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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.
- Winter '09