Chapter 9

Question 1

Building process

Answer 1

The building process consists of build up method, the comparable method, integrated finacial statements and then next steps.

Question 2

Financial Construction checklist

Answer 2

This is when you calculate the amount of revenue, cost of goods for a typical day and multiply it by the number of days in a year. Then you can calculate the operating costs for a typical time frame and refine them before constructing a preliminary financial statement.

Question 3

Build up method

Answer 3

This method consists of constructing worksheets or sheets listing all of the values for revenue, cost of goods sold and operating expenses and their calcualtions for avg. typical day or a certain time frame.

Question 4

Understanding your Revenue Drivers

Answer 4

Revenue drivers are components responsible for generating revenue and these are producing better items which you find out how to from the sales force and attracting customers through advertising and appropriate store location.

Question 5

Comparable Method

Answer 5

This is when you select which industry metrics you want to measure, companies in the industry you want to compare to and compare them based in industry metrics and industrial averages. For example does you companies profit margin match up or exceed that of benchtop competitors or the industrial average?

Question 6

Integrated Financial Statements:

Answer 6

1. Income statement: Financial statement indicating how much profit you make. Should be recorded monthly for the first two years and yearly for years and 3 and 5.
2. Balance sheet: Resources, assets and money you owe based on accounts you already paid, accounts you will pay and the gradual loss of money due to purchased equipment you experience
3. Cash flow statement: How much money you need and when you need it.