Embed Size (px)
DESCRIPTION
This is a refresher for an entrepreneur who lacks complete knowledge and confidence in financial and cash management. These are mostly stock and common knowledge
Citation preview
Financial and Cash Management for Entrepreneurs
Lecture for entrepreneurship students at the Ateneo
Graduate School of Businesss
CASH IS KING
The gravest mistake that an entrepreneur can make is to
run out of cash
Cash
Problem of most start-ups
…Its not the capital, but lack of sufficient liquidity to support the business at the initial stages….
Sources of funds at the start-up stage:
Savings Relatives and friends Credit cards Informal often usurious lenders Suppliers (rarely)BANKS DO NOT LEND TO START-
UPS!
Must have for a start-up enterprise:
MVP Sufficient cash flow Sufficient profits/margins Large enough number of
customers
THE TEST OF FEASIBILITY
Break even analysis
Short cut:
Fixed cost (Plus profit and taxes)/ gross profit rate = break even number of units.
Break even sales: break even number of units x selling price. (Factor in the vat or grt)
Break even point
Du Pont Analysis
Return of Investment = Net Income divided by Total Stockholders Equity:
Efficiency= Net Income/Total Sales x
Turn-over= Total Sales/Total Assets x
Leverage = Total Assets/Total Stockholders Equity
Tagalog version of Du Pont
Patong
Paikot
Laway
Other financial ratios
Liquidity ratios Profitability ratios Leverage ratios
Financial statements
Statement of conditions
Cash flow statements
Balanced statement of conditions
Financial statements
Guides on financial statement evaluation/due diligence It is as of; as snapshot Examine the status of inventory as to
whether it is current or saleable; The manner of recognizing income,
expenses and inventory must be consistent and approved by management
Integrithy on the part of accountant/controller
For financial projections: The financials must support the strategic
plans, as capex, spend for advertising; The sources of funds must be specified: bank loans, new equity, retained earnings; The assumptions for sales projections
must come from market research, from thorough micromarket, external opportunity and competitive analysis
Advanced tools:
Discounted Cash Flow Analysis Net Present Value IRR
DCF FORMULA
Business valuation
Replacement cost approach
Market approach
Capitalized income approach
Acknowledgement:
The pictures and graphs are from google images;
The ideas are common stock knowledge
from finance management. This is a review of basic finance
and cash management concepts
