Part 2: Preparing A Financial Plan

The Projected Balance Sheet

The balance sheet is a snapshot of the financial position of a business at a particular point in time - as opposed to over a period of time. It shows what the company owns, what it owes and its net worth on the date when the balance sheet was prepared. Using a series of projected balance sheets, or "snapshots", the reader can determine the business's worth over a period of time.

Assumptions to balance sheet projections

When you prepare this statement, consider the assumptions underlying your financial plans and their effect on assets, liabilities and owners' and shareholders' equity (your investment plus accumulated profits).

• Do accounts receivable reflect your current credit policy? For example, if your terms are net 30 days, are your customers paying within 30 days? Should you be allowing for 45 days in your plan to reflect real experience?

• Do you have enough inventory to fill planned orders?

• Have you adjusted figures for fixed assets and accumulated depreciation for reflect any plans for adding equipment or leaseholds?

• For long term debt, such as mortgages or debentures, what is the current portion of the principle payable each month?

• Do trade payables reflect your established arrangements with suppliers? For example, do you usually pay within 35 days?

• Have retained earnings been adjusted monthly to reflect the planned profits or losses carried forward from the income statement?

• Are there any "hidden values" in your balance sheet? Be sure to inform your banker of market values of assets such as land, stocks, bonds and licenses.

Accounts Receivable

Accounts receivable is money owed to the business by customers who purchase goods on credit.

Name of Debtors Total amount Current amount 31 - 60 days 61-90 days Over 90 days
Total amount          
Percentage 100% % % % %

Accounts payable

Accounts payable is money owed to suppliers for purchases on credit. Accounts payable also includes money owed for other expenses like utilities or taxes.

Name of Debtors Total amount Current amount 31 - 60 days 61-90 days Over 90 days
Total amount          
Percentage 100% % % % %

Current portion of long term debt

The current portion of long term debt consists of the amounts due on long and medium term debt over the next 12 months.

Mortgages and notes:

Loans from shareholders:  
Other loans:


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