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ncome Statements

The income statement (profit and loss statement) shows the revenue, expenses, and net income (or net loss)

25% 30%

2012 2013 2014

Revenues 10,00,000 12,50,000 13,00,000

Cost of Sales 400000 0 500,000 5,20,000

Gross Profit 600,000 7,50,000 7,80,000

Accounting 6,000 7,500 7,800

Advertising &

Promotion 9,000 11,250 11,700

Stationary 10,500 13,125 13,650

Depreciation 0 70,000 70,000

rent 12,000 12,000 12,000

Consulting Fees 10,000 0 0Computer

equipment

software 130,000 0 0

Lease office

equipment 30,000 37,500 39,000

Legal &

Professional 5,000 6,250 6,500

Website 50,000 50,000 50,000

Maintenance 7,500 9,375 9,750

others 10,500 13,125 13,650

Total 280,500 230,125 234,050

net 320000 589,875 545950

A discussion about understanding the income statement is here

Example Balance Sheets

http://www.thebusinessplanstore.com/incomestatement.htm

http://www.thebusinessplanstore.com/incomestatement.htm



The balance sheet is a statement of financial position that shows total assets = total liabilities + owners' equit

2012 2013 2014

Cash 30,00,000 35,00,000 25,00,000

Inventory 10,00,000 10,00,000 10,00,000

Prepaid Leases 30,000 30,000 30,000

Total Current

Assets 40,30,000 45,30,000 35,30,000

Fixed Assets 7,00,000 630,000 5,60,000

Less:

Depreciation 70,000 70,000 70,000

Net Fixed

Assets 6,30,000 5,60,000 4,90,000

Total Assets 46,00,000 50,90,000 40,20,000

Accounts

Payable 0 8,70,125 94,050

Long Term

Debt 30,00,000 23,50,000 21,00,000

Total Liabilities 30,00,000 32,20,125 2,194,050

Owner's Equity

Paid-in Capital 12,80,000 12,80,000 12,80,000

Retained

Earnings 3,20,000 589,875 545950

Total Liabilities

& Equity 46,00,000 50,90,000 40,20,000

A discussion about understanding the balance sheet is here

Example Cash Flow Statements

Revenue does not necessarily mean receipt of cash, and expense does not automatically imply a cash payme

Year 1 Year 2 Year 3 Year 4 Year 5

Operating

Profit $94,266 $127,219 $156,310 $187,020 $219,438

http://www.thebusinessplanstore.com/balancesheet.htm

http://www.thebusinessplanstore.com/balancesheet.htm



Add:

Depreciation 4,916 4,916 4,916 4,916 4,916

99,182 132,135 161,226 191,936 224,354

Working

Capital

Investment -68,908 -70,966 14,256 14,968 15,719

Cash FromOperations 168,090 203,101 146,970 176,968 208,635

Interest

Expense 43,199 40,274 37,059 33,524 29,639

Income Taxes 17,873 30,431 41,738 53,724 66,429

Net Cash

Before Debt

Pmt 107,018 132,396 68,173 89,720 112,567

Debt Payment 29,471 32,396 35,611 39,145 43,031

Change in Cash $77,547 $100,000 $32,562 $50,575 $69,536

Cash

Reconciliation

Beginning Cash $33,150 $110,697 $210,697 $243,259 $293,834

Change in Cash 77,547 100,000 32,562 50,575 69,536

Ending Cash $110,697 $210,697 $243,259 $293,834 $363,370



for a period of time. Net income is the amount by which total revenue exceeds total expenses. The resu



y. Financial position refers to the amount of resources (i.e., assets) and the liabilities of the business on a

t. Net income and net cash flow (cash receipts less cash payments) are different. For example, taking out





lting profit is added to the retained earnings account (accumulated earnings of a company since its ince



specific date. Owners' equity is the residual interest, or the amount of the assets to which the owners h

a bank loan generates cash, but this cash is not revenue since no merchandise has been sold and no se





ption less dividends). A net loss reduces the retained earnings account. The projected income stateme



ave claim because creditor claims (liabilities) legally come first. Owners' equity in a business derives fro

vices have been provided. Loan repayments consume cash, but do not reduce income - they are record





ts demonstrate that your business has the ability to earn profits over time.



two sources: (1) paid-in capital, which is the investment of cash or other assets in the business by the

ed as a reduction to liabilities. In our income statement example (above), although net income for Year







owner or owners; and (2) retained earnings, which are the accumulated profits of the business less the l

1 was $33,194, cash flow was $77, 547. The beginning cash balance in Year 1 was $33,150. Cash flow in







osses and withdrawals. The purpose of the balance sheet is to report the financial position of a busines

ear 1 was $77,547. Add the two, and the ending cash balance in Year 1 becomes $110,697. Your state







at a particular point in time.

ents "tie together." This is a simple check potential investors or lenders will perform.

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