D076 Finance Skills for Managers - U9 (Part 1)

Balance Sheet Forecasting - is typically done in conjunction with projecting in come statement. Helps understand future asset earning and potential of the company Sources and uses of funds Budgeting - is a detailed representation of the future results, financial position, and cash flows that management wants to achieve during a certain period. Includes variance analysis Budgeting Vs Forecasting (NOT THE SAME) - Budgeting - Where management wants to take the company. Quantifies the expected performance that a company wants to achieve in a future period. Forecasting - Weather the company is heading in the right direction. Estimates the number of sales that will be achieved in the future to understand the future financial needs of the company. Calculate the forecasting sales given the following information: current sales = $500; Growth rate = 10%; cost of goods sold = $300; net income = $200 - $550 Construction of a pro forma income statement is based on _____. - Sales projections and the production plan Discretionary accounts - Are the non-spontaneous accounts. Increase with sales but are left as discretion of management.