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

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

3. 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.

4. 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

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

6. 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)

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

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

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

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

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

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

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

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