Developing Financial Projections

PUBLIC COMPANY MANAGEMENT SERVICES WHITE PAPER Developing Financial Projections for NonFinance People This White Paper gives you the tools to answer the two most important questions any business must ask: â€Å"Are you financially prepared to begin? Are we able to sustain ourselves? † You’ll learn: †¢ What’s on financial statements and how they get there †¢ How to develop and understand income statements †¢ How to set up and read balance sheets †¢ How to use common formulas to evaluate cash flow †¢ How to create a budget using standard guidelines †¢ How to read and evaluate income projections †¢How to develop your own financial projections through a â€Å"fill in the blanks† approach† †¢ How to accurately determine the value of your idea or business This memorandum is provided by Public Company Management Services for educational purposes only and is not intended and should not be construed as legal advice. 200 4  © Public Company Management Services 5770 El Camino Road. Las Vegas, NV 89118 Phone: (702) 222-9076 http://www. pubcowhitepapers. com http://www. pcms-team. com http://www. foreigncompanylisting. com http://www. gopublictoday. com A Budget and Financial Worksheet OverviewManagers must ask, ‘is the business financially prepared to begin/continue’? Understanding basic budgeting guidelines, income projection statements, balance sheets and common formulas to evaluate cash flow help ensure successful operations. This financial knowledge significantly impacts a company’s short term and long term success. START-UP BUDGET †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ personnel (costs prior to opening) legal/professional fees occupancy licenses/permits equipment insurance supplies advertising/promotions salaries/wages accounting income utilities payroll expensesAn operating budget is prepared when you are actu ally ready to open for business. The operating budget will reflect your priorities in terms of how you spend your money, the expenses you will incur and how you will meet those expenses (income). Your operating budget also should include money to cover the first three to six months of operation. It should allow for the following expenses. OPERATING BUDGET †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ personnel insurance rent depreciation loan payments advertising/promotions legal/accounting miscellaneous expenses supplies payroll expenses Developing Projections www. publiccompanywhitepapers. om 14001 May 20,2003 †¢ †¢ †¢ †¢ †¢ salaries/wages utilities dues/subscriptions/fees taxes repairs/maintenance Other questions that you will need to consider are: †¢ What type of accounting system will your use? Is it a single entry or dual entry system? †¢ What are your sales and profit goals for the coming year? If a franchis e, will the franchisor set your sales and profit goals? Or, will he or she expect you to reach and retain a certain sales level and profit margin? †¢ What financial projections will you need to include in your business plan? †¢ What kind of inventory control system will you use?Sample balance sheets, income projections (profit and loss statements) and cash flow statements are included below along with detailed instructions for completing same. INCOME PROJECTION STATEMENT †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ Total net sales (revenues) Costs of sales Gross profit Gross profit margin Controllable expenses Salaries/wages Payroll expenses Legal/accounting Advertising Automobile Office supplies Dues/Subscriptions Utilities Miscellaneous Total controllable expenses Fixed expenses Rent Depreciation Utilities Insurance License/pe rmits Loan payments Miscellaneous †¢ Total fixed expenses Total expenses Net profit (loss) before taxes Taxes †¢ Net profit (loss) after taxes INSTRUCTIONS FOR INCOME PROJECTIONS STATEMENT The income projections (profit and loss) statement is valuable as both a planning tool and a key management tool to help control business operations. It enables you to develop a preview of the amount of income generated each month and for the business year, based on reasonable predictions of monthly levels of sales, costs and expenses. As monthly or quarterly projections are developed and entered into the income projections statement, they can serve as definite goals for controlling the business operation.As actual operating results become known each month, they should be recorded for comparison with the monthly projections. A completed income statement allows you to compare actual figures with projections and to take steps to correct any problems. Industry Percentage In the industry per centage column, enter the percentages of total sales (revenues) that are standard for your industry, which are derived by dividing Costs/expenses items x 100% These percentages can be obtained from various sources, such as trade associations, accountants or banks.Industry figures serve as a useful bench mark against which to compare cost and expense estimates that you develop for your firm. Compare the figures in the industry percentage column to those in the annual percentage column. Total Net Sales (Revenues) Determine the total number of units of consulting service you realistically expect to sell each period (per month or quarter) in each area of your business at the prices you expect to get. Use this step to create the projections to review your pricing practices. †¢ Exclude any revenue that is not strictly related to the business. Cost of SalesThe key to calculating your cost of sales is that you do not overlook any costs that you have incurred. Calculate cost of sales of all services used to determine total net sales. Do not overlook transportation or travel costs if you’re working at a distance. Also include all direct labor. Gross Profit Subtract the total cost of sales from the total net sales to obtain gross profit. Gross Profit Margin The gross profit is expressed as a percentage of total sales (revenues). It is calculated by dividing gross profits by total net sales Controllable (also known as Variable) Expenses †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ Salary expenses-Base pay plus overtime.Payroll expenses-Include paid vacations, sick leave, health insurance, unemployment insurance and social security taxes – may or may not be applicable. Outside services-Include costs of subcontracts, overflow work and special or one-time services. Supplies-Services and items purchased for use in the business. Repair and maintenance-Regular maintenance and repair. Advertising-Include desired sales volume and classified d irectory advertising expenses. Car delivery and travel-Include charges if personal car is used in business, including parking, tools, buying trips, etc. Accounting and legal-Outside professional services.Fixed Expenses †¢ †¢ †¢ †¢ †¢ †¢ †¢ Rent-List only real estate used in business. Depreciation-Amortization of capital assets like computers. Utilities-Water, heat, light, etc. Insurance-Fire or liability on property or products. Include workers' compensation. Loan repayments-Interest on outstanding loans. Miscellaneous-Unspecified; small expenditures without separate accounts. Net Profit (loss) (before taxes) †¢ Subtract total expenses from gross profit. †¢ Taxes – Include inventory and sales tax, excise tax, real estate tax, etc. Net Profit (loss) (after taxes) †¢ Subtract taxes from net profit (before taxes) Annual Total – For each of the sales and expense items in your income projection statement, add all the monthly or quarterly figures across the table and put the result in the annual total column. Annual Percentage †¢ Calculate the annual percentage by dividing Annual total x 100% Sample BALANCE SHEET Assets Current assets Cash $_______ Petty cash $_______ Accounts receivable $_______ Inventory $_______ Short-term investment $_______ Prepaid expenses $_______ Long-term investment $_______ Fixed assets Land $_______ Buildings $_______ Improvements $_______ Equipment $_______ Furniture $_______ Automobile/vehicles $_______Other assets †¢ †¢ †¢ †¢ 1. $_______ 2. $_______ 3. $_______ 4. $_______ †¢ Total assets $______ Liabilities Current Liabilities Accounts payable $______ Notes payable $______ Interest payable $______ Taxes payable Federal income tax $______ State income tax $______ Self-employment tax $______ Sales tax (SBE) $______ Property tax $______ Payroll accrual $______ Long-term liabilities Notes payable $______ Total liabilities $______ Net worth (owner equity) $______ Proprietorship or Partnership (name's) equity $_____ (name's) equity $_____ or †¢ Corporation Capital stock $_____ Surplus paid in $_____ Retained earnings $_____Total net worth $_____ †¢ Total liabilities and †¢ total net worth $_____ (Total assets will always equal total liabilities and total net worth) _______________________________________________ INSTRUCTIONS FOR BALANCE SHEET Figures used to compile the balance sheet are taken from the previous and current balance sheet as well as the current income statement. The income statement is usually attached to the balance sheet. The following text covers the essential elements of the balance sheet. At the top of the page fill in the legal name of the business, the type of statement and the day, month and year. AssetsList anything of value that is owned or legally due the business. Total assets include all net values. These are the amounts derived when you subtract depreciation and amortization from th e original costs of acquiring the assets. Current Assets †¢ †¢ †¢ †¢ †¢ †¢ Cash-List cash and resources that can be converted into cash within 12 months of the date of the balance sheet (or during one established cycle of operation). Include money on hand and demand deposits in the bank, e. g. , checking accounts and regular savings accounts. Petty cash-If your business has a fund for small miscellaneous expenditures, include the total here.Accounts receivable-The amounts due from customers in payment for merchandise or services. Inventory-Includes raw materials on hand, work in progress and all finished goods, either manufactured or purchased for resale. Short-term investments-Also called temporary investments or marketable securities, these include interest- or dividend-yielding holdings expected to be converted into cash within a year. List stocks and bonds, certificates of deposit and time-deposit savings accounts at either their cost or market valu e, whichever is less. Prepaid expenses-Goods, benefits or services a business buys or rents in advance.Examples are office supplies, insurance protection and floor space. Long-term Investments Also called long-term assets, these are holdings the business intends to keep for at least a year and that typically yield interest or dividends. Included are stocks, bonds and savings accounts earmarked for special purposes. Fixed Assets Also called plant and equipment. Includes all resources a business owns or acquires for use in operations and not intended for resale. Fixed assets may be leased. Depending on the leasing arrangements, both the value and the liability of the leased property may need to be listed on the balance sheet. Land-List original purchase price without allowances for market value. †¢ Buildings †¢ Improvements †¢ Equipment †¢ Furniture an Computers †¢ Automobile/vehicles Liabilities Current Liabilities List all debts, monetary obligations and cla ims payable within 12 months or within one cycle of operation. Typically they include the following: †¢ Accounts payable-Amounts owed to suppliers for goods and services purchased in connection with business operations. †¢ Notes payable-The balance of principal due to pay off short-term debt for borrowed funds. Also includes the current amount due of total balance on notes whose terms exceed 12 months. Interest payable-Any accrued fees due for use of both short- and long-term borrowed capital and credit extended to the business. †¢ Taxes payable-Amounts estimated by an accountant to have been incurred during the accounting period. †¢ Payroll accrual-Salaries and wages currently owed. Long-term Liabilities Notes payable-List notes, contract payments or mortgage payments due over a period exceeding 12 months or one cycle of operation. They are listed by outstanding balance less the current position due. Net worth Also called owner's equity, net worth is the claim o f the owner(s) on the assets of the business.In a proprietorship or partnership, equity is each owner's original investment plus any earnings after withdrawals. Total Liabilities and Net Worth The sum of these two amounts must always match that for total assets. __________________________________________________ MONTHLY CASH FLOW PROJECTION 1. Cash on hand (beginning month) 2. Cash receipts †¢ †¢ †¢ †¢ †¢ (a) Cash sales (b) Collections from credit accounts (c) Loan or other cash injections (specify) 3. Total cash receipts (2a+2b+2c=3) 4. Total cash available (Before cash out) (1+3) 5. Cash paid out †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ a) purchases (merchandise) (b) Gross wages (excludes withdrawals) (c) Payroll expenses (taxes, etc. ) (d) Outside services (e) Supplies (office and operating) (f) Repairs and maintenance (g) Advertising (h) Car, delivery and travel (i) Accounting and legal (j) Rent (k) Telephone (l) Utilities (m) Insurance (n) Taxes (real estate, etc. ) (o) Interest (p) Other expenses (specify each) (q) Miscellaneous (unspecified) (r) Subtotal (s) Loan principal payment †¢ †¢ †¢ †¢ †¢ †¢ (t) Capital purchases (specify) (u) Other start-up costs (v) Reserve and/or escrow (specify) (w) Owner's withdrawal 6. Total cash paid out (5a through 5w) . Cash position (end of month) (4 minus 6) †¢ †¢ Essential operating data (non-cash flow information) †¢ A. Sales volume (dollars) †¢ B. Accounts receivable †¢ (end on month) †¢ C. Bad debt (end of †¢ month) †¢ D. Inventory on hand (end †¢ of month) †¢ E. Accounts payable (end †¢ of month) INSTRUCTIONS FOR MONTHLY CASH FLOW PROJECTION †¢ †¢ †¢ †¢ †¢ †¢ 1. Cash on hand (beginning of month) — Cash on hand same as (7), Cash position, pervious month 2. Cash receipts†¢ (a) Cash sales-All cash sales. Omit credit sales unless cash is actually received †¢ (b) Gross wages (including withdrawals)-Amount to be expected from all accounts. (c) Loan or other cash injection-Indicate here all cash injections not shown in 2(a) or 2(b) above. 3. Total cash receipts (2a+2b+2c=3) 4. Total cash available (before cash out)(1+3) 5. Cash paid out †¢ (a) Purchases (merchandise)–Merchandise for resale or for use in product (paid for in current month). †¢ (b) Gross wages (including withdrawals)-Base pay plus overtime (if any) †¢ (c) Payroll expenses (taxes, etc. )– Include paid vacations, paid sick leave, health insurance, unemployment insurance, (this might be 10 to 45% of 5(b)) †¢ (d) Outside services-This could include outside labor and/or material for pecialized or overflow work, including subcontracting †¢ (e) Supplies (office and operating)–Items purchased for use in the bu siness (not for resale) †¢ (f) Repairs and maintenance-Include periodic large expenditures such as painting or decorating †¢ (g) Advertising-This amount should be adequate to maintain sales volume †¢ (h) Car, delivery and travel-If personal car is used, charge in this column, include parking †¢ (i) Accounting and legal-Outside services, including, for example, bookkeeping †¢ (j) Rent-Real estate only (See 5(p) for other rentals) †¢ (k) Telephone †¢ (l) Utilities-Water, heat, light and/or power (m) Insurance-Coverage on business property and products (fire, liability); also worker's compensation, fidelity, etc. Exclude executive life (include in 5(w)) †¢ (n) Taxes (real estate, etc. )– Plus inventory tax, sales tax, excise tax, if applicable †¢ (o) Interest-Remember to add interest on loan as it is injected (See 2 © above) †¢ (p) Other expenses (specify each) _________________________________________ _________________________ ____________ Unexpected expenditures may be included here as a safety factor________________________________________ Equipment expenses during the month should be included ere (non-capital equipment)__________________________ When equipment is rented or leased, record payments here †¢ (q) Miscellaneous (unspecified)–Small expenditures for which separate accounts would be practical †¢ (r) Subtotal-This subtotal indicates cash out for op †¢ (s) Loan principal payment-Include payment on all loans, including vehicle and equipment purchases on time payment †¢ (t) Capital purchases (specify)–Nonexpensed (depreciable) expenditures such as equipment, building purchases on time payment †¢ (u) Other start-up costs-Expenses incurred prior to first month projection and paid for after startup (v) Reserve and/or escrow (specify)– Example: insurance, tax or equipment escrow to reduce impact of large periodic payments †¢ (w) Owner's withdrawals-Sho uld include payment for such things as owner's income tax, social security, health insurance, executive life insurance premiums, etc. †¢ 6. Total cash paid out (5a through 5w) †¢ 7. Cash position (end on month) (4 minus 6)-Enter this amount in (1) Cash on hand following monthEssential operating data (non-cash flow information)-This is basic information necessary for proper planning and for proper cash flow projection.Also with this data, the cash flow can be evolved and shown in the above form. †¢ A. Sales volume (dollars)–This is a very important figure and should be estimated carefully, taking into account size of facility and employee output as well as realistic †¢ †¢ †¢ †¢ †¢ anticipated sales (actual sales, not orders received). B. Accounts receivable (end of month)-Previous unpaid credit sales plus current month's credit sales, less amounts received current month (deduct â€Å"C† below) C.Bad debt (end on month)– Bad debts should be subtracted from (B) in the month anticipated D. Inventory on hand (end on month)– Last month's inventory plus merchandise received and/or manufactured current month minus amount sold current month E. Accounts payable (end of month) Previous month's payable plus current month's payable minus amount paid during month. F. Depreciation-Established by your accountant, or value of all your equipment divided by useful life (in months) as allowed by Internal Revenue Service Developing Financial Projections PUBLIC COMPANY MANAGEMENT SERVICES WHITE PAPER Developing Financial Projections for NonFinance People This White Paper gives you the tools to answer the two most important questions any business must ask: â€Å"Are you financially prepared to begin? Are we able to sustain ourselves? † You’ll learn: †¢ What’s on financial statements and how they get there †¢ How to develop and understand income statements †¢ How to set up and read balance sheets †¢ How to use common formulas to evaluate cash flow †¢ How to create a budget using standard guidelines †¢ How to read and evaluate income projections †¢How to develop your own financial projections through a â€Å"fill in the blanks† approach† †¢ How to accurately determine the value of your idea or business This memorandum is provided by Public Company Management Services for educational purposes only and is not intended and should not be construed as legal advice. 200 4  © Public Company Management Services 5770 El Camino Road. Las Vegas, NV 89118 Phone: (702) 222-9076 http://www. pubcowhitepapers. com http://www. pcms-team. com http://www. foreigncompanylisting. com http://www. gopublictoday. com A Budget and Financial Worksheet OverviewManagers must ask, ‘is the business financially prepared to begin/continue’? Understanding basic budgeting guidelines, income projection statements, balance sheets and common formulas to evaluate cash flow help ensure successful operations. This financial knowledge significantly impacts a company’s short term and long term success. START-UP BUDGET †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ personnel (costs prior to opening) legal/professional fees occupancy licenses/permits equipment insurance supplies advertising/promotions salaries/wages accounting income utilities payroll expensesAn operating budget is prepared when you are actu ally ready to open for business. The operating budget will reflect your priorities in terms of how you spend your money, the expenses you will incur and how you will meet those expenses (income). Your operating budget also should include money to cover the first three to six months of operation. It should allow for the following expenses. OPERATING BUDGET †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ personnel insurance rent depreciation loan payments advertising/promotions legal/accounting miscellaneous expenses supplies payroll expenses Developing Projections www. publiccompanywhitepapers. om 14001 May 20,2003 †¢ †¢ †¢ †¢ †¢ salaries/wages utilities dues/subscriptions/fees taxes repairs/maintenance Other questions that you will need to consider are: †¢ What type of accounting system will your use? Is it a single entry or dual entry system? †¢ What are your sales and profit goals for the coming year? If a franchis e, will the franchisor set your sales and profit goals? Or, will he or she expect you to reach and retain a certain sales level and profit margin? †¢ What financial projections will you need to include in your business plan? †¢ What kind of inventory control system will you use?Sample balance sheets, income projections (profit and loss statements) and cash flow statements are included below along with detailed instructions for completing same. INCOME PROJECTION STATEMENT †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ Total net sales (revenues) Costs of sales Gross profit Gross profit margin Controllable expenses Salaries/wages Payroll expenses Legal/accounting Advertising Automobile Office supplies Dues/Subscriptions Utilities Miscellaneous Total controllable expenses Fixed expenses Rent Depreciation Utilities Insurance License/pe rmits Loan payments Miscellaneous †¢ Total fixed expenses Total expenses Net profit (loss) before taxes Taxes †¢ Net profit (loss) after taxes INSTRUCTIONS FOR INCOME PROJECTIONS STATEMENT The income projections (profit and loss) statement is valuable as both a planning tool and a key management tool to help control business operations. It enables you to develop a preview of the amount of income generated each month and for the business year, based on reasonable predictions of monthly levels of sales, costs and expenses. As monthly or quarterly projections are developed and entered into the income projections statement, they can serve as definite goals for controlling the business operation.As actual operating results become known each month, they should be recorded for comparison with the monthly projections. A completed income statement allows you to compare actual figures with projections and to take steps to correct any problems. Industry Percentage In the industry per centage column, enter the percentages of total sales (revenues) that are standard for your industry, which are derived by dividing Costs/expenses items x 100% These percentages can be obtained from various sources, such as trade associations, accountants or banks.Industry figures serve as a useful bench mark against which to compare cost and expense estimates that you develop for your firm. Compare the figures in the industry percentage column to those in the annual percentage column. Total Net Sales (Revenues) Determine the total number of units of consulting service you realistically expect to sell each period (per month or quarter) in each area of your business at the prices you expect to get. Use this step to create the projections to review your pricing practices. †¢ Exclude any revenue that is not strictly related to the business. Cost of SalesThe key to calculating your cost of sales is that you do not overlook any costs that you have incurred. Calculate cost of sales of all services used to determine total net sales. Do not overlook transportation or travel costs if you’re working at a distance. Also include all direct labor. Gross Profit Subtract the total cost of sales from the total net sales to obtain gross profit. Gross Profit Margin The gross profit is expressed as a percentage of total sales (revenues). It is calculated by dividing gross profits by total net sales Controllable (also known as Variable) Expenses †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ Salary expenses-Base pay plus overtime.Payroll expenses-Include paid vacations, sick leave, health insurance, unemployment insurance and social security taxes – may or may not be applicable. Outside services-Include costs of subcontracts, overflow work and special or one-time services. Supplies-Services and items purchased for use in the business. Repair and maintenance-Regular maintenance and repair. Advertising-Include desired sales volume and classified d irectory advertising expenses. Car delivery and travel-Include charges if personal car is used in business, including parking, tools, buying trips, etc. Accounting and legal-Outside professional services.Fixed Expenses †¢ †¢ †¢ †¢ †¢ †¢ †¢ Rent-List only real estate used in business. Depreciation-Amortization of capital assets like computers. Utilities-Water, heat, light, etc. Insurance-Fire or liability on property or products. Include workers' compensation. Loan repayments-Interest on outstanding loans. Miscellaneous-Unspecified; small expenditures without separate accounts. Net Profit (loss) (before taxes) †¢ Subtract total expenses from gross profit. †¢ Taxes – Include inventory and sales tax, excise tax, real estate tax, etc. Net Profit (loss) (after taxes) †¢ Subtract taxes from net profit (before taxes) Annual Total – For each of the sales and expense items in your income projection statement, add all the monthly or quarterly figures across the table and put the result in the annual total column. Annual Percentage †¢ Calculate the annual percentage by dividing Annual total x 100% Sample BALANCE SHEET Assets Current assets Cash $_______ Petty cash $_______ Accounts receivable $_______ Inventory $_______ Short-term investment $_______ Prepaid expenses $_______ Long-term investment $_______ Fixed assets Land $_______ Buildings $_______ Improvements $_______ Equipment $_______ Furniture $_______ Automobile/vehicles $_______Other assets †¢ †¢ †¢ †¢ 1. $_______ 2. $_______ 3. $_______ 4. $_______ †¢ Total assets $______ Liabilities Current Liabilities Accounts payable $______ Notes payable $______ Interest payable $______ Taxes payable Federal income tax $______ State income tax $______ Self-employment tax $______ Sales tax (SBE) $______ Property tax $______ Payroll accrual $______ Long-term liabilities Notes payable $______ Total liabilities $______ Net worth (owner equity) $______ Proprietorship or Partnership (name's) equity $_____ (name's) equity $_____ or †¢ Corporation Capital stock $_____ Surplus paid in $_____ Retained earnings $_____Total net worth $_____ †¢ Total liabilities and †¢ total net worth $_____ (Total assets will always equal total liabilities and total net worth) _______________________________________________ INSTRUCTIONS FOR BALANCE SHEET Figures used to compile the balance sheet are taken from the previous and current balance sheet as well as the current income statement. The income statement is usually attached to the balance sheet. The following text covers the essential elements of the balance sheet. At the top of the page fill in the legal name of the business, the type of statement and the day, month and year. AssetsList anything of value that is owned or legally due the business. Total assets include all net values. These are the amounts derived when you subtract depreciation and amortization from th e original costs of acquiring the assets. Current Assets †¢ †¢ †¢ †¢ †¢ †¢ Cash-List cash and resources that can be converted into cash within 12 months of the date of the balance sheet (or during one established cycle of operation). Include money on hand and demand deposits in the bank, e. g. , checking accounts and regular savings accounts. Petty cash-If your business has a fund for small miscellaneous expenditures, include the total here.Accounts receivable-The amounts due from customers in payment for merchandise or services. Inventory-Includes raw materials on hand, work in progress and all finished goods, either manufactured or purchased for resale. Short-term investments-Also called temporary investments or marketable securities, these include interest- or dividend-yielding holdings expected to be converted into cash within a year. List stocks and bonds, certificates of deposit and time-deposit savings accounts at either their cost or market valu e, whichever is less. Prepaid expenses-Goods, benefits or services a business buys or rents in advance.Examples are office supplies, insurance protection and floor space. Long-term Investments Also called long-term assets, these are holdings the business intends to keep for at least a year and that typically yield interest or dividends. Included are stocks, bonds and savings accounts earmarked for special purposes. Fixed Assets Also called plant and equipment. Includes all resources a business owns or acquires for use in operations and not intended for resale. Fixed assets may be leased. Depending on the leasing arrangements, both the value and the liability of the leased property may need to be listed on the balance sheet. Land-List original purchase price without allowances for market value. †¢ Buildings †¢ Improvements †¢ Equipment †¢ Furniture an Computers †¢ Automobile/vehicles Liabilities Current Liabilities List all debts, monetary obligations and cla ims payable within 12 months or within one cycle of operation. Typically they include the following: †¢ Accounts payable-Amounts owed to suppliers for goods and services purchased in connection with business operations. †¢ Notes payable-The balance of principal due to pay off short-term debt for borrowed funds. Also includes the current amount due of total balance on notes whose terms exceed 12 months. Interest payable-Any accrued fees due for use of both short- and long-term borrowed capital and credit extended to the business. †¢ Taxes payable-Amounts estimated by an accountant to have been incurred during the accounting period. †¢ Payroll accrual-Salaries and wages currently owed. Long-term Liabilities Notes payable-List notes, contract payments or mortgage payments due over a period exceeding 12 months or one cycle of operation. They are listed by outstanding balance less the current position due. Net worth Also called owner's equity, net worth is the claim o f the owner(s) on the assets of the business.In a proprietorship or partnership, equity is each owner's original investment plus any earnings after withdrawals. Total Liabilities and Net Worth The sum of these two amounts must always match that for total assets. __________________________________________________ MONTHLY CASH FLOW PROJECTION 1. Cash on hand (beginning month) 2. Cash receipts †¢ †¢ †¢ †¢ †¢ (a) Cash sales (b) Collections from credit accounts (c) Loan or other cash injections (specify) 3. Total cash receipts (2a+2b+2c=3) 4. Total cash available (Before cash out) (1+3) 5. Cash paid out †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ a) purchases (merchandise) (b) Gross wages (excludes withdrawals) (c) Payroll expenses (taxes, etc. ) (d) Outside services (e) Supplies (office and operating) (f) Repairs and maintenance (g) Advertising (h) Car, delivery and travel (i) Accounting and legal (j) Rent (k) Telephone (l) Utilities (m) Insurance (n) Taxes (real estate, etc. ) (o) Interest (p) Other expenses (specify each) (q) Miscellaneous (unspecified) (r) Subtotal (s) Loan principal payment †¢ †¢ †¢ †¢ †¢ †¢ (t) Capital purchases (specify) (u) Other start-up costs (v) Reserve and/or escrow (specify) (w) Owner's withdrawal 6. Total cash paid out (5a through 5w) . Cash position (end of month) (4 minus 6) †¢ †¢ Essential operating data (non-cash flow information) †¢ A. Sales volume (dollars) †¢ B. Accounts receivable †¢ (end on month) †¢ C. Bad debt (end of †¢ month) †¢ D. Inventory on hand (end †¢ of month) †¢ E. Accounts payable (end †¢ of month) INSTRUCTIONS FOR MONTHLY CASH FLOW PROJECTION †¢ †¢ †¢ †¢ †¢ †¢ 1. Cash on hand (beginning of month) — Cash on hand same as (7), Cash position, pervious month 2. Cash receipts†¢ (a) Cash sales-All cash sales. Omit credit sales unless cash is actually received †¢ (b) Gross wages (including withdrawals)-Amount to be expected from all accounts. (c) Loan or other cash injection-Indicate here all cash injections not shown in 2(a) or 2(b) above. 3. Total cash receipts (2a+2b+2c=3) 4. Total cash available (before cash out)(1+3) 5. Cash paid out †¢ (a) Purchases (merchandise)–Merchandise for resale or for use in product (paid for in current month). †¢ (b) Gross wages (including withdrawals)-Base pay plus overtime (if any) †¢ (c) Payroll expenses (taxes, etc. )– Include paid vacations, paid sick leave, health insurance, unemployment insurance, (this might be 10 to 45% of 5(b)) †¢ (d) Outside services-This could include outside labor and/or material for pecialized or overflow work, including subcontracting †¢ (e) Supplies (office and operating)–Items purchased for use in the bu siness (not for resale) †¢ (f) Repairs and maintenance-Include periodic large expenditures such as painting or decorating †¢ (g) Advertising-This amount should be adequate to maintain sales volume †¢ (h) Car, delivery and travel-If personal car is used, charge in this column, include parking †¢ (i) Accounting and legal-Outside services, including, for example, bookkeeping †¢ (j) Rent-Real estate only (See 5(p) for other rentals) †¢ (k) Telephone †¢ (l) Utilities-Water, heat, light and/or power (m) Insurance-Coverage on business property and products (fire, liability); also worker's compensation, fidelity, etc. Exclude executive life (include in 5(w)) †¢ (n) Taxes (real estate, etc. )– Plus inventory tax, sales tax, excise tax, if applicable †¢ (o) Interest-Remember to add interest on loan as it is injected (See 2 © above) †¢ (p) Other expenses (specify each) _________________________________________ _________________________ ____________ Unexpected expenditures may be included here as a safety factor________________________________________ Equipment expenses during the month should be included ere (non-capital equipment)__________________________ When equipment is rented or leased, record payments here †¢ (q) Miscellaneous (unspecified)–Small expenditures for which separate accounts would be practical †¢ (r) Subtotal-This subtotal indicates cash out for op †¢ (s) Loan principal payment-Include payment on all loans, including vehicle and equipment purchases on time payment †¢ (t) Capital purchases (specify)–Nonexpensed (depreciable) expenditures such as equipment, building purchases on time payment †¢ (u) Other start-up costs-Expenses incurred prior to first month projection and paid for after startup (v) Reserve and/or escrow (specify)– Example: insurance, tax or equipment escrow to reduce impact of large periodic payments †¢ (w) Owner's withdrawals-Sho uld include payment for such things as owner's income tax, social security, health insurance, executive life insurance premiums, etc. †¢ 6. Total cash paid out (5a through 5w) †¢ 7. Cash position (end on month) (4 minus 6)-Enter this amount in (1) Cash on hand following monthEssential operating data (non-cash flow information)-This is basic information necessary for proper planning and for proper cash flow projection.Also with this data, the cash flow can be evolved and shown in the above form. †¢ A. Sales volume (dollars)–This is a very important figure and should be estimated carefully, taking into account size of facility and employee output as well as realistic †¢ †¢ †¢ †¢ †¢ anticipated sales (actual sales, not orders received). B. Accounts receivable (end of month)-Previous unpaid credit sales plus current month's credit sales, less amounts received current month (deduct â€Å"C† below) C.Bad debt (end on month)– Bad debts should be subtracted from (B) in the month anticipated D. Inventory on hand (end on month)– Last month's inventory plus merchandise received and/or manufactured current month minus amount sold current month E. Accounts payable (end of month) Previous month's payable plus current month's payable minus amount paid during month. F. Depreciation-Established by your accountant, or value of all your equipment divided by useful life (in months) as allowed by Internal Revenue Service

How to Spot a Scam or Fraud in the Medical Field? Essay

There are many way to spot a scam or fraud in the medical field. Medical frauds range from people posing as doctors and practicing without a license, to useless supplements, worthless or dangerous diet aides, fake medicines and cures for cancer. Making good health decisions is hard and sadly some immoral people make it even more difficult by attempting to deceive and cheat the sick. Not everyone knows enough about medicine to spot a medical fraud or scam but this essay will give you some places to start. Avoiding medical fraud is important because a delay in real treatment can create potentially deadly complications. You should know that some medical frauds are simply con artists. Some medical fraud is simply a con artist looking for a quick pay off, so  you must know how to spot a con man. You also have to understand that many medical frauds are victims themselves. Many people who push bad medicine believe that they are actually helping because they have been fooled themselves by someone else. With these people the standard methods of spotting a con artist will not work because they honestly want to help. You should always check for the phrase â€Å"cure-all†. If a person tells you something is a cure-all 99% of the time it is actually a cure-nothing. Real medicine recognizes that each disease is unique and so there is no single procedure or substance that can cure all. Check for a single cause theory will also help. The corollary to the cure-all fraud is the single cause theory. This is simply the claim that all diseases and conditions can be explained by a single cause. Common examples of this fraud include unbalanced energy or toxins. Asking about side effects is important. Anything that has an ability to affect your body positively could also affect it negatively. If a person tells you that their treatment never has any side effects, you are likely dealing with a fraud or scam. You must listen for conspiracy theories. Since they lack scientific evidence to support their practice many medical frauds resort to wild-eyed conspiracy theories regarding other medicines. A popular example is the claim that scientists have cured all cancer, but they keep it secret so that they can make more money selling medicines for the symptoms. Obviously false as a patent on the cure for cancer would be the most valuable commodity the world has ever known. Listen for spiritual claims will also help. Spirituality is great, but it has no place in medicine. If a person claims a spiritual mechanism for how their treatments work, you might be dealing with a fraud of some type. While there  are  links between emotional well-being and physical condition, there is no medically-proven program for treating physical symptoms with mental or spiritual techniques. Pay for it at your own risk. Listen for claims regarding â€Å"toxins†. A popular fraud right now is the claim that everyone’s body accumulates mysterious toxins, usually in the colon or liver but sometimes throughout the entire body. Frauds claim that these mysterious toxins need to be removed because they are the cause of all diseases and ailments. This process often involves enemas, fasting, or ingesting a wide variety of herbs. There is no scientific evidence that the toxins exist, or that the cleansing process is at all beneficial. In many cases it is actually harmful. You should never take any medical advice from a person who recommends this treatment. Ask for their official title and look it up. Real medical professionals have what is called a â€Å"protected title†. This means that laws do not allow just anyone to call themselves by that title, you must first complete recognized training. Many frauds create a title that closely resembles the legally protected title and hope that average people do not know the difference. For example, dietitian and nutritionist. Only dietitian is protected, which means that anyone may call themselves a nutritionist if they wish. People without legally protected titles are not always frauds and scam artists, but they are much more likely to be. You should ask for their opinion on vaccinations. If someone opposes vaccinations it is a sure sign that they are some form of a medical fraud or quack, or at the very least uneducated. Ask a doctor that you trust. If you ever aren’t sure about something get a second opinion from a doctor that you know well and trust.

Herman Melville, Bartleby, the Scrivener or Gail Godwin, A Sorrowful Essay

Herman Melville, Bartleby, the Scrivener or Gail Godwin, A Sorrowful Woman choose one - Essay Example s and actions and the actions of the people around her, the objectivity of the voice is a mask for the subjectivity of womanhood where womanhood is subjective because society narrowly defines and controls it. The narrator of the story is an objective omniscient narrator because she can follow any character around and do not provide interpretations. The narrator provides information on other characters which makes her omniscient. The narrator follows what the father and son to do together one time. The woman is sleeping, but the narrator knows what the father and child did together: â€Å"He took the child for a walk, and when they returned, red-cheeked and boisterous, the father made supper† (Godwin 1). The narrator also turns to other characters to inform the audience of what they are doing. The narrator, furthermore, is also objective because she does not offer judgments or interpretations and lets the readers interpret what is happening. For instance, as the story ends, the narrator describes everything the woman did and then adds: â€Å"The house smelled redolently of renewal and spring† (Godwin 5). There is something ironic about â€Å"renewal and spring† when t he woman plans to kill herself after doing her household duties. The narrator is then leaving the interpretation to the readers. Aside from being objective and omniscient, the narrator’s subjectivity helps readers to understand that the objective tone is ironically subjective because focusing on women’s roles and responsibilities showed that the woman wanted to die because she is tired of being a woman. The narrator hides her subjectivity through objective omniscience. Still, it is clear that the narrator is obsessed with feminine roles and obligations. For example, the narrator describes what the girl maid did as part of her daily work: She painted the room white, fed the child lunch, read edifying books, raced the boy to the mailbox†¦She knitted dresses for herself and played chess with the

Service Marketing Essay Example | Topics and Well Written Essays - 1500 words

Service Marketing - Essay Example The company has been globally accepted and has a high visibility of their brand. (Source from website http://instruction.bus.wisc.edu/obdemo/may%20not%20need_2/starbucks.htm) Starbucks has been renowned for its customer service. A "service" is any act of performance that one party can offer to another, that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product. ( Kotler, 2000) By creating a unique atmosphere, Starbucks has differentiated themselves from their competitors and catered to their customer's preferences. A company's offering to the market place will include some kind of service. It may be a major or minor part of the product. It may be purely tangible goods that require no service, a mix of goods and services in varying proportions, or just pure service. Services can be equipment based or people based. Some services require the client's presence while some do not. Services may be a personal need or a business need. It could be for profit or non-profit and be private or public depending on ownership. ( Kotler, 2000) Intangibility- Services cannot be seen, tasted, felt, heard or smelled. This makes evaluating service quality very difficult. Service quality is therefore ascertained by the potential consumers by perusal of other evidences like place, people, equipment communication etc. as indicators of quality. Inseparability- Services are produced and consumed at the same time and cannot be separated from their providers. There is no stocking or distribution. The provider and client must interact for the service to occur and therefore both parties become part of the service provided. Both of them influence the outcome of the service. Variability - As the consumer and producer are both part of the service, the quality of services depends largely on who, when, where and how they are provided. Therefore, service providers become the representative of the organization as a whole and service quality depends on the quality of the service providers themselves. Perishability- Services must be consumed as they are provided and cannot be stored for future use. Therefore, a missed opportunity will create a loss of service that needed to be rendered. The demand and supply needs to be carefully monitored and services offered as needed during the time period. Non-Transferability- Services cannot be owned by the user. An excellent service has good retentivity though and acts as an incentive to the customer to opt for the same service again. Starbucks has survived and grown in the new economy because of its innovative capability to adapt to a dynamically changing environment. Their customer-focused strategy has allowed them to garner sales selling the humble coffee at a premium value due to the perception of value inculcated in the customer. Quality of Service Providing the level of service to desired expectations is of prime importance. Quality management is a way of doing business that allows an organization to design products and services that meet or exceed customer needs and build operational processes that achieve high levels of performance and quality. A good service company understands the psychology of the consumer, adds in a qualitative

Municipal Budgtes Speech or Presentation Example | Topics and Well Written Essays - 1000 words

Municipal Budgtes - Speech or Presentation Example Main types are line – item and program budgets (NACSLB 37). Thus, neither budgeting method is perfect as each serves a different purpose: such as performance maximization or objective – activity alignment. A perfect budget should satisfy twelve principles. As indicated in the definition of the budget process, these principles are creation of goals based on stakeholder analysis, their implementation, including efficiency analysis and adjustments (NACSLB, 1999, p.5). The first type is line – item budget. This approach arose at the beginning of the 20th century (Tyer & Willand). It lists categories of expenses, such as â€Å"personnel, operating and capital expenses† (Tyer & Willand). Incremental approach belongs to this type as well. In this approach, previous year’s budget is adjusted for legislative changes, price, wage inflation and any other change that might take place in the new fiscal year (Northern Ireland Assembly 5). Since changes take place on a marginal basis in comparison to the last year’s levels, the base, this method is called incremental budgeting (Northern Ireland Assembly 5). This method saves time and resources. ... Incremental budgeting method is based on negotiations and compromise (Northern Ireland Assembly 5). Wages and allocations of resources are negotiated, and oftentimes based on political decisions. As a result, this type of budgeting is efficient only if the political system is stable and transparent (Northern Ireland Assembly 5). Otherwise, the budget will favor few at the expense of the majority. Moreover, this method has several disadvantages. The first disadvantage is the fact that this method is backward looking since it is based on a previous year’s budget. As a result, it does not make adjustments for unexpected changes. Moreover, performance is hard to evaluate in this method, as it is based on compromise rather than standards such as cost minimization. Thus, data tend to be outdated, inconsistent with new priorities and say nothing about efficiency (O’Connor 2). Though still used even in some fire departments, such as the Muscatine Fire Department, efficiency mea surement capabilities of other methods make it an unattractive option (O’Connor 2). In response to line – item budget disadvantages, performance budgets were established in the 1950’s (Tyer & Willand). Such budgets emphasize activities, rather than items paid, and focus on connecting performance with allocation of resources (Tyer & Willand). As a result, each such budget must contain information on inputs, output, productivity or efficiency, and level of objective implementation, e.g. number of miles to be swept during the fiscal year (Morgan 6). Before budget design, objectives and measurement tools must be set up to evaluate each proposed activity. After

The History of the World in Six Glasses Essay Example | Topics and Well Written Essays - 1000 words

The History of the World in Six Glasses - Essay Example â€Å"Factory workers had to function like parts in a well-oiled machine, and tea was the lubricant that kept the factories running smoothly.† (p.200) Tea-break or tea-time became part of the sports activities and entertainment programs. Solid trade connections were established with the tea-producing countries like India and China, by some of the western countries, prominent amongst them was UK. The author has linked the thirst of the human throat to the thirst for material progress. He has unveiled the hidden agenda behind these drinks that have taken the commercial world by storm! When one makes an analysis, what all factors contributed to the concept of ‘world is one family,’ tea will be one of the top-contenders. The prime necessity to quench thirst needs no elaboration, appreciation, or explanation. Many thousands of years ago humans made their habitation near the rivers and lakes, precisely for his reason—to get adequate fresh water! Drinks shaped human history and growth and continue to have impact on the modern civilization. Tea, soon after it was introduced in UK, became a global drink! But there was always a storm in the cup of tea of the imperialists. The British people saw great potential in the tea trade, and exploited the business opportunity to the maximum extent. â€Å"Tea drinking is not the cause, but the consequences of the distresses of the poor. The drink of queens had also become the drink of last resort†¦ Tea had reached around the world from the world’s oldest empire and planted itself at the heart of the newest.† (p. 196) Tea cures, as well as creates problems for the human constitution and aggravates certain conditions of diseases. Those suffering from neuralgia and blood pressure should not drink tea. If one takes tea on empty stomach, it affects digestion and its consumption at bed-time, causes sleepless nights. It stimulates the nervous system and the urine

Scientic psychology cannot live with folk psychology and cannot live Essay

Scientic psychology cannot live with folk psychology and cannot live without it - Essay Example Folk psychology explains people actions in terms of their goals however scientific psychology explains actions of individuals based on what leads them to undertake these actions. Despite the distinction scientific psychology still has some normative aspects and for this reason cannot live without folk psychology. Folk psychology has been challenged by scientific psychology and this is based on how folk psychology results are achieved, in most cases folk psychology results will conflict with results of scientific psychology. For this reason therefore it is very difficult to choose which results best explain human behavior, due to conflicting results of the two disciplines scientific psychology tend to criticize the results of folk psychology and for this reason scientific psychology cannot live with folk psychology. Folk psychology assumes that people already know why they tend to believe in their actions and why they take these actions, according to scientific psychology people are not aware of why they take certain actions, this is a conflict of assumption and therefore it is evident that scientific psychology cannot live with folk psychology. According to Stephen Stitch it is possible to undertake scientific psychology without folk psychology where he gave an example using beliefs. ... gave an example of a day that had rained and the two characters X and Y are asked to narrate on what had happened, X said that the day had rained very heavily and Y said that it did not rain very heavily. He posed the question who of the two individuals was telling the truth, however Stephen Stitch said that these two persons may telling the truth but it depends on their understanding and observations on the way they have learned from the groups, that is family or friends on how they belief in a particular aspect. According to J.B Watson it is possible to identify someone's behavior at his or her current age as long as he or she is not in the childhood age but it depends on how the person behaves and socializes. For this reason therefore Watson verifies that it is only necessary to study the persons behavior without taking into consideration believes of the individuals, in his statement he states that it is possible for scientific psychology to live without folk. Folk Psychology assumes that an individual can directly explain the different feelings they experience, this is to say that individuals are well aware of what they feel and why they feel it, on the other hand scientific psychology agues that individuals feeling are based on the inferences about changes in what they are undergoing. For this reason therefore there is a conflict of assumptions that people are ware of their feelings and for this reason both disciplines will yield different results, for this reason therefore scientific psychology cannot live with folk psychology. Why scientific psychology cannot live without folk psychology: Despite the many reasons why scientific psychology cannot live with folk psychology it is evident that scientific psychology cannot live without folk psychology, folk