Building Financial Projections newtest

Building Financial Projections newtest - Balance Sheet Key...

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Why do we need Pro Forma Financials? Determine proposed Project profitability Estimate the amount of needed financing Convince Management (Investors) of the  financial soundness of the Project
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The Three Key Financial Statements 1) Income Statement 2) Cash Flow Statement 3) Balance Sheet
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  Income Statement- Key Points Illustrates Profitability Segregates Direct Expenses from Indirect  Expenses Basis for Income tax calculations Income is NOT equal to cash   Projects Revenue & Expense
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Cash Flow Statement- Key Points Illustrates all transactions involving cash. Projects the cash balance at end of each  period Reveals ‘Cash Flow before Equity Financing’  for valuing company by discounted Cash  Flow Method. Profitable companies can go bankrupt  because Cash  not income pays bills!   Basis for estimating required investment
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Unformatted text preview: Balance Sheet- Key Points Separates Current Assets and Liabilities from Long term Assets and Liabilities Highlights the owner’s equity Show the company’s liquidity and ability to service debt The Net Worth Statement is equivalent to the Balance Sheet Accumulates all you own and all you owe The Accounting Equation ASSETS = LIABILITIES + OWNERS’ EQUITY Pro Forma Statements Summary The Cash Flow statement reveals the required investment. Cash is what pays bills! The balance sheet accumulates all that you own and all that you owe. The income statement shows profitability and is the basis for taxes. Income is not equivalent to cash....
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Building Financial Projections newtest - Balance Sheet Key...

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