...Personal Budget, Balance Sheet, and Cash Flow Statement ACC/547 January 21, 2013 Personal Budget, Balance Sheet, and Cash Flow Statement Memo: Some people save less than their financial capacity is and this fact leads them to serious financial problems and lack of financial security. Therefore, successful money management should be a life decision undertaken at the early adulthood in order to plan money distribution effectively that would eventually provide financial prosperity. The purpose of this memo is to analyze my client's financial situation, their personal budget, balance sheet, and cash flow statement and give them recommendations and support for improving their financial situation. My client, John Morgan is a 49 year old engineer who is married and has two dependents. Kate Morgan, John's spouse is a 43 year old teacher and the mother of those two children. My client and his family live in a gorgeous 4-bedroom house, in a nice neighborhood with a good school district. Although, the family leads a peaceful life their financial situation is in a great disarray. Though, John and Kate make together close to $140,000 a year they don't have much of a life savings, or emergency fund, and too much credit card debts. In order to help them understand the significance of saving more money instead of spending it, personal balance sheet, cash flow statement, and budget need to be prepared. Personal balance sheet reflects their assets and liabilities and determines...
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...Personal Budget, Balance Sheet, and Cash Flow Statement Personal Budget, Balance Sheet, and Cash Flow Statement Ann and Jan Stone are married and have no kids. Ann has received her Bachelor’s degree, MBA and now getting her Master’s of Accounting. Jan has not finished his Bachelor’s degree in International business. Jan is a director of revenue in a hotel industry and makes about $89,000 a year. Ann works for Credit Union as a Branch Manager and makes $38,000. Ann is 27 years old and Jan is 30. Major concerns that the couple has is debt. Jan has about $52,000 in credit card debt and he is paying high 20% interest on them. Ann has student loan totaling $60,000 and growing. Another concern the couple has is not having enough cash flow to invest in their small house upgrades. Another common goal this couple has is to save money and successfully invest. Jan and Ann want to have their own business in the future, but have no cash flow to start a business (Primiano, 2012). Following are Ann and Jan Stone personal budget, cash flow and budget. Monthly budget Financial goals: pay off debt, increase emergency funds Budgeted Amounts Actual Amounts Variance (dollars) (percent) Projected Inflows (income) Salary 10,800 100 Projected Outflows Emergency fund savings 600 6% 600 - Savings for vacation 200 2% 200 - Total savings 800 7% 800 - Fixed Expenses Health insurance 280 3% 280 - Mortgage 1200 11% 1200 - ...
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...project. LO2 Understand the implications of finance as a resource within a business P2.1 Analyse the costs of different sources of finance for your chosen business. P2.2 Explain the importance of financial planning to the business organisation you have chosen. P2.3 Asses the information needs of different decision makers in your chosen business P2.4 Explain the impact of finance on the financial statements of your chosen business LO3 Be able to make financial decisions based on financial information P3.1 Analyse budgets and make appropriate decisions from the case study P3.2 Explain the calculation of unit costs and make pricing decisions using relevant information P3.3 Asses the viability of a project using at least two investment appraisal techniques LO4 Be able to evaluate the financial performance of a business P4.1 Discuss the main financial statements P4.2 Compare appropriate formats of financial statements for different types of business P4.3 Interpret financial statement using appropriate ratios and comparisons, both internal and external P 1.1 To start a new business you need money, to invest , acquisition equipment and make profit. After a period of evaluation the business I choose to...
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...Three CHEF’S TOOLKIT INC. Cash Budgeting 企业现金需求分析和预算 1 Case Explanation: cash budgeting History: Jefferys, invention of Pasta server Production: data Marketing: data Financial Implication: data Data: Composition of Canadian Households; Balance sheet(July 15, 1994) Jefferys Personal balance sheet (July 15, 1994) Production Schedule in Unit 2 Study Questions Q1：What is the Case? (1)event?(2)Companies?(3)Persons?(4)Time? What is the problem?(5)Why is the problem?(6)Possible Solutions? Q2：Analyses (1) Background of Chef’s Toolkit Inc. ? (2) CV of managers? (3)What is the invention? (4)Company Size-up: production, marketing, and financial status? Q3：Budgeting(monthly sales : 10,000; 5,000; 30,000): production schedule, cash budget, Pro-forma income statement, Pro-forma balance sheet Q4：How can the firm avoid loss? Break –even calculation? Q5: How much money do the firm need for financing? Should Dale Raid invest? What are his risks? 3 Case Summary（案例） M r. P eter Jeffery M r. Dale Reid Private Investor President of 风险投资家 Chef’s Toolkit Inc. Obtain funds to start manufacturing and marketing a new pasta server. 4 Case Summary（案例） Sell Produce Chef’s Toolkit Inc. Pasta Server Chef or Housewife 意大利通心粉 5 Objectives（目标） Produce projected income statements, balance sheets, and cash flow statement up to July 31, 1995. 预计财务报告 Obtain fund from Dale Reid. 6 Why Budget? 预算 If you know where...
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...Case Three CHEF’S TOOLKIT INC. Cash Budgeting 企业现金需求分析和预算 1 Case Explanation: cash budgeting History: Jefferys, invention of Pasta server Production: data Marketing: data Financial Implication: data Data: Composition of Canadian Households; Balance sheet(July 15, 1994) Jefferys Personal balance sheet (July 15, 1994) Production Schedule in Unit 2 Study Questions Q1：What is the Case? (1)event?(2)Companies?(3)Persons?(4)Time? What is the problem?(5)Why is the problem?(6)Possible Solutions? Q2：Analyses (1) Background of Chef’s Toolkit Inc. ? (2) CV of managers? (3)What is the invention? (4)Company Size-up: production, marketing, and financial status? Q3：Budgeting(monthly sales : 10,000; 5,000; 30,000): production schedule, cash budget, Pro-forma income statement, Pro-forma balance sheet Q4：How can the firm avoid loss? Break –even calculation? Q5: How much money do the firm need for financing? Should Dale Raid invest? What are his risks? 3 Case Summary（案例） M r. P eter Jeffery President of Chef’s Toolkit Inc. M r. Dale Reid Private Investor 风险投资家 Obtain funds to start manufacturing and marketing a new pasta server. 4 Case Summary（案例） Produce Sell Chef’s Toolkit Inc. Pasta Server 意大利通心粉 Chef or Housewife 5 Objectives（目标） Produce projected income statements, balance sheets, and cash flow statement up to July 31, 1995. 预计财务报告 Obtain fund from Dale Reid. 6 Why Budget? 预算 If you know where you are going...
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...Chapter 4 Cash Flow and Financial Planning ( Instructor’s Resources Overview This chapter introduces the student to the financial planning process, with the emphasis on short-term (operating) financial planning and its two key components: cash planning and profit planning. Cash planning requires preparation of the cash budget, while profit planning involves preparation of a pro forma income statement and balance sheet. The text illustrates through example how these budgets and statements are developed. The weaknesses of the simplified approaches (judgmental and percent-of-sales methods) of pro forma statement preparation are outlined. The distinction between operating cash flow and free cash flow is presented and discussed. Current tax law regarding the depreciation of assets and the effect on cash flow are also described. The firm’s cash flow is analyzed through classification of sources and uses of cash. The student is guided in a step-by-step preparation of the statement of cash flows and the interpretation of this statement. This chapter ties in every person’s need to set goals, estimate income, and budget expenditures to the firm’s need to effectively engage in these activities. ( Answers to Review Questions 1. The first four classes of property specified by the MACRS system categorized by the length of the depreciation (recovery) period are called 3-, 5-, 7-, and 10-years property: |Recovery Period |Definition ...
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...creating personal financial statements, and (3) creating and implementing a budget. (p. 36) 2. What are the benefits of an organized system of financial records and documents? An organized system of financial records provides a basis for: (1) handling daily business activities, such as bill paying; (2) planning and measuring financial progress; (3) completing required tax reports; (4) making effective investment decisions; and (5) determining available resources for current and future spending. (pp. 36-37) 3. For each of the following records, check the column to indicate the length of time the item should be kept. “Short-time period refers” to less than five years. |Document |Short time period |Longer-time period | |Credit card statements |X | | |Mortgage documents | |X | |Receipts for furniture, clothing |X | | |Retirement account information | |X | |Will | |X | Concept Check 2-2 (p. 44) 1. What are the main purposes of personal financial...
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...MANAGEMENT 2 FINANCIAL PLANNING PROCCES Reported by: Corina V. Lalaguna Submitted to: Atty. Celso D. Beneloga Ph.D, CPA Topic Outline: * The Financial Planning Process * Cash Planning: Cash Budgets * Profit Planning: Pro Forma Statements * Preparing the Pro Forma Income Statement * Preparing the pro Forma Balance Sheet * Debt/Interest Planning Problem * The Percentage of Sales Method-A Formula Approah References: Principles of Managerial Finance By Lawrence Gittman Practical Financial Management By William R. Lasher Financial Planning Projecting a company’s financial statements into the future. Financial planning is part of a broader activity known as business planning. Financial planning is an important aspect of the firm’s operations because it provides road maps for guiding, coordinating and controlling the firm’s actions to achieve its objectives. Two key aspects of the financial planning process are cash planning and profit planning. Financial Planning Process Planning that begins with long-term, or strategic, financial plans that in turn guide the formulation of short term, or operating, plans and budgets. Cash planning involves preparation of the firm’s cash budget. Profit planning involves preparation of pro forma statements. Long term or strategic financial plans lay out a company’s planned financial actions and the anticipated impact of those actions over periods ranging from 2 to 10 years. Those long term...
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...* How does a personal cash flow statement help you organize your finances? * What was the most interesting thing you learned about completing this worksheet? * Did this worksheet provide you with any ideas about how you may want to change your budget (how much you are spending, saving, or reducing your debt)? The personal cash flow statement is a categorized sheet that helps us identify the relationship between income and expenses. Calculating the income is an easy process, all you need to do, is add up the primary sources , like the monthly salary and the extra income like scholarship, gifts, but calculating the expenses is much harder because the total amount of the income, will be spent in so many different ways. This sheet will help you record the outflows over the same period of time, from the essential expenses to the unnecessary ones. Completing the sheet will make you feel organized and able to count all the expenses no matter how much money you spent on little purchases, and it make you go over the bank statements, the life and health insurances, the credit cards statement and bills, the ATM machine receipts, then get it all together and file it in order. This way, the financial situation will be organized, and you will be able to determine the net worth, how much you own and how much you owe, by the end of the month if you have money left over or if you are spending more money than you can afford . You will know by completing...
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...Abstract This is a research paper about financial budgets. This research paper talks about a management director would establish policies and system for a business and/or organization. This research paper will help to explain the different style of budgets, budget cycles and the guidelines rules for set up a financial budget for a business and/or organization. Unit 3 Individual Project Introduction This is a report from the management director to establish policies and systems for the new business, I Can Business Incorporated (ICBI). This report will be delivered to the board of directors of ICBI. This report will describe what a financial reporting system is and explain how management for ICBI should use an activity based budget instead of an operating budget. This report also gives examples of budget guidelines for ICBI. Describe the meaning and the components of a financial reporting system Financial reporting is the process of compiling statements that shows a glimpse of an organization’s financial “health” or status to management, investors and the government. There are four basic reports that are included in a financial report. There is a balance sheet, an income statement or sometimes called the profit & loss statement, a cash flow statement and a statement of shareholder’s equity. The balance sheet gives a detailed picture of the financial condition of a business at a specific period of time. The balance sheet tells how the business financed what it owns and...
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...sources or internal sources. TASK ONE 1. SOURCES OF FINANCE AVAILABLE TO A BUSINESS Finance can be arranged from internal sources or external sources. External sources of finance are funds that come from outside the business. Here the business are getting loans from individuals or institutions that do have business relations directly e.g. banks. 1.1 Internal sources The main internal sources of finance for a start-up are as follows: Personal sources These are the most important sources of finance for a start-up, and we deal with them in more detail in a later section. As mentioned earlier, most start-ups make use of the personal financial arrangements of the founder. This can be personal savings or other cash balances that have been accumulated. It can be personal debt facilities which are made available to the business. It can also simply be the found working for nothing! The following notes explain these in a little more detail. * Savings and other “nest-eggs” An entrepreneur will often invest personal cash balances into a start-up. This is a cheap form of finance and it is readily available. Often the decision to start a business is prompted by a change in the...
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... is a startup that seeks a venture capitalist for additional funding to start its operations. We have constructed a complete master budgeting system for the company, starting from sales budget to projected balance sheet. We have found that the company will need $85,000 for smooth functioning including expansion of production facility. Based on the above mentioned figures and an analysis of the master budget, we suggest that the company should go for 50% ownership stake and receive $75,000 from Mr. Cohen. By the tenth month i.e. May 1990, however, they will need cash of $8,663 to fund the purchase of two-cavity production mould. Nevertheless, the decrease in production costs due to the new mould increases the profitability as well as cash position of the company. Case Introduction: Jointly owned by Ken and Mary Lanzetta, Gourmet Gadgets Inc. was founded in May 1989 to design, develop, manufacture and market the unique household utensil. The Lanzettas have already patented their invention in Canada and United States. They have also applied for patent registration in Europe. Initially, Gourmet Gadgets plans to market its products in Canada, with expansion plans for US, and Europe after the registration of patent. The Lanzettas have already financed long term assets and patent through personal loans, however, they need additional funding in order to kick start production and pay the dues on production mould. They are unable to get any further debt from bank, hence, they decided...
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...Personal Finance: Turning Money into Wealth, 5e (Keown) Chapter 2 Measuring Your Financial Health and Making a Plan 2.1 Using a Balance Sheet to Measure Your Wealth 1) Insolvency results from taking in more than you consume financially. Answer: FALSE Diff: 2 Topic: Net Worth 2) In some cases insolvency can lead to bankruptcy. Answer: TRUE Diff: 3 Topic: Net Worth 3) Having negative net income will not affect your net worth. Answer: FALSE Diff: 3 Topic: Net Worth 4) The house that you are leasing from the landlord is a good example of a tangible asset on your balance sheet. Answer: FALSE Diff: 2 Topic: Assets 5) Current liabilities are those that can typically be paid off in full within twelve months. Answer: TRUE Diff: 1 Topic: Liabilities 6) To determine your level of net worth, subtract your liabilities from your positive net equity. Answer: FALSE Diff: 2 Topic: Net Worth 7) Before you can hope to achieve your financial goals, you will need to first measure your current financial health and develop a plan and a budget. Answer: TRUE Diff: 1 Topic: Nothing Happens Without a Plan 8) When measuring your current financial condition it is important to create A) positive net worth. B) a personal balance sheet. C) an income statement. D) positive net income. E) both B and C are required. Answer: E Diff: 2 Topic: Balance Sheet 9) Assets that you purchase for the purpose of accumulating wealth to satisfy your...
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...Financial Statements Paper - Part I Bridgette Toutant ACC/497 March 31, 2014 Ken Goranson Financial Statements Paper - Part I A financial statement offers users, such as management, board of directors, and potential investors, information related to the company’s activities and it gives them the ability to make decisions in relation to the company. A certain amount of urgency should exist when providing this useful information because the financial statements are considered to be a powerful and commonly used tool. The most commonly used of all the financial statements would be the income statement because it can be used to examine the profits and losses of a company. Many users do also find that the balance sheets and cash flow statements just as useful in the decision making process. The following will include the analysis of Home Depot’s annual report by examining the income statement, balance sheet, and cash flow statement and looking at how they can help with business decisions. The Consolidated Statements of Earnings, the income statement, tells the user about the sales and expenses of Home Deport during each fiscal year. Analyzing the income statement for Home Depot, it appears that the company had strong sales numbers of over $71 billion each year. Even though the company was able to keep sales over $71 billion, it is noticeable that the sales and gross profits declined from 2007 to 2009 (The Home Depot, 2009). It also seems that an increase in expenses...
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...Quiz ------------------------------------------------- Top of Form Note: It is recommended that you save your response as you complete each question. | Question 1 (4 points) The ____ shows the results of a firm's operations over a period of time, usually one year. Question 1 options: | income statement | | balance sheet | | statement of cash flow | | statement of financial position | Save Question 2 (4 points) Operating expenses include Question 2 options: | marketing-related expenses. | | the cost for independent dealers to prepare for the distribution of the product. | | interest on all loans. | | income taxes. | Save Question 3 (4 points) For the opening day of The Lemonade Kids, MacKenzie and John bought $40 of “premium pink lemonade mix” and paper cups, which constituted their Question 3 options: | cash balance. | | fixed assets. | | inventory. | | cost of goods sold. | Save Question 4 (4 points) After their first day of their The Lemonade Kids, MacKenzie and John’s profits were $45. However their cash increased by only $30 because their _____ also increased. Question 4 options: | debt | | inventory | | accounts payable | | accounts receivable | Save Question 5 (4 points) Raw materials and products held by the firm for sale constitute _____. Question 5 options: | accounts payable. | | accounts receivable. | | cost of goods. | | inventories. | Save Question...
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