Goals  Prepare a pro forma cash flow statement.  Prepare a pro forma income statement.  Prepare a pro forma balance sheet.

Slide 2  cash flow statement  income statement  balance sheet

Slide 3  cash flow statement  an accounting report that describes the way cash flows into and out of your business over a period of time

Slide 4  estimate  monthly cash receipts  monthly cash disbursements

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Slide 7  net cash flow = cash receipts ─ cash disbursements  Tracking monthly cash flow statements  enables you to anticipate periods of positive and negative cash flow

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Slide 9  Changes in the economy can dramatically effect the cash flow of businesses.  Business owners should make conservative estimates. WHY?

Slide 10 What does a cash flow statement show?

Slide 11  income statement  shows revenues and expenses incurred over a period of time  shows the profit or loss for the time period

Slide 12  The long-term growth of your business can be demonstrated by a pro forma income statement prepared for multiple years.

Slide 13  Revenue  Cost of goods sold  Gross profit  Operating expenses  Net income before taxes  Taxes  Net income/loss after taxes The pro forma income statement consists of:

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Chapter 9 Slide 15 What does an income statement show?

Slide 16  balance sheet  a financial statement that lists what a business owns what a business owes how much a business is worth at a point in time  assets = liabilities + owner’s equity

Slide 17  fixed assets  used for many years  current assets  items that are used up in normal business operations  accounts receivable  the amounts owed to a business by its credit customers

Slide 18  debts that are payable over a year or longer  current liabilities  debts that must be paid in full in less than a year  accounts payable  amounts owed to vendors for merchandise purchased on credit long-term liabilities

Slide 19  the amount a company estimates it will not receive from customers  depreciation  the lowering of an asset’s value to reflect its current worth allowance for uncollectible accounts

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 Find an article on the internet that discusses the current state of the industry. Summarize the article and discuss how the status of your industry will affect your business’s cash flow  Should be a minimum of 2-3 paragraphs