Week 6 - Financial Planning Flashcards
Why should you make a financial planning
To map out:
- Profitability
- Efficiency
- Liquidity
- Risk
How do you track Profitability and Risk?
Via an income statement, which provides an overview of all the costs and revenue within a certain time frame.
How do you track Efficiency?
- Income Statement
2. Balance sheet (an overview of different ownings of the company and how these ownings are financed.)
How do you track Liquidity?
Cashflow statement (All the money that goes in to the company and that goes out)
What is part of an income statement?
Gross margin • - Services and other goods • - remunerations and other social costs • - depreciations • - Provisions Operational result (EBIT) • + Financial results • + Exceptional result Results before taxes • - Taxes Results after taxes
What are the (8) bases for sales?
Product sale Renting/leasing Service package Licensing Usage fee Brokerage fee Subscription fee Advertising
What are the two pricing structures?
- Fixed pricing
2. Dynamic pricing
When to apply fixed pricing?
- Product feature based
- Customer segment based
- Volume based
When to apply dynamic pricing
• Negotiation
• Yield management
o Uses price elasticity, based on supply and demand (airline)
• Real-time-market
What are the four parts of the cost structure?
Direct + Variable • Flour for biscuit Direct + fixed • Machine rent biscuit X Indirect + variable • Electricity for machine biscuit x, y, z Indirect + fix • Rent of factory
What is a cash flow statement
• Cash flow statement is a projection of the future cash ins and cash-outs
How is it different from an income statement?
o While income statement = A projection of future revenues and costs
o Not all cash-ins are revenues, and vice versa, same goes for cash-outs and costs
What are the two principles that affect a cashflow statement?
- Matching principle
o Cashout depends on the moment when you buy the product, costs are spread
over a period (difference between costs and cashout) - Operational Principle
o Need for networking capital to bridge this cap (customer pays later while supplier requires money earlier than payment)
From the operational costs onward, what comes in a cashflow statement?
o Operational Results +/- operational results + depreciations – change in NWC o Cash flow from operations - Reimbursements - Interests - investments + Capital raised + financing from other sources o Cash flow for period
What does a balance sheet exist of?
- left side, assets
2. Right side, Equity & liabilities