Unit 7
Financial Unit


R-E=P/L
Revenue - Expenses = Profit or Loss

Expenses-money owed

Revenue-money that is coming in

Timeframe-the actual dates of the budget

Create a list of income and expenses

Categorize the income and expenses

Assign amounts to the categories

Keep track of money spent or earned



Start-up Budget–the initial income and
expenses of a new business.
Operating Budget-the financial plan for
ongoing operations of a business for a
specific time period.
Cash Budget-Estimate of the actual money
received and paid out for a specific time
period.

Inventory Records-accounts of what you own

Accounts Payable-who you owe money to

Accounts Receivable-who owes you money

Cash Records-details where money is

Payroll Records-details about the employeespay,
◦ Taxes, and days missed

Reasons for
◦ Develop fiscal plans
◦ Determine business strategies
◦ Analyze numeric data




Balance Sheet-measures the assets, liabilities
and the owner’s equity.
This shows where the company is currently
Income Statement-reports the revenue,
expenses, and net loss or gain.
This shows how the company is doing
whether they are making money or not.
Parts of a Balance Sheet
Assets-are items such as land, equipment
 Items that are owned by the company and can be sold.
Liabilities-are the bills of the company- what a
company owes to others.
Owner’s equity-how much money the owner
has put into the business

Expenses-money owed

Revenue-money that is coming in

Net Loss/Profit-what is left over after the bills
have been paid.






Gross Pay-actual pay
Net Pay-Bring home pay after taxes
Taxes-income (state, federal)
Taxes-OASDI(FICA) Medicare
Taxes-Unemployment(FUTA)
Direct Deposit

Where companies trade ownerships by selling
pieces of stock

NYSE New York Stock Exchange –major

Dow Jones-30 major American Companies

NASDAQ-Top 100 Companies

Current Ratio-tells you if the business can
pay its debts as they become due
◦ Current Assets/Current Liabilities-should be 1:1

Debt to Equity Ratio-tells you how much the
business is relying on money borrowed from
others
◦ Total liabilities/Owner’s Equity-should be 1:1but no
higher than 2:1

Return to Equity Ratio-shows the rate of
return the owners are getting on their money
◦ Net Profit/Owner’s Equity

Net Income Ratio-how much profit is being
made on each sales dollar.
◦ Total Sales/Net Income

Number of trades in a day

Natural Disasters

Government Stability

Shortages/surpluses






Hi/Lo Price of stock-for the year
Market Trends-how the entire stock market is
doing or specific industries
Competition-people who sell the sames items
Dividends-money that is paid out to stock
holders after all bills are paid
History of the company
Type of stock-common or preferred