Understanding Financial Plans

Why is a financial plan summary important?

• It helps make better financial decisions.

• It is not necessary for stakeholders.

• It complicates the financial picture.

What are assumptions in a financial plan?

• Guaranteed facts about the future.

• Educated guesses or expectations.

• Random guesses without basis.

What is an Income Statement?

• A report showing how much money a business earned.

• A document for tax purposes only.

• A summary of employee salaries.

What does the term 'Net Income' refer to?

• Final earnings after all expenses are paid.

• Total sales revenue before expenses.

• The cost of goods sold.

What is the formula for calculating Gross Profit?

• Sales Revenue - COGS

• COGS - Sales Revenue

• Sales Revenue + COGS

What is the formula for calculating Earnings Before Taxes (EBT)?

• EBIT - Interest

• Net Income - Taxes

• Gross Profit - SG&A

What is the significance of a contingency fund?

• To cover unexpected costs.

• To increase profits.

• To reduce sales.

Why is Exit Strategy Important in a Feasibility Study?

• Shows investors or partners that you are prepared for the long-term

• Helps manage risks and potential business failure

• Makes your plan professional and complete

• Provides a clear direction if the business does very well or very poorly

What are the possible exit strategies for a business?

• Liquidation or Walkaway

• Bankruptcy

• Selling the Business

• Family Succession

• Taking the Company Public (IPO)

Why is Socio-Economic Contribution Important?

• It shows that your business is not just focused on profits, but also on helping people and the community.

• It helps attract investors who want to support businesses that contribute positively to society.

• It can help build a good reputation for the business, leading to customer loyalty and trust.