Chapter 8 Lecture Slides - CHAPTER 8 Assessing Assessing aa New New Ventures Ventures Financial Financial Strength Strength and and Viability Viability

Chapter 8 Lecture Slides - CHAPTER 8 Assessing Assessing aa...

This preview shows page 1 - 6 out of 31 pages.

Assessing a New Venture’s Financial Strength and Viability Assessing a New Venture’s Financial Strength and Viability CHAPTER 8
Image of page 1

Subscribe to view the full document.

Why go through the effort of financial planning? 1. Determines if the venture is worth pursuing 2. Helps entrepreneur manage the firm more effectively by: Understanding sales and expense levels over time that are needed to be profitable Providing a short term basis for budgeting control Determining the level of cash needed to continue operations 3. Facilitates scenario planning to anticipate possible financial problems ahead of time.
Image of page 2
Basic Financial Statements Balance Sheet – “Snapshot.” Estimates the firm’s worth on a given date; built on the accounting equation: Assets = Liabilities + Owner’s Equity Income Statement – “Moving picture.” Compares the firm’s expenses against its revenue over a period of time to show its net income (or loss): Net Income = Sales Revenue - Expenses Statement of Cash Flows Shows the change in the firm's working capital over a period of time by listing the sources and uses of funds.
Image of page 3

Subscribe to view the full document.

Comparing forecasting existing products versus new product forecasting Existing Products New Products Data History Assumptions Analytics Statistical Judgement Forecast Point Range Plan Certainties Contingencies Measurement Accuracy Meaningfulness From “Solving the Problem of New Product Forecasting” by Kenneth Khan
Image of page 4
Business Plan Requirements In the business plan, the financial plan needs to have a minimum of three years of projected data – five years is better The first year of financial projections should reflect monthly data.
Image of page 5

Subscribe to view the full document.

Image of page 6

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes