Entrepreneurship

Mr. Bernstein

Managing Your Finances, pp 457-465June 11, 2013

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EntrepreneurshipMr. Bernstein

Pro Forma Cash Flow StatementBecomes a budget tool:

Must have a sales forecastMust include estimates of all expensesComparison with results highlights areas

where changes may need to be madeMust include entries for capital expensesHelpful in developing Pro Forma Balance Sheet

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EntrepreneurshipMr. Bernstein

Cash Flow Statement and BudgetingControlling costs: Variable vs. Fixed ExpensesAKA “marginal” and “sunk” costsAirlines: Example of High Fixed ExpensesLarge upfront costs, pure profit after reaching breakeven pointFarmer’s Market: Example of High Variable ExpensesLow upfront costs, profit from markup on each item

What type of expenses are favored by Startup Entrepreneurs?