Cash Flow Statement        Financial Forecasts        Tips for Financial Calculations Preparer

 

Cash Flow Statement

Business Name: ____________________

Year:

 

Month

6-Month Total

Month

12-Month Total

1

2

3

4

5

6

7

8

9

10

11

12

BEGINNING CASH BALANCE

                           

CASH RECEIPTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A. Sales/revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

B. Receivables

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C. Interest income    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

D. Sale of long-term assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL CASH AVAILABLE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH PAYMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A. Cost of goods to be sold

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1. Purchases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2. Material

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3. Labor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total cost of goods

 

 

 

 

 

 

 

 

 

 

 

 

 

 

B. Variable expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7. Misc. variable expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total variable expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C. Fixed expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.

                           

3.

                           

4.

                           

5.

                           

6.

                           

7. Misc. fixed expense

                           

Total fixed expenses

                           

D. Interest expense

                           

E. Income tax

                           

F. Other uses

                           

G. Long-term asset payments

                           

H. Loan payments

                           

I. Owner draws

                           

TOTAL CASH PAID OUT

                           

CASH BALANCE/DEFICIENCY

                           

LOANS TO BE RECEIVED

                           

EQUITY DEPOSITS

                           

ENDING CASH BALANCE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Forecasts

Financial forecasts should be prepared by the company for fund raising campaign. Prospective investors would ask you for a full set of cohesive financial statements, including a balance sheet, income statement, and cash-flows statement (see examples of financial forecasts). These projections should be based on certain assumptions described below.

Assumptions

Companies submitting their business plans to venture capitalist investors must prepare financial forecasts, usually for a period of three to five years. Monthly statements are to be shown until the breakeven point or profitability is reached.

Venture Financing Funnel

Venture Financing: Key Documents To Be Prepared

Thereafter, quarterly statements should be prepared for two years, followed by yearly data for the remaining timeframe. It is also imperative that the forecasts include a footnote section that explains the major assumptions used to develop revenue and expense items.

Assumptions to Use in Forecasts:

Sales

The plan should state an average selling price per unit along with the projected number of units to be sold each reporting period. Sales prices should be competitive with similar offerings in the market and should take into consideration the cost to produce and distribute the product.

Cost of Sales

The forecast should provide accurate unit cost data over the reporting period, taking into consideration the labor, material, and overhead costs to produce each unit. A good grasp on initial product costing is recommended so it is protected against price pressure from competitors.

Product Development

Forecasts should include enough of cash cushion for a major rework of the first major product of the company, at least six month' worth of burn rate. Product development expenses should be closely tied to product introduction timetables elsewhere in the plan. Investors will focus on these assumptions because further rounds of financing may be needed if major products are not introduced on time.

Other Expenses

All other expense categories such as headcount, selling and administrative costs, space, and major promotions should be taken into consideration.

Balance sheet

The balance sheet should agree with the income and cash flows statement. Consideration should be given to the level of inventory and capital expenditures required to support the projected sales level. Capital expenditures should be limited at the outset to current requirements. It is generally better to rent or lease capital equipment in the first few years in order to conserve cash for marketing and selling expenses that will generate sales.

Cash Flows

The cash-flows statement must correlate to the balance sheet and income statement and should mirror the timing of the funding requirements stated in the plan. The cost in lower valuations for unanticipated financings can be high. This is why it is important to set realistic forecasts so that the initial request covers the capital needs until the business can complete milestones leading to higher valuations in future rounds.

 

Tips for Financial Calculations Preparer:

Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2

Accounts Receivable, Net = Sales / Average Accounts Receivable

Accounts Payable (for 1 year) = (Purchases + Ending Inventory Payment Cycle) / 360 days

For Following Years: (Purchases + Average Inventory x Payment Cycle) / 360 days

Inventory Turns = Cost of Goods Sold / Average Inventory

Accrued Expenses = (Overhead + Service Coast + Ending Accounts Receivable) / 2