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The financial data is always incorporated at the back of the business plan. This does not mean that it is of any less importance than the strategies that are put up in the start of the business plan. For the matter of fact, investors tend to pay keen attention to the charts, tables, formulas and spreadsheets in this financial section before making a valuable investment in the company since it states the condition of the company. Financial statement comes in three:
Merging all of these together, you get an accurate depiction of the company’s current value along with its capability to pay the expenses today and earn a profit that will help it move forward. Income Statement An income statement demonstrates whether you are making any money from your business or not. It adds up all of your business revenue through the sales and other sources, subtracts all your expenses and finally depicts a total net income amount. In other words, this amount is known as the bottom line. Income statements are known with various other names such as
However, the idea of an income statement is very simple – if expenses are subtracted from the income, the amount that is left is the profit amount your business made. To calculate the income statement, following information is needed
Balance Sheet As the income sheet depicts what you are earning, balance sheets depict what is the overall worth of your company. An investor can understand through balance sheet whether the company owns any valuable assets that are not listed in the income statement or whether the company is profitable but owes heavy debts. In other words, balance sheet adds everything that the business owns, subtracts all that the business owes and lastly states the difference as the net worth of the business. However, accountants term them differently. The things you own are termed as assets, the that you owe money to are termed as liabilities and the net worth is termed as equity. Balance sheet portrays the condition of the business on any given date. Moreover, it shows how and where exactly the financial position of the company changed. Tracking changes in your equity numbers will give you an idea about the fact whether you are getting rich or poor. Cash flow statement As the name suggests, cash flow statements displays the flow of cash over a period of time (a month, a quarter or a year) and calculates the total amount of cash you are currently left at the moment. Cash flow statement is also termed as the statement of changes in the financial position of the company. It also analyses the changes that have occurred in the balance sheet. The cash flow statement consists of two parts:
If you discover that the business is facing some financial troubles, you can check the cash flow statement that gives you a brief about the flow of cash in and out of the company. To overcome the financial trouble that your company is facing, you can opt for Cash Flow Finance. There are various firm that lend money to businesses that are facing financial troubles at a very low interest rate than that of the banks. You can look up on Google for such firms and seek guidance.
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