|Type of paper:||Course work|
Financial planning is important in a business startup. Generating revenue helps to test whether a business idea is worth trying out. Finances are significant in that they aid in paying the bills that have to be paid. For Horse Boarding Firm to run efficiently, there is the need for finances. Finances also give a firm desirable outcome. Investing more money in business will help gain more from it. Enough investments is a sign that the business model is sustainable. Lack of enough funds to start up the firm might result in business failure since the firm owner might be forced to borrow loans, which ought to be paid after a specified period. There are three different financial planning tools which aid in the successful growth of businesses. They include the Income statement, Cash flow forecast, and The Balance sheet.
Horse Boarding Income Statement
Horse Boarding firm Income Statement 2017 Fiscal Year $ $ Revenue 1743500 Cost of Sales 1067000 Gross Margin 676500 Operating Expenses Development 130000 Selling expenses 105600 Amortization 40000 Total operating expenses 400900 Income from operations 101000 Investment income 1500 Taxes 22700 Net income 275700 An income statement focuses on the financial performance of a business over a specified period, usually for one year a quarter or a month. The revenue from the Horse boarding firm is money that is coming into the business by its activities. This is through getting paid by people who bring in their horses to board. The costs of sales that Horse Boarding incurs are costs that come with Horse keeping the horses in the firm including feeding them. They include advertising, and paying salaries to employees working in the firm. The Gross margin is calculated by deducting the cost of sales from the Revenue ( Dearman, Lechner & Shanklin 2018). Operating expenses in the firm are the costs that are unrelated to the services the firm is providing. They include Amortization and development expenses. Development will help in making discoveries which will help enhance the services provided by the firm and also bring forth new ideas. After deducting taxes, the company gets its profits.
Horse Boarding Balance sheet
Horse Boarding Firm Balance sheet 30-Jun-18 $ $ Assets Cash 2757 Accounts receivable 17435 Inventory 6800 Building and equipment 35000 Land 150000 Total Assets 211992 Liabilities Accounts payable - Loan 70000 Total liabilities 70000 Owner's Equity 141992 Total Liabilities and owner's equity. 211992 Horse Boarding Firm's balance sheet shows the assets, liabilities and the firm's Net worth. The purpose of the balance sheet is to evaluate the firm's financial position, its profitability, and its cash flow. The assets include cash, inventories, accounts receivables, land, and buildings. Liabilities are the items that Hose boarding owes to others which include the accounts payables and loans that the company might take in the name of the firm (Alavi, & Seager 2017). Assets and liabilities are used to calculate the Net Worth of the firm. The Net worth of Horse Boarding is the total asset minus the total liabilities. It is usually the owner's equity which means that it is the accounting value of the firm if all the assets were sold out and the debts were paid on a certain date.
Cash flow statement
Horse Boarding firm Cash Flow Statement For the Year Ended December 31, 2018 $ $
Cash flow from operations Net income 275700
Depreciation expense 75000 Decrease in inventory 7500 Increase in account payable 4000 Increase in account receivable -5000 A decrease in accrued expenses payable -6700 Gain on sale of marketable securities -7500 67300
Net cash provided by operating activities. 343000
Cash flows from investments: Marketable securities sales 35000 Cash paid to acquire firm assets. -27000 Net cash provided through investments 8000
Cash flows from finances: Paid dividends -112270 Payments to bonds payable -195000 Net cash used by financing activities -307270
The net increase in cash during the year 43730
Cash equivalents on Jan 1, 2018 105000
Cash equivalents on December 31, 2018 148730
Cash equivalents on December 31, 2018 148730
Supplementary investment: Purchase of firm assets 110000
Issuance of long-term debt 70000
Cash paid to acquire the firm asset 40000
The cash flow statement helps to determine whether all reported revenues have been collected, and also to ensure that all reported expenses have been paid. It helps identify cash flowing in and out of the firm. It comprises of four parts. The operating activities convert the items reported on the income statement on an accrual basis to cash. The investing activities report the purchases and sales of long-term investments and property, together with equipment. Financing activities report issuance and repurchasing of the services. Supplemental information reports exchange of significant items which were non-monetary (Peake, McDowell, Harris & Davis 2018). It also indicates the interests paid.
Financial planning is important for business growth. Horse Boarding Firm's probability to succeed with a good financial management strategy is high. Its financial planning indicates that it will succeed if it is managed properly.
Alavi, A. R., Simon, J., & Seager, P. H. (2017). Corporate and Entrepreneurial Finance: Moving Your Business from Back of the Envelope to Front of the Class. In Managing Media Businesses(pp. 183-204). Palgrave Macmillan, Cham.
Dearman, D., Lechner, T. A., & Shanklin, S. B. (2018). Demand for Management Accounting Information in Small Businesses: Judgment Performance in Business Planning. International Journal of the Academic Business World, 93.
Peake, W. O., McDowell, W. C., Harris, M. L., & Davis, P. E. (2018). Can Women Entrepreneurs Plan to Prosper? Exploring the Role of Gender as a Moderator of the Planning-Performance Relationship. In Inside the Mind of the Entrepreneur (pp. 121-133). Springer, Cham.
Cite this page
Free Paper Sample on Techniques for Managing Cash Flow and Pricing. (2022, Jun 16). Retrieved from https://speedypaper.com/essays/free-paper-sample-on-techniques-for-managing-cash-flow-and-pricing
If you are the original author of this essay and no longer wish to have it published on the SpeedyPaper website, please click below to request its removal:
- Essay Sample: Management of Culcinema
- Knowledge Management Personal Statement Example
- HRM Essay Sample: Hiring Procedures
- Essay Sample: The Four Fundamentals of Management and Intercultural Communication
- Project Management Essay Sample: Equipping a Sound (Record) Studio
- Free Paper on ERP SAP Implementation in Logistics and Supply Chains
- Essay Sample Describing the Value of Forecasting