Link type in the Business Plan Financial in a few clicks

Aug 6th, 2022
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How to link type in the Business Plan Financial

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Just like you need air to breathe, your company needs cash flow to stay in business. Many small business owners avoid managing the money part of their business. This could be because: It may seem difficult to understand Financial statements look intimidating Its more fun to work on marketing They have hired a bookkeeper Or maybe they are too busy Its important to pause and look at your numbers often. Your financials tell you about the health of your company. If you are feeling intimidated by financials this video will help you master 3 key concepts. Our first concept is Cashflow: It is important to know when the money comes in and how its being spent. You want to ensure your bill collection and payments are on time. Doing this will help you stay on track and plan for emergencies. If you run a seasonal business like a landscaping company, your cash inflow for the entire year may happen in just a few short months. You will need to plan for costs such as rent and utilities when busin

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The balance sheet shows the cumulative effect of the income statement over time. It is just like your bank balance. Your bank balance is the sum of all the deposits and withdrawals you have made. When the company earns money and keeps it, it gets added to the balance sheet.
The concept of retained earnings is the centerpiece that links the three financial statements together. The retained earnings balance in the current period is equal to the prior periods retained earnings balance plus net income minus any dividends issued to shareholders in the current period.
The major links in the three financial statements are: Net income from the IS links to the BS (retained earnings) and the CFS operating section. Property, plant and equipment in the BS creates depreciation in the IS and the CFS operating section, and also creates capital expenditure in the CFS investing section.
A financial plan is an integral part of an overall business plan, ensuring financial objectives align with overall business goals. It typically contains a description of the business, financial statements, personnel plan, risk analysis and relevant key performance indicators (KPIs) and ratios.
Financing events such as issuing debt affect all three statements in the following way: the interest expense appears on the income statement, the principal amount of debt owed sits on the balance sheet, and the change in the principal amount owed is reflected on the cash from financing section of the cash flow
The income statement, balance sheet, and cash flow all connect to create the three-statement model. How? Changes in current assets and liabilities on the balance sheet are reflected in the revenues and expenses that you see on the income statement.

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