented by: Farida Komalasari

Main Topics: Financial Plan Financial Analysis

Financial Goals: Ultimate goal: To make money now and to make more money in the future Three basic financial goals: Maximize the wealth of the business owners (investors) To meet interest payments on debt To grow

Preparing the Financial Plan: Three financial areas: Summarize the forecasted sales and the appropriate expenses (at least 3 years) Cash Flow figures (at least three years, monthly for the first year) Projected Balance sheet

Preparing the Financial Statements: Income statement Statement of R/E Cash flow statement Balance sheet

Capital gains or losses Statement of R/E: Income statement: Revenue Expenses Capital gains or losses Statement of R/E: Beginning retained earning Net income Dividends paid during the accounting period Cash flow statement: Explain the reasons for changes in the cash balance, showing sources and uses of cash Balance sheet: Balances of all asset accounts Balances of all liability accounts Capital stock balance

Income Statement: Sales xx COGS (xx) Gross Profit xx Operating expenses (xx) EBIT xx Interest expense (xx) EBT xx Tax (xx) Net Income xx

Cash Flow Statement: Operating Activities Investing Activities Financing Activities

Balance Sheet: Liabilities: Current Asset: A/P Cash Other STL A/R LTL Owner’s Equity: Capital R/E Total L+OE Current Asset: Cash A/R Inventory Fixed Asset: Equipment Depreciation Total Asset

Financial Analysis: Break-even Analysis Technique for: or determining how many units must be sold or how much sales volume must be achieved in order to break even

Break-even Formula: TFC B/E (Q) = ---------- P-VC/unit TFC = Total Fixed Cost P = Selling Price VC = Variable Cost

Financial Statement Analysis: Horizontal Analysis Vertical Analysis Ratio Analysis: Liquidity ratios: e.g. current ratio (CR) Activity (asset turnover) ratios: e.g. total asset turnover (TATO) Solvability (financial leverage) ratios: e.g. debt to equity ratio (DER) Profitability (rentability) ratios: e.g. return on equity (ROE)

CR = current assets/current liabilities TATO = total assets/sales DER = total debt/total equity ROE = net income/shareholder equity

Sources of Fund: Shareholder equity Bootstrap (husband/wife, parent, etc.) Personal lender (friend, cousin, etc.) Bank loan (short term, medium term, long term) Pawning Leasing Factoring Venture capital Government programs Etc.

THE END

Conclusion ODD > EVEN : high in credibility, leadership, strategic networking, innovative thinking, achieving target

Conclusion ODD < EVEN : high in approachability, people skill, information gathering, problem solving

Conclusion ODD = EVEN : valuable talent for being a liaison or mediator, as well as radiating qualities of charismatic leadership