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Financial Plan - PowerPoint PPT Presentation


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Financial Plan. Company profitability {Income statement} Affects viability of the business Affects financability of the venture How much is the company worth {Balance sheet} Can you pay your bills? {Cash Flow} Timing of the inflows and outflows Where to get the money from {Fund raising}

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Financial Plan


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Presentation Transcript
financial plan
Financial Plan
  • Company profitability {Income statement}
    • Affects viability of the business
    • Affects financability of the venture
  • How much is the company worth {Balance sheet}
  • Can you pay your bills? {Cash Flow}
    • Timing of the inflows and outflows
  • Where to get the money from {Fund raising}
    • Next financable milestone
    • Financing requirements for the opportunity
    • Sources of financing
    • Plan to obtain financing

96.503 Issues in Telecommunications

financial plan cont
Financial Plan (cont)
  • Income statement reflects the viability (profitability) of the business
  • Cash flow focus on the timing of the inflows and outflows
  • Balance sheet reflects current value and solvency of the business
  • Information required:
    • For past years
    • Budget for coming years (coming 5 years or at least for while the required fund last )
    • In more details (monthly or quarterly for coming year)
  • Report assumptions for (interest, tax,.. )

96.503 Issues in Telecommunications

income statement
Income Statement
  • Gross revenue on Sales
  • Cost of sales
  • SG&A (incl. Marketing), R&D
  • Depreciation
  • Non-operating income
  • Non-operating expense
  • Taxes

Gross Profit

Operating Profit

Profit before Tax

Net profit

96.503 Issues in Telecommunications

balance sheet
Balance Sheet
  • Current assets
      • Cash, short term investments, account receivable, inventory, prepaid expenses
  • Fixed assets
      • Land, building, capital equipment, furniture. . . - accumulated depreciation
  • Current liability
      • Account payable, accrued expenses & salary payable
  • Fixed Liability
      • Long term loans, retained (re-invested) earning

96.503 Issues in Telecommunications

cash flow
Cash Flow
  • If all inflow
    • Materializes
    • Materializes on the first day of the year
  • We wouldn’t need a cash flow statement
  • What can be problematic:
    • Large inventory for quick to ship
    • Early expenses and late revenue
    • Heavy fixed assets expenses

96.503 Issues in Telecommunications

cash flow cont
Cash Flow (cont)
  • (Cash + short term investments) +
  • + Inflow
    • Gross revenue on Sales
    • Other income
    • Fund raised (new investments)
  • - Outflow
    • Cost of sales
    • SG&A (incl. Marketing), R&D
    • Other expenses
    • Taxes
    • Capital (building, land, equipments,..)
    • Loan principal payment
    • Dividend distribution

96.503 Issues in Telecommunications

cash flow cont7
Cash Flow (cont)
  • Rent/lease but not buy fixed assets
  • Layoff
  • Defer next generation development
  • Call for account receivables
  • Pay on the 60th day of receiving invoices
  • Contract installments negotiation

96.503 Issues in Telecommunications

example
Example

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cfo vp engineering dialogue
CFO - VP, Engineering Dialogue
  • For early phases of hi tech companies, R&D is > 70% of expenses
  • Phased development vs. one release
  • Short term vs. long term development
    • For fund raising
    • For cash flow
  • Release dates (dates that maters: GA)
  • Cost reduction availability (phased or not)
  • Expenses timing (& year end boundaries )
  • Develop, license, partner
  • Application for R&D Tax incentive rebate & research grants

96.503 Issues in Telecommunications

cfo vp operation dialogue
CFO - VP, Operation Dialogue
  • Inventory
    • Of components
    • Of finished goods
  • Purchasing & manufacturing lead time
  • General & admin expenses
  • Net 30 vs. net 60 vs. net 90 payment for sales and for supplies
  • Product proper costing
  • Outsource manufacturing ??
  • Contracts payment breakdown

96.503 Issues in Telecommunications

cfo vp marketing dialogue
CFO - VP, Marketing Dialogue
  • Cost vs. Price
  • Margin
  • Price structure
  • Volume forecast
  • Invest or not in Release n+1 & when

96.503 Issues in Telecommunications

cfo vp sales dialogue
CFO - VP, Sales Dialogue
  • Sales forecast
  • Cost of customer trials
  • Discounts vs. SRP
  • Direct sales vs. channel sales margins

96.503 Issues in Telecommunications

cfo investors dialogue
CFO - Investors Dialogue
  • Shareholder equity
  • Balance sheet, income statement, cash flow
  • Dilution
  • Exist strategy
  • Term sheet

96.503 Issues in Telecommunications

sensitivity analysis
Sensitivity analysis
  • Uncertainty of funding & sales timing
  • Uncertainty of funding & sales amount
  • Expenses trigger points

96.503 Issues in Telecommunications

other issues
Other Issues
  • Budget
  • Poor forecast
  • Financial ratios

96.503 Issues in Telecommunications