C. Financing a Small Business

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Presentation transcript:

C. Financing a Small Business 5.00 Explain the financial statements maintained in a small business. 5.02 Explain the use of sales projections.

Identify factors associated with making sales projections. Sales quota Product positioning Market share Sales Ratio Sales Forecast Break-even point Economic outlook

Sales Ratio: An expression of any component of the income statement as a percentage of total sales. The value of the component is divided by the value of sales.

Current Ratio: A comparison of current assets with current liabilities Current Ratio: A comparison of current assets with current liabilities. This is one indicator of the ability of the business to pay its debts. Assets/Liabilities=Current Ratio

Sales forecast: An estimate of sales for a specified period Sales forecast: An estimate of sales for a specified period. Current Sales + (% increase x the current sales) OR Current Sales x (100% + % increase)

Break-even point: The point at which the money from product sales equals the costs of making and distributing the product. BEP=Total fixed expenses divided by (unit sales price minus unit variable expense)

Economic outlook: Trends associated with the economy that can impact your business’ sales.

Sales quota: A goal assigned to a sales person for a specified period.

Product positioning: Placing a product in a certain market to get a desired customer response.

Market share: The percentage of a product/service that is sold in the total market for that product/service.

Identify financial tools that utilize sales projections. Cash flow statement Repayment Plan Inventory

Cash flow statement: Shows the flow of cash in and out of the business.

Repayment plan: A plan for repaying the debt of a business.

Inventory: Ensuring that adequate inventory is on hand to meet sales demand.