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| Overview of Basic Parts | The structure of the Income Statement is simple enough (Revenue - Expenses = Profit/Loss). Usually it contains sale proceeds, process costs, tax and other assessments. Profit, which remains after distribution of dividends, is calculated on the basis of these activities. It is possible to determine using this information whether concrete products make a profit or not. You may also compare different products in their profitability and determine expediency of their further production. Thus the final task of this document is to show how the profits will form and change during the year. If you have a product-based business, the Revenue section will look different. Revenue will be called Sales, and inventory needs to be accounted for.
Sales
1. Cost of Sales
2. Opening Inventory
3. Purchases
4. Ending Inventory
5. Gross Profit
The Cash Flow Projection shows the cash that is anticipated to be generated or expended over a chosen period of time in the future. It also contains projected and actual investments in the business during the particular time. The Cash Flow Projection provides an evidence for Bank loans officers that your business is a good credit risk and that there will be enough cash on hand to make your business a good candidate for a line of credit. And on the contrary Cash Flow Statement describes the cash flow that has taken place in the past.
The Cash Flow Projection is divided into three parts. Your Cash Revenues are described in the first part that contains your estimated sales figures for each month. The second part of the Cash Flow Projection is your Cash Disbursements. It is the list of cash expenditures you expect to pay each month. And the third part is the Reconciliation of Cash Revenues to Cash Disbursements. Subtract the current month's Disbursements from Revenues and you’ll get an adjusted cash flow balance which should be carried over to the next month.
The Balance Sheet is very peculiar as it doesn’t reflect activities result but shows strength and weakness in the view of finance. In itself any separate element of the balance-sheet means a little. But all these elements, considered in the ratio with each other, allow judging about the financial status of the business. This account shows how a start-up capital will be gotten (the source of the debt+owned capital) and how you plan to spend it. It summarizes all the financial information about your business, breaking that data into 3 categories; assets, liabilities, and equity.
The Balance Sheet is the last of the financial statements that you need to include in the Financial Plan section of the business plan. The Balance Sheet presents a picture of your business' net worth at a particular point in time.
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