1. 10-1 Chapter Ten Financial Projections Dr. Bruce Barringer University of Central Florida

2. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall10-2 Introduction  Sources and uses of funds statement  Assumptions sheet  Income statements  Balance sheets  Cash flows  Ratio analysis

3. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall10-3 Sources and Uses of Funds Statement The sources and use of funds statement is a document that lays out specifically how much money a firm needs, where the money will come from, and what the money will be used for

4. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall10-4 Assumptions Sheet An assumptions sheet is an explanation of the most critical assumption that your financial statements are based on

5. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall10-5 Financial Statements  Income statement  Balance sheet  Cash flow statement

6. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall10-6 Income Statement  Net sales  Cost of good sold  Operating expenses

7. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall10-7 Net Sales Net sales consists of total sales minus allowances for returned goods and discounts

8. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall10-8 Cost of Goods Sold Cost of goods sold includes all the direct costs associated with producing or delivering a product or service, including the material costs and direct labor

9. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall10-9 Operating Expenses Operating expenses include marketing, utilities, and administrative costs not directly related to producing a product or service

10. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall10-10 Balance Sheet A balance sheet is a projection of a firm’s assets, liabilities, and owner’s equity at a specific point in time

11. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall10-11 Balance Sheet  Assets Current assets Fixed assets  Liabilities Current liabilities Long-term liabilities Owner’s equity

12. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall10-12 Cash Flow  Operating activities  Investing activities  Finance activities

13. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall10-13 Operating Activities Operating activities include net income (or loss), depreciation, and changes in current assets and current liabilities other than cash

14. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall10-14 Investing Activities Investing activities include the purchase, sale, or investment in fixed assets, such as real estate, equipment, and buildings

15. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall10-15 Financing Activities Financing activities include cash raised during the period by borrowing money, making payments on loans, or paying dividends

16. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall10-16 One Final Note  Demonstrate the ability to prepare financial statements  Break even analysis

17. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall10-17 Ratio Analysis  Profitability Ratios  Liquidity Ratios  Overall Financial Stability

18. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright ©2009 Pearson Education, Inc. publishing as Prentice Hall