Unit 3: Determine financial requirements of a new venture By the end of this unit you should be able to: 1. Determine the financial and cash flow requirements of a new venture. 2. Determine income and expenditure of new venture. 3. Implement pricing and costing principles. 4. Identify resources to obtain start-up capital. Introduction - Handy financial terms Accounts payable A current liability representing the amount owed by a business to a creditor for the merchandise or the services purchased on open account, i.e. Without giving a note or other evidence of debt. Accounts receivable Money owed to a business enterprise for merchandise bought on open account. Asset Anything owned by an individual or business that has commercial or exchange …show more content…
Merchandise inventory Goods held for sale, aside from the finished goods inventory that is found in manufacturing concerns. Net income The excess of the total income over the total expenses for a fiscal period. Net loss The excess of the total expenses over the total income for a fiscal period. Net worth The equity ownership interest of the owners of a company, that is, the common and preferred stockholders. It is the difference between the book value of the assets and the liabilities of a company. In a corporation, net worth or stockholders' equity consists of capital stock, capital surplus, and retained earnings (earned surplus). Operating budgets These are budget allowances that pertain to the expenses and the incomes that are included in the profit and loss statements of a company for the given fiscal period. Profit plan The profit plan for the fiscal year is a complete financial picture of the operating plans, sales volumes, capital expenditure plans, and the resulting profitability, financial condition, and cash flow for the year. The profit and loss portion is developed by applying the operating budgets to the sales forecast. These, plus the capital budgets, are analysed to determine their effect on the financial position and to develop cash