1. Managing Business Finance
Chapter 17
Managing Business Finance

2. Financial Planning
Financial plan = outline of your expenses, needs, and goals, and how you expect to meet them
Financial planning
1st step – identifying your assets
Asset = any property or item of value that your business owns
Examples: cash, equipment, buildings, supplies, inventory, land
2nd step – purchasing your assets
Do you need to borrow money?
3rd step – recognizing the financial records you need to keep
Financial forecast = estimate of what business conditions will be like in the future

3. Accounting
Accounting = systematic process of recording and reporting the financial position of a business.
Financial manager = person in charge of a business’s financial planning, funding, and accounting.
Budget = written plan of what you expect your income and expenses to be over a certain period of time.

4. Financial Records Fiscal year = reports are for one year
Summarize the year with an income statement and a balance sheet.

5. Financial Statements Assets = Liabilities + Owner’s Equity
The two sides of the equation must always balance
Liability = amount your business owes (debt)
Owner’s Equity = equal to the assets minus liabilities (what the business is worth)

6. Income Statement
Income Statement = a report of net income or net loss over an accounting period
Includes revenue and expenses
If revenue is greater than expenses, you have a net income
If expenses are greater than revenue, you have a net loss
Example on next slide

8. Balance Sheet
Balance Sheet= a report of the financial state of your business on a certain date.
Includes assets, liabilities, and owner’s equity
Assets on the left side
Liabilities and owner’s equity on the right side
The two sides must equal, or balance
Example on next slide