THE BUSINESS PLAN - APPENDIX
2
FINANCIAL MANAGEMENT
1. Income Projection Statement
 | Instructions for Income Projection
Statement
|
2. Balance Sheet
| Instructions for Balance Sheet
|
3. Monthly Cash Flow Projection
| Instructions for Monthly Cash Flow
Projection
|
4. Information Resources
_________________________________________________________________
INCOME PROJECTION STATEMENT
Industry J F M A M J J
A S O N D Annual Annual%
total %
|
Total net sales (revenues)
|
Costs of sales
|
Gross profit
|
Gross profit margin
| | | |
|
Controllable expenses
|
Salaries/wages
|
Payroll expenses
|
Legal/accounting
|
Advertising
|
Automobile
|
Office supplies
|
Dues/Subscriptions
|
Utilities
|
Miscellaneous
|
Total controllable
|
expenses
| | | | | | | | | | | |
|
Fixed expenses
|
Rent
|
Depreciation
|
Utilities
|
Insurance
|
License/permits
|
Loan payments
|
Miscellaneous
|
Total fixed expenses
| | | | | | | | |
Total expenses
|
Net profit (loss)
|
before taxes
| |
Taxes
Net profit (loss) after
taxes
_________________________________________________________________
INSTRUCTIONS FOR INCOME PROJECTIONS
STATEMENT
The income projections (profit and loss)
statement is valuable as both a planning tool and a key management
tool to help control business operations. It enables the owner/manager
to develop a preview of the amount of income generated each month
and for the business year, based on reasonable predictions of
monthly levels of sales, costs and expenses.
As monthly projections are developed
and entered into the income projections statement, they can serve
as definite goals for controlling the business operation. As actual
operating results become known each month, they should be recorded
for comparison with the monthly projections. A completed income
statement allows the owner/manager to compare actual figures with
monthly projections and to take steps to correct any problems.
Industry Percentage
In the industry percentage column, enter
the percentages of total
sales (revenues) that are standard for
your industry, which are
derived by dividing
Costs/expenses items x 100%
___________________________
total net sales
These percentages can be obtained from
various sources, such as trade associations, accountants or banks.
The reference librarian in your nearest public library can refer
you to documents that contain the percentage figures, for example,
Robert Morris Associates' Annual Statement Studies (One Liberty
Place, Philadelphia, PA 19103).
Industry figures serve as a useful bench
mark against which to compare cost and expense estimates that
you develop for your firm. Compare the figures in the industry
percentage column to those in the annual percentage column.
Total Net Sales (Revenues)
Determine the total number of units
of products or services you realistically expect to sell each
month in each department at the prices you expect to get. Use
this step to create the projections to review your pricing practices.
|
What returns, allowances and markdowns
can be expected?
|
Exclude any revenue that is not
strictly related to the business.
| |
Cost of Sales
The key to calculating your cost of
sales is that you do not overlook any costs that you have incurred.
Calculate cost of sales of all products and services used to determine
total net sales. Where inventory is involved, do not overlook
transportation costs. Also include any direct labor.
Gross Profit
Subtract the total cost of sales from
the total net sales to obtain gross profit.
Gross Profit Margin
The gross profit is expressed as a percentage
of total sales
(revenues). It is calculated by dividing
gross profits
______________
total net sales
Controllable (also known as Variable) Expenses
|
Salary expenses-Base pay plus overtime.
|
Payroll expenses-Include paid vacations,
sick leave, health insurance, unemployment insurance and social
security taxes.
|
Outside services-Include costs of
subcontracts, overflow work and special or one-time services.
|
Supplies-Services and items purchased
for use in the business.
|
Repair and maintenance-Regular maintenance
and repair, including periodic large expenditures such as painting.
|
Advertising-Include desired sales
volume and classified directory advertising expenses.
|
Car delivery and travel-Include
charges if personal car is used in business, including parking,
tools, buying trips, etc.
|
Accounting and legal-Outside professional
services.
| | | | | | | |
Fixed Expenses
|
Rent-List only real estate used
in business.
|
Depreciation-Amortization of capital
assets.
|
Utilities-Water, heat, light, etc.
|
Insurance-Fire or liability on property
or products.
| | | |
|
Include workers' compensation.
|
|
Loan repayments-Interest on outstanding
loans.
|
Miscellaneous-Unspecified; small
expenditures without separate accounts.
| |
Net Profit (loss)
(before taxes) - Subtract total
expenses from gross profit.
Taxes - Include inventory
and sales tax, excise
tax, real estate
tax, etc.
Net Profit (loss)
(after taxes) - Subtract taxes
from net profit (before
taxes)
Annual Total - For each of the
sales and expense items in
your income projection
statement, add all
the monthly figures
across the table and
put the result
in the annual total column.
Annual Percentage - Calculate the
annual percentage by dividing
Annual total
x 100%
___________________
total
net sales
| Compare this figure to the industry
percentage in the first column.
|
_________________________________________________________________
Next Topic: BALANCE SHEET
[ICBS Knowledgebase Home]
[ICBS Home]
