Chapter 17 Notes Packet
Managing Business Finances
Ch. 17.1 – Financial Management
Objectives: •
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Identify the six reasons for creating a financial plan. Explain what a budget is and how it is used. Directions – Utilizing your textbook, complete the notes outline below for Section 17.1. You are expected to be reading this as well! We will discuss Section 1 tomorrow. A.) The Purpose of the Financial Plan
1. Define financial plan -­‐ a. What kinds of information might be needed when developing a financial plan? 2. A financial plan is a ______________________ that can help to guide a company into their future ventures. 3. A financial plan can also be used to _______________________________________. 4. An effective financial plan includes: a. b. c.
d. e. f. B.) Identifying Business Assets
1. A financial plan identifies the ______________________ needed for the business. 2. Define assets – 3. List three examples of business assets. a. b. c.
4. What should business owners and managers do before making big business decision? 1 C.) Determining Needed Capital 1. What does a financial plan estimate? 2. ___________________ is the money that is supplied by investors, banks, or owners of a business. 3. Define start-­‐up capital – a. List three common sources of start-­‐up capital for entrepreneurs. i. ii. iii. D.) Describing Start-Up and Operating Expenses
1. Explain the reason for a new business to need a large amount of start-­‐up capital. 2. Define operating expenses -­‐ 3. What are some expenses of a new business venture? E.) Describe Financial Records Management
1. What does a financial record explain and describe? 2. Develop and list two questions a person might ask to help a business owner decide who should maintain financial records. F.) Forecasting Future Finances
1. Define financial forecasts -­‐ 2. The forecast should consider: a. 3. A financial forecast might show: a. 4. It is best to remember to keep financial estimates for income ___________ and estimates for expenses ____________ . 2 G.) Describing Growth Financing
1. Every company needs to _____________ in order to remain ____________________. 2. Planned growth can be _____________________. 3. Unplanned growth can be __________________. 4. The financial plan should explain: a. H.) Budgets
1. Financial statements indicate the financial __________________ of a firm in a _______________________. 2. Define budget – 3. Budgeting helps business owners _________________ how much _______________ the business will need. 4. What do business owners do to avoid financial problems? 5. There are three main types of budgets (write the name and describe each one): a. ______________________ -­‐ b. ______________________ -­‐ c.
______________________ -­‐ Ch. 17.1 - Review Questions
1. In general, what is the purpose of the financial plan? 2. What does an effective financial plan do? 3. Why do business owners use a budget? 4. When big companies create financial statements, they often shorten large numbers by omitting zeroes and adding a caption such as “all numbers in billions.” Another way is to use scientific notation. What is 55 billion (55,000,000,000) expressed in scientific notation? 3