Download - Technology Entrepreneurship

Technology Entrepreneurship

Entrepreneurs

and

The Business of

Accounting, Finance and Economics


What About Your PRESENTATION…?

Make Some Magic…!!!

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Ten Accounting Items

1. Revenue

2. Expense

3. Asset

4. Liability

5. Equity

6. Assets= Liab.+Equity

7. Rev – Exp = Income

8. Debits on the Left

9. Credits on the Right

10. Dr must equal Cr

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Financial…Information

Managerial…Information

Operational…Information

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Financial

Financial Statements

Cash Flow Statements

Capital, Investments and Returns


Financial

Financial Statements…GAAP

“Generally Accepted Accounting Principles”

What about them???


Financial

Cash FlowsCash Balance…

Cash - In Flows…

Cash – Outlays…

Ending Cash Balance


Financial

Cash flows-Monthly ScheduleCash Flow Budget Worksheet

[Month] [Month] [Month] [Month] [Month] [Month] TotalBeginning Cash Balance $0 $0 $0 $0 $0Cash Inflows (Income):

Accts. Rec. Collections 0Loan Proceeds 0Sales & Receipts 0Other:

00

Total Cash Inflows $0 $0 $0 $0 $0 $0 $0Available Cash Balance $0 $0 $0 $0 $0 $0Cash Outflows (Expenses):

Advertising 0Bank Service Charges 0Credit Card Fees 0Delivery 0Health Insurance 0Insurance 0Interest 0Inventory Purchases 0Miscellaneous 0Office 0Payroll 0Payroll Taxes 0Professional Fees 0Rent or Lease 0Subscriptions & Dues 0Supplies 0Taxes & Licenses 0Utilities & Telephone 0Other:

000

Subtotal $0 $0 $0 $0 $0 $0 $0Other Cash Out Flows:

Capital Purchases 0Loan Principal 0Owner's Draw 0Other:

0 Subtotal $0 $0 $0 $0 $0 $0 $0 Total Cash Outflows $0 $0 $0 $0 $0 $0 $0

Ending Cash Balance $0 $0 $0 $0 $0 $0


Financial

Capital, Investments and Returns

• The Time Value of Money

• Present Value

• Discounted Cash Flows

• Cost of Capital

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Financial

Time Value of Money

interest rate 0.05time 0 1 2 3 4 5yr-totalcash out flow ($100)future value $105.00 $110.25 $115.76 $121.55 $127.63

Technology

Financial

NPV and Discounted Cash Flows

Periodic Cash Flowsrate 10%time 1 2 3 4 5Cash flow = 420,000 420,000 420,000 420,000 420,000NPV = 1,751,343


Cost of Capital

Cash has a price…

• The Cost of Debt…..

• The Cost of Equity…

• Cost of Funds…???... Concept and Framework!!!


Managerial

Cost, Volume, Profit Analysis

Contribution Margin

Break Even

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Contribution Margin Statement

Sales (400 units)… .$100,000 ($250/unit)

Less Var. Cost……..$(60,000) ($150/unit)

Contribution Margin $40,000 $100/unit

Less Fixed Cost….....$(35,000)

Net Operating Inc……..$5,000


Break Even

In Units…..(CM per unit=CM/units sold)

Q =TFC / CM per unit

Q = $35,000 / $100

Q = 350 units sold


Break EvenIn Dollars….

(CM Ratio=Sales/CM)

$ = TFC / CM Ratio

$ = $35,000 / 40%

$ = $87,500 in Sales


Target Profit of $20,000

In Dollars….

$ = Target Profit + TFC / CM Ratio

$ = $20,000 + $35,000 / 40%

$ = $137,500 in Sales


Break Even…$0 profit

$87,500 / $250 selling price

350 Units

Target Profit of $20,000

$137,500 / $250 selling price

550 Units

Can the class prove it?


OperationalActivity Based… Costing

toActivity Based Funds Flow

Design

Production

Quality


Good Night

&

Good Luck


Intentionally

BLANK