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The Basics Financial PlanPosted by Roth-IRA-401k on: 2006-07-12 10:01:42 in category:
Retirement Planning News [ Print | Permalink / 0 Comment(s) ] Jitendra To begin the financial planning process, you need specific financial goals. By specific goals, I mean to establish a date to meet the goal and a savings plan that meets your goals. At first these goals may seem unobtainable but continuing the planning process will enable you to evaluate these goals and modify as necessary. Next you need to track your expenses and income until you can develop a yearly statement (cash/flow statement). To see where you are currently, list the value of all your assets and what you owe. Subtract your debts from your assets and you have your current net worth (balance sheet). You should update these statements yearly. The financial plan will be the most important element of your business plan to potential investors or lenders. Your projections for revenue growth and profitability directly affect their decision to invest or extend credit. Financial ratios (e.g. return-on-investment) are used to evaluate investment and lending alternatives. As a result, a sound financial plan is vital to receiving funding. The financial plan includes four main components: Financial Highlights, Financial Statements, Financial Ratios, and Graphs. Financial Highlights, sometimes called Financial Overview, is the first section of your financial plan. It is an overview of important financial results including forecasted revenue, profit and cash flow. Your financial overview should contain the items that are most important to the reader of your business plan. For example, if you are writing your plan for investors, highlight forecasted sales, profit and return-on-investment. The financial statements should include projected Cash Flow Statement and Income Statement. If you are seeking funding, a Balance Sheet and Break-Even Analysis will probably be required. Consider the option of including excerpting or summarizing your financial statements in your financial plan. In that case, you should include your entire financial statements in the appendix of your plan. The financial ratios give your reader decision-making benchmarks. Depending on your industry and the purpose of your business plan, consider including ratios like working capital, return-on-investment, return-on-assets, return-on-equity, and debt-to-equity. You should also consider including industry and historical ratio comparisons. Graphsprovide a visual display of your business plan. Here they can be used to highlight noteworthy financial results. Common graphs to consider include projected Sales Volume, Revenue, Profit, Cash Flow, Break-Even Analysis, and Retained Earnings. Financial graphs may also be included in other sections of your business plan, such as the executive summary or the business overview. Place your graphs wisely: Having too many graphs creates unnecessary clutter for the reader. Before presenting your plan, make sure your financial statements are correct. For example, recheck all totals for accuracy. Check that information that appears in more than one statement matches (e.g. ending cash balance in Statement of Cash Flow should match cash amounts in Balance Sheet). Consider hiring a certified public accountant to compile or review your financial statements. For reading articles on other latest topics visit Halfvalue.com Knowledge Resource Visit: Halfvalue.com (A Unique Shopping Website) Other Useful Website: Halfvalue.co.uk Lookbookstores.com About the author: Jitendra,Halfvalue.com Email- blog_jitu@halfvalue.com |
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