Vital as this is to business survival it is not

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Unformatted text preview: of a more detailed Profit and Loss is shown in the illustration below. This example divides operating expenses into categories, including Sales and Marketing expenses and General and Administrative expenses. It provides a breakdown of the business expenses and what they stand for. DETAILED PROFIT AND LOSS STATEMENT This illustration shows the more detailed profit and loss statement that divides operating expenses into categories. This is a partial graphic, showing three months of a 12-month table, plus two years of annual data. 15.4 HURDLE: THE BOOK ON BUSINESS PLANNING Regardless of which statement style you choose, you make very important choices as you plan your profit and loss. This is where you estimate expenditures across the business, from rent and overhead to advertising, sales commissions, and public relations. Decisions you make here are as important as the mathematics are simple. Your sum of expenses ultimately determines your company’s profitability. This is the business plan equivalent to budgeting, as you set your sights on the levels of expenditures you expect your company will need. Summary Your profit and loss statement is where you budget and forecast your expenses. You also absorb the more important numbers of your sales forecast and personnel plan, to create a planned bottom line for profit. This is educated guessing. Keep it on a computer so you can revise often as the business changes. CHAPTER 16: CASH IS KING As we looked at business numbers in the previous two chapters, we focused on the critical difference between cash and profits. This chapter looks at how to plan for cash in a business plan, understanding the critical elements that affect cash flow. You don’t want to be one of those businesses that goes broke even while producing profits. Direct Cash Flow Technique Let’s start again with a simple example. Compared to the examples in the previous chapter, Chapter 15: The Bottom Line, this first illustration looks at the business from a completely different point of view; money coming in and money flowi...
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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.

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