Financial Planning

Financial Planning Financial resources are those resources that have monetary valueFinancial management is the planning and monitoring of an organizations financial resources to enable the organization to achieve its financial goalsAssets are the property and other items of the business both tangible and intangible.Objectives of financial management:Liquidity - ability to pay short-term debts.Profitability - maximizing profitsEfficiency - ability to maximize profits with minimal resourcesGrowth - increase size in the longer termReturn on Owners Equity - percentage of profit compared with total invested.The Planning CycleAddress current financial positionDetermine financial elements of business planDevelop budgetsMonitor cash flowInterpret financial reportsMaintain record systemPlanning financial controlsMinimizing financial risk and lossesMajor participants in financial marketsBanksFinance/insurance companiesMerchant banksRBASuper fundsMutual fundsPublic/private companiesASXSources of fundsInternal sou rces- Owners equity- Retained profitsAdvantages- Low gearing- Less riskDisadvantagesLower profits and return on OEExternal sourceso Short-term Overdraft Bridging finance Bank billso Long-term Bonds Mortgage Term loans Leasing Factoring Trade credit Venture capitalAdvantagesIncreased fundsTax deduction on interest repaymentsDisadvantagesIncreased riskSecurity requiredRegular repaymentsLenders have first claim on money if they go bankruptLeverage measures the relationship between debt and equityThe accounting frameworkRaw DataProcessed DataAccounting DataAnalysis of reportFinancial Statements Revenue statement - shows revenue earned and expenses incurred over the accounting period.English: Berechnung des Net Working Capital Balance Sheet - shows the businesses assets and liabilities at a point in time.Financial RatiosLiquidityCurrent Ratio = Current assets(working k) Current liabilities2:1 safe positionSolvencyDebt to equity = Total liabilitiesOwner's EquityProfitabilityGross Profit = gross profit...