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Bizness Branding Academy Presents The Financial Puzzle: Fitting the Pieces Together
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Transcript of Bizness Branding Academy Presents The Financial Puzzle: Fitting the Pieces Together
The Financial Puzzle: Putting the Pieces Together
Bizness Branding Academy | Lady Bizness | GTCC SBC
For Your Information
•Please complete your registration forms •Please mute or silence cell phones•Please ask questions•Please introduce yourself & your company
Agenda
Bizness Branding Academy | Lady Bizness | GTCC SBC
An Overview of Financial Statements
What do they tell youThe Financial Statements• The Income Statement• The Balance Sheet• The Cash Flow Sheet
Bizness Branding Academy | Lady Bizness | GTCC SBC
Reasons People Fail
• FAILURE TO PLAN PROPERLY
• FAILURE TO MONITOR FINANCIAL POSITION
• FAILURE TO KNOW COSTS
• FAILURE TO PRICE PROPERLY
• FAILURE TO PLAN CASH FLOW
• FAILURE TO MANAGE GROWTH
• FAILURE TO CAREFULLY STRUCTURE DEBT
• FAILURE TO ESTABLISH GOOD BANKING RELATIONSHIP
Bizness Branding Academy | Lady Bizness | GTCC SBC
Reasons People Fail
• Plan to Reinvest Your Profits • Learn How to Structure Your
Bank Debt • Look for Outside Equity
What are YOUR Business Costs?
• Rent• Cable• Internet• Phone• Website• Business Cards• Flyers • Office Supplies• Insurance
Bizness Branding Academy | Lady Bizness | GTCC SBC
• Services • Gas • Travel • Hotels• Business Supplies• Advertisement • Marketing• Social Media
Accounts
The Income Statement
• Basic Income Statement Equation:• Sales Revenue – Expenses = Profits• Expense Categories: Cost of Goods
Sold, Operating Expenses, Interest Expense, Taxes
• Profit does NOT equal cash; profit is an accounting concept, not a substitute for a bank statement
Bizness Branding Academy | Lady Bizness | GTCC SBC
Income Statement
• Income statement• Profit and loss account• Profit and loss statement(P&L)• Revenue statement• Statement of financial performance• Earnings statement• Operating statement• Statement of operations
One of the financial statements of a company andshows the company’s REVENUES & EXPENSES duringa particular period.
Bizness Branding Academy | Lady Bizness | GTCC SBC
Multi-Step Method Income Statement
Gross Sales - Cost of Goods Sold = Gross Profit
Gross Profit – Operating Expenses = Operating Profit (Salaries/Wages, Payroll Taxes, Occupancy Expenses,
Advertising, Travel, Insurance, Utilities, Depreciation, etc.)
Operating Profit - Interest Expense =Earnings Before Taxes
Earnings Before Taxes -Income Taxes =Net Profit
Bizness Branding Academy | Lady Bizness | GTCC SBC
Balance Sheet
Basic Balance Sheet equation:Assets = Liabilities + Equity
Assets are broken into different types:• Current• Fixed• Other
Described in terms of ‘liquidity’– lose liquidity as move from top to bottom
Bizness Branding Academy | Lady Bizness | GTCC SBC
Liabilities
• Liabilities– What a business owes, financial obligations
• Current Liabilities– Items that must be paid within 12 months
• Long-Term Liabilities – Items that can be paid in more than 1 year
Bizness Branding Academy | Lady Bizness | GTCC SBC
Balance Sheet
Bizness Branding Academy | Lady Bizness | GTCC SBC
ASSETS• Current Assets – Cash, A/R, Inventory, Pre-paid expenses• Fixed Assets – Land, Building, Equipment, Fixtures (less
depreciation)• Other Assets – intangibles (good will, patent, customer list, etc.)
LIABILITIES• Current Liabilities – A/P, Notes Payable, Current Por. L/T Debt• Long-Term Liabilities – L/T Loans, Mortgages, etc.
EQUITY• Owner’s Equity• Retained Earnings• Additional Paid in Capital
.
Cash Flow Statement
Bizness Branding Academy | Lady Bizness | GTCC SBC
• Shows how cash enters and exits via business operations. Cash flow statements report a company’s inflows and outflows of cash. This is important because a company needs to have enough cash on hand to pay its expenses and purchase assets.
• While an income statement can tell you whether a company made a profit, a cash flow statement can tell you whether the company generated cash.
Cash Flow
Bizness Branding Academy | Lady Bizness | GTCC SBC
• Cash Flows from Assets• Cash Flows from Operations• Changes in Operating Working Capital• Changes in Long-Term Assets
• Cash Flows from Financing• Increase Debt• Increase Equity• Pay Interest/Dividends• Decrease Debt (pay it off)• Decrease Equity (company buys back stock)
Bizness Branding Academy | Lady Bizness | GTCC SBC
AssetsCash 375Stocks/Bonds 20,000Real Estate142,000Autos 25,000Other 35,000
Total Assets 222,375
LiabilitiesNotes Payable 7,500Installment14,200 AutoInstallment15,000 OtherMortgage97,000Unpaid Taxes 750
Total Liabilities 134,450Net Worth
$87,925Total liabilities & Net worth 222,375
Personal Financial Statement
The Financial Puzzle
Chisa D. Pennix-Brown, MBA [email protected]
GTCC Small Business Center336.334.4822 x 62001– Greensboro336.454.1126 x 62001– High Point
Bizness Branding Academy | Lady Bizness | GTCC SBC