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As the chart suggests and the previous examples show, there is a logical link between the business
numbers in a standard analysis.
• Your sales forecast should show sales and cost of sales. The same numbers in the sales forecast
are the ones you use in the proﬁt and loss. • As with sales, you should normally have a separate personnel table, but the numbers showing
in that table should be the same numbers that show up for personnel costs in your proﬁt and
loss table. • Your proﬁt and loss table should show the same numbers as sales and personnel plan tables in
the proper areas. It should also show interest expenses as a logical reﬂection of interest rates
and balances of debt. HURDLE: THE BOOK 14.12 ON BUSINESS PLANNING • Your cash ﬂow has to reﬂect your proﬁt and loss, plus changes in balance sheet items and noncash expenses such as depreciation, which are on the proﬁt and loss. The changes in the balance sheet are critical. For example, when you borrow money, it doesn’t affect the proﬁt or loss
(except for interest expenses later on), but it makes a huge difference to your checking account
balance. • The balance sheet has to reﬂect the proﬁt and loss and the cash ﬂow. • Your business ratios should calculate automatically, based on the numbers in sales, proﬁt and
loss, personnel, cash ﬂow, and balance sheet. LOGIC OF BUSINESS STATEMENTS The business plan tables and charts should be linked together to reﬂect the practical realities of
business numbers. Summary
Use the charts together with the tables to illustrate and enhance your analysis. For example, keeping
the Cash Flow chart visible while changing assumptions gives you an instant picture of whether or
not you have exceeded available cash resources as you plan your operations. CHAPTER 15: THE BOTTOM LINE The familiar phrase “the bottom line,” often used synonymously with the conclusion or the underlying truth,
is actually taken from the standard Income Statement in accounting, which subtracts costs and expenses from
sales and shows pr...
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This note was uploaded on 01/26/2014 for the course BUINESS 102 taught by Professor Unknown during the Winter '09 term at University of Phoenix.
- Winter '09