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Entrepreneurship

This segment focuses on crucial financial statements—Income Statement, Balance Sheet, and Cash Flow Statement—essential for entrepreneurs. It explains how these documents report profitability, assets, liabilities, and cash flows, serving as scorecards for lenders and investors. Learn how to analyze these statements to understand financial trends and control expenses. Important financial ratios such as Current Ratio, Debt Ratio, and Working Capital are discussed, providing insights into a business's financial health and its ability to meet obligations.

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Entrepreneurship

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Presentation Transcript

  1. Entrepreneurship Mr. Bernstein Analyzing Your Finances, pp 450-456 May 30, 2014

  2. EntrepreneurshipMr. Bernstein 3 Primary Financial Statements Income Statement Advertising Cash Flow Statement Ledger Balances Balance Sheet

  3. EntrepreneurshipMr. Bernstein 3 Primary Financial Statements Income Statement reports Profit/Loss Balance Sheet reports Assets & Liabilities Cash Flow Statement reports cash receipts and disbursements Lenders and Investors use these statements as scorecards of desirability

  4. EntrepreneurshipMr. Bernstein Comparing Financial Statements Understand Trends Lenders and Investors will CARE!

  5. EntrepreneurshipMr. Bernstein Comparing Financial Statements Who do you expect to have higher earnings next year? Lenders and Investors have CHOICES!

  6. EntrepreneurshipMr. Bernstein Comparing Financial Statements Which company has better control of their SGA (Sales & General Administrative Expenses)? Lenders and Investors can compare you to other businesses

  7. EntrepreneurshipMr. Bernstein Important Financial Ratios: Current Ratio Current Assets /Current Liabilities = Current Ratio Shows the ability to pay bills quickly From the Balance Sheet Ratio of 2:1 or higher is considered strong

  8. EntrepreneurshipMr. Bernstein Important Financial Ratios: Debt Ratio Total Liabilities / Total Assets = Debt Ratio Shows the percent of the business which is being financed by creditors (lenders) From the Balance Sheet

  9. EntrepreneurshipMr. Bernstein Important Financial Ratios: Working Capital Current Assets – Current Liabilities = Working Capital Shows the capital available to immediately use in operations From the Balance Sheet

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