Iraida Juna B.

Estacio
SHS TEACHER III
 FINANCIAL PLAN
FINANCIAL STATEMENT – A FIRM’S
INCOME STATEMENT, BALANCE SHEETS,
AND CASH FLOW STATEMENT
COST OF GOOD SOLD – THE COST OF
PRODUCING OR ACQUIRING GOODS OR
SERVICES TO BE SOLD BY A FIRM.
GROSS PROFITS – SALES LESS THE COST
OF GOOD SOLD
 INCOME STATEMENT
OPERATING EXPENSES – COST RELATED TO
MARKETING AND SELLING A FIRM’S PRODUCT OR
SERVICE, GENERAL AND ADMINISTRATIVE
EXPENSES, AND DEPRECIATION.

OPERATING PROFITS – EARNINGS AFTER

OPERATING EXPENSES BUT BEFORE INTEREST AND
TAXES ARE PAID.

INTEREST EXPENSE – THE COST OF BORROWED

MONEY
 INCOME STATEMENT
PROFITS BEFORE TAXES (TAXABLE PROFITS ) –
EARNINGS AFTER OPERATING EXPENSES AND
INTEREST EXPENSES BUT BEFORE TAX.

NET PROFITS – EARNINGS THAT MAY BE

DISTRIBUTED TO THE OWNERS OR REINVESTED IN
THE COMPANY

DEPRECIATION EXPENSE – THE COST OF FIRM’S

BUILDING AND EQUIPMENT, ALLOCATED OVER
THE ASSET’S USEFUL LIFE.
 INCOME STATEMENT
DIVIDEND – A DISTRIBUTION OF A FIRM’S
PROFITS TO THE OWNERS.

PROFIT MARGINS – PROFITS AS A PERCENTAGE

OF SALES.

CURRENT ASSETS (WORKING CAPITAL) –

ASSETS THAT CAN BE CONVERTED INTO CASH
RELATIVELY QUICKLY.
 BALANCE SHEET
CASH – MONEY IN THE BANK AND MAY INCLUDE A
SECURITY THAT CAN BE SOLD VERY QUICKLY,
SUCH AS A GOVERNMENT SECURITY.
ACCOUNTS RECEIVABLE – THE AMOUNT OF CREDIT
EXTENDED TO CUSTOMERS THAT IS CURRENTLY
OUTSTANDING.

INVENTORY – A FIRM’S RAW MATERIALS AND

PRODUCTS HELD IN ANTICIPATION OF EVENTUAL
SALE.
 BALANCE SHEET
WORKING CAPITAL CYCLE – THE PROCESS OF
CONVERTING INVENTORY TO CASH.

FIXED ASSET (PROPERTY, PLANT AND

EQUIPEMENT ,PPE) – PHYSICAL ASSETS THAT
WILL BE USED IN THE BUSINESS FOR
MORETHAN ONE YEAR, SUCH AS EQUIPMENT,
BUILDINGS AND LAND.

DEPRECIABLE ASSETS – ASSETS WHOSE VALUE

DECLINES, OR DEPRECIATES, OVER TIME.
 BALANCE SHEET
GROSS FIXED ASSETS – DEPRECIABLE ASSETS
AT THEIR ORIGINAL COST, BEFORE ANY
DEPRECIATION EXPENSE HAS BEEN TAKEN.
ACCUMULATED DEPRECIATION – TOTAL
(COMULATIVE) DEPRECIATION EXPENSE TAKEN
OVER AN ASSET’S LIFE.
NET FIXED ASSETS – GROSS FIXED ASSETS LESS
ACCUMULATED DEPRECIATION.
OTHER ASSETS – INTANGIBLE ASSETS SUCH AS
PATENTS, COPYRIGHTS, AND GOODWILL.
 BALANCE SHEET
DEBT – IS FINANCING PROVIDED BY A
CREDITOR.
CURRENT DEBT (SHORT-TERM LIABILITIES) IS
BORROWED MONEY THAT MUST BE REPAID
WITHIN 12 MONTHS. SOURCES OF CURRENT
DEBT MAY BE CLASSIFIED AS FOLLOWS:
 ACCOUNTS PAYABLE (TRADE CREDIT) –
REPRESENT CREDIT EXTENDED BY SUPPLIERS
TO FIRM WHEN IT PURCHASES INVENTORY.
 ACCRUED EXPENSES – OPERATING EXPENSES
THAT HAVE BEEN INCURRED BUT NOT PAID.
 SHORT-TERM NOTES – AGREEMENTS TO REPAY
CASH AMOUNTS BORROWED FROM BANKS OR
OTHER LENDING SOURCES WITHIN 12 MONTHS
OR LESS.
 LONG TERM DEBT – LOANS FROM BANKS OR
OTHER SOURCES WITH REPAYMENT TERMS OF
MORETHAN 12 MONTHS.
 LONG-TERM NOTES – AGREEMENTS TO REPAY
CASH AMOUNTS BORROWED FROM BANKS OR
OTHER LENDING SOURCES, PLUS INTEREST , FOR
PERIOD LONGER THAN 12 MONTHS.
 MORTGAGE – A LONG TERM LOAN TO
PURCHASE A BUILDING OR LAND.
 OWNER’S EQUITY – OWNERS’
INVESTMENT IN A COMPANY PLUS
COMMULATIVE NET PROFITS RETAINED
IN THE FIRM.
 COMMON STOCK – STOCK SHARES
THAT REPRESENT OWNERSHIP IN A
CORPORATION
“IF IT WASN’T HARD EVERYONE
WOULD DO IT. IT’S THE HARD
THAT MAKES IT GREAT”

THANK YOU !