Bizness Branding Academy Presents The Financial Puzzle: Fitting the Pieces Together

The Financial Puzzle: Putting the Pieces Together

Bizness Branding Academy | Lady Bizness | GTCC SBC

For Your Information

•Please complete your registration forms •Please mute or silence cell phones•Please ask questions•Please introduce yourself & your company

Agenda

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An Overview of Financial Statements

What do they tell youThe Financial Statements• The Income Statement• The Balance Sheet• The Cash Flow Sheet

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Reasons People Fail

• FAILURE TO PLAN PROPERLY

• FAILURE TO MONITOR FINANCIAL POSITION

• FAILURE TO KNOW COSTS

• FAILURE TO PRICE PROPERLY

• FAILURE TO PLAN CASH FLOW

• FAILURE TO MANAGE GROWTH

• FAILURE TO CAREFULLY STRUCTURE DEBT

• FAILURE TO ESTABLISH GOOD BANKING RELATIONSHIP

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Reasons People Fail

• Plan to Reinvest Your Profits • Learn How to Structure Your

Bank Debt • Look for Outside Equity

What are YOUR Business Costs?

• Rent• Cable• Internet• Phone• Website• Business Cards• Flyers • Office Supplies• Insurance

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• Services • Gas • Travel • Hotels• Business Supplies• Advertisement • Marketing• Social Media

Accounts

The Income Statement

• Basic Income Statement Equation:• Sales Revenue – Expenses = Profits• Expense Categories: Cost of Goods

Sold, Operating Expenses, Interest Expense, Taxes

• Profit does NOT equal cash; profit is an accounting concept, not a substitute for a bank statement

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Income Statement

• Income statement• Profit and loss account• Profit and loss statement(P&L)• Revenue statement• Statement of financial performance• Earnings statement• Operating statement• Statement of operations

One of the financial statements of a company andshows the company’s REVENUES & EXPENSES duringa particular period.

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Multi-Step Method Income Statement

Gross Sales - Cost of Goods Sold = Gross Profit

Gross Profit – Operating Expenses = Operating Profit (Salaries/Wages, Payroll Taxes, Occupancy Expenses,

Advertising, Travel, Insurance, Utilities, Depreciation, etc.)

Operating Profit - Interest Expense =Earnings Before Taxes

Earnings Before Taxes -Income Taxes =Net Profit

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Balance Sheet

Basic Balance Sheet equation:Assets = Liabilities + Equity

Assets are broken into different types:• Current• Fixed• Other

Described in terms of ‘liquidity’– lose liquidity as move from top to bottom

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Liabilities

• Liabilities– What a business owes, financial obligations

• Current Liabilities– Items that must be paid within 12 months

• Long-Term Liabilities – Items that can be paid in more than 1 year

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Balance Sheet

Bizness Branding Academy | Lady Bizness | GTCC SBC

ASSETS• Current Assets – Cash, A/R, Inventory, Pre-paid expenses• Fixed Assets – Land, Building, Equipment, Fixtures (less

depreciation)• Other Assets – intangibles (good will, patent, customer list, etc.)

LIABILITIES• Current Liabilities – A/P, Notes Payable, Current Por. L/T Debt• Long-Term Liabilities – L/T Loans, Mortgages, etc.

EQUITY• Owner’s Equity• Retained Earnings• Additional Paid in Capital

.

Cash Flow Statement

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• Shows how cash enters and exits via business operations. Cash flow statements report a company’s inflows and outflows of cash. This is important because a company needs to have enough cash on hand to pay its expenses and purchase assets.

• While an income statement can tell you whether a company made a profit, a cash flow statement can tell you whether the company generated cash.

Cash Flow

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• Cash Flows from Assets• Cash Flows from Operations• Changes in Operating Working Capital• Changes in Long-Term Assets

• Cash Flows from Financing• Increase Debt• Increase Equity• Pay Interest/Dividends• Decrease Debt (pay it off)• Decrease Equity (company buys back stock)

Bizness Branding Academy | Lady Bizness | GTCC SBC

AssetsCash 375Stocks/Bonds 20,000Real Estate142,000Autos 25,000Other 35,000

Total Assets 222,375

LiabilitiesNotes Payable 7,500Installment14,200 AutoInstallment15,000 OtherMortgage97,000Unpaid Taxes 750

Total Liabilities 134,450Net Worth

$87,925Total liabilities & Net worth 222,375

Personal Financial Statement

The Financial Puzzle

Chisa D. Pennix-Brown, MBA Info@LadyBizness.com

GTCC Small Business Center336.334.4822 x 62001– Greensboro336.454.1126 x 62001– High Point

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