1. Financial analysis & statements

2. Financial Analysis Methods to monitor the fiscal status of the organization over a period of time Monthly, quarterly, annually Methods Break even analysis Income statements Cash flow statement Balance sheet Budget statement

3. Break Even Analysis How many units of a product must be sold in order to cover all costs of production of that unit Method #1 BE=F+(V*Units sold)/Units sold

4. Break Even - Example

5. Break Even - Example

6. Break Even - Example

7. Break Even Analysis How many units of a product must be sold in order to cover all costs of production of that unit Method #2 Formula BE=F / (P � V) BE= Break even point F = Fixed costs P = Selling price per unit V = Variable costs per unit

8. Break Even BE=F / (P � V) P=$60 BE=2650 / (60-7) BE=2650 / 53 BE=50 people

9. Break Even Analysis Bike rental business Fixed costs = $8000 Variable costs = $10/person Bike rental = $50/bike

10. Break Even Analysis Bike rental business Fixed costs = $8000 Variable costs = $10/person Bike rental = $50/bike BE=F / (P � V) BE=8000/(50-10) BE=8000/40 BE=200 bikes

11. Break Even Analysis

12. Break Even Analysis Profit $40 profit per bike over 200 250 bikes = 50*$40=$2000 350 bikes � 150*$40=$6000 Loss � 150 bikes Expenditures 8000+($10*150)=$9500 Revenues $50*150 bikes=$7500

13. Income Statement Measures profitability over a period of time i.e. annually, quarterly, or monthly Income = revenues � expenses Shows how profitable your company is�how much money will be made after all expenses are taken out With a new company� Typically 1st year you prepare monthly projections Years 2-3 Quarterly projections (4 times a year) Years 4-5: Annually (once a year) Example�.

14. Income Statement

15. Cash Flow Statement Income statement provided information about revenues coming in and expenses going out, but not cash in and cash out What�s in the bank Eliminates some of the creative accounting of the income statement (ex. depreciation) Negative cash flows okay, but not sustainable forever

16. Cash Flow Statement Negative monthly cash flow � means that you dipped into the savings in this seasonal business.Negative monthly cash flow � means that you dipped into the savings in this seasonal business.

17. Cash Flow Statement Negative monthly cash flow � means that you dipped into the savings in this seasonal business.Negative monthly cash flow � means that you dipped into the savings in this seasonal business.

18. Balance Sheet Financial condition of a business at a single point in time End of month, quarter, year Provides information about a company�s assets, liabilities, and owner�s equity (capital)�owes vs. owns Assets = liabilities + equity or Equity = assets � liabilities Terms�

19. Balance Sheet Current assets Cash & assets that can be turned to cash quickly (within a year) Inventory Bank deposits Accounts receivable Amts not yet collected from customers but are due Fixed assets Used to produce good & aren�t for sale Land, building, machinery, equipment Depreciation Declining value of a fixed asset

20. Balance Sheet Accounts payable What is owed to suppliers for things bought on credit Salaries Current liabilities Debts for regular business operations that will come due within a year) Long term liabilities Due after a year Mortgages, bonds, large loans Net worth (owner�s equity) Portion of business owned free and clear of all debts

21. Assets � what you have of value; liabilities � what you owe; Equity is the net worth or what you own free and clear. Assets � what you have of value; liabilities � what you owe; Equity is the net worth or what you own free and clear.

22. Budget Statement Expended monies Allocated monies Revenues received % of allocated that is commited

23. Budget Statement