The Reason for Being

The Reason for Being

Three years personal tax returns Three years company tax returns Personal Financial Statement Pro Forma Profit and Loss Pro Forma Cash Flow Pro Forma Balance Sheet

This is your personal balance sheet It shows your assets It shows your liabilities It shows your net worth Why is this important

TYPE OF - CR - E - DI - T- C - HĒCK - T - HE ĀP- PRŌP- RIĀTĒ BŌX--------- (Name of - Len - de - r) --------------------------- 0 lnd1v1dual - If you check th1s box, prov1de Financiai Information only about yourself. D Joint, with Relationship If you check this box, provide Financial Information about yourself and the other person. PERSONAL FINANCIAL STATEMENT OF NOTE: Any willful misrepresentation could result in a VIolation of Federal Law (Sec. 18 U.S.C. 1 014) Birth Name Date, 19 Statement Date _.: _,19 Address--------------------------- City State/Zip Social Sec. No. _ Home Phone--------- No. of Dependents----- Bus. or Occupation Bus. Phone _ ASSETS NOTE: Complete all of Section II BEFORE Section I THOU- SANDS SECTION I DREDS CENTS THOU- SANDS HUN- LIABILITIES 1 Cash On Hand & in Banks Sec. II-A 21 Notes Due to Banks Sec. II-A 2 Cash Value of Life Insurance Sec. 11-B 22 Notes Due to Relatives & Friends Sec. 11-H 3 U.S. Gov. Securities Sec. 11-C 23 Notes Due to Others Sec. 11-H 4 Other Marketable Securities Sec. 11-C 24 Accounts & Bills Payable Sec. 11-H 5 Notes & Accounts Receivable - Good Sec. 11-D 25 Unpaid Income Taxes Due- 0 Federal 0 State 6 Other Assets Readily Convertible to Cash - Itemize 26 Other Unpaid Taxes & Interest 7 27 Loans on Life Insurance Policies Sec. 11-B 8 28 Contract Accounts Payable Sec. 11-H 9 29 Cash Rent Owed 10 TOTAL CURRENT ASSETS 30 Other L1abillt1es Due within 1 Year - Itemize 11 Real Estate Owned Sec. 11-E 31 12 Mortgages & Contracts Owned Sec. 11-F 32 13 Notes & Accounts Receivable- Doubtful Sec. 11-D 33 TOTAL CURRENT LIABILITIES 14 Notes Due From Relat1ves & Fnends Sec. 11-D 34 Real Estate Mortgages Payable Sec. 11-E 15 Other Secunties - Not Readily Marketable Sec. 11-C 35 Liens & Assessments Payable 16 Personal Property Sec. 11-G 36 Other Debts - Itemize 17 Other Assets - Itemize 37 18 38 Total Liabilities 19 39 Net Worth (Total Assets minus Total Liabilities) 20 TOTAL ASSETS 40 TOTAL LIABILITIES & NET WORTH HUN- DREDS CENTS ANNUAL INCOME ESTIMATE OF ANNUAL EXPENSES Salary, Bonuses & Commissions $ Income Taxes $ D1v1dends & Interest $ Other Taxes $ Rental & Lease Income (Net) $ Insurance Prem1ums $ Alimony, child support, or separate maintenance income need not be revealed if Mortgage Payments $ you do not wish to have it considered as a basis for repaying this obligation. Other Income-Itemize $ Rent Payable $ Provide the following information only if J01nt Credit 1s checked above. Other Expenses $ Other Persons Salary, Bonuses & Commissions $ $ Alimony, child support, or separate maintenance income need not be revealed $ if you do not wish to have it considered as a basis for repaying this obligation. Other Income of Other Person-ItemiZe $ $ TOTAL $ TOTAL $ A GENERAL INFORMATION CONTINGENT LIABILITIES Are any Assets Pledged? 0 No 0 Yes (See Section II) As Endorser, Co-maker or Guarantor $ Are you a Defendant in any Su1ts or Legal Actions? 0 No 0 Yes On Leases or Contracts $ (Explain): Legal Claims $ Have you ever been declared Bankrupt in the last 10 years? 0 No 0 Yes Federal - State Income Taxes $ (Explain): Other- $ CASH IN BANKS AND NOTES DUE TO BANKS SECTION II (List all Real Estate Loans in Section 11-E) NAME OF BANK Type of Account Type of Ownership On Depos1t Notes Due Banks COLlATERAL (If Any) & Type of Ownersh1p $ $ '" (Complete Rest of Section II on Reverse Side) Cash on Hand $ TOTALS $ $ )Enter Sec. I Lme I I (Enler Sec. I Lone 21 I BANKERS SYSTEMS, INC, ST CLOUD, MINNESOTA FORM PS-15 7 I 25/64

B LIFE INSURANCE SECTION II Continued (l"1st Only those P 0r IC. iest hat you own) COMPANY Face of Policy Cash Surrender Value Poltcy Loan from Insurance Co. Other Loans Polley as Collateral BENEFICIARY $ $ $ $ c SECURITIES OWNED Face Value-Bonds No. of Shares Stock DESCRIPTION Indicate those Not Registered in Your Name TOTALS $ $ (Enler Sec. 1 Lone 2) (Enler Sec. 1 Lone 27) ( nciud"mg US Gov t Bondsand aii other StoeksandBonds) Type of Ownershtp COST Market Value US Gov Sec Market Value Marketable Sec. MARKET VALUE Not Readily Marketable SECURITIES Amount Pledged to Secured Loans $ D TOTALS $ $ $ (Enler Sec. 1 Line 3) (Enter Sec. 1 Lone 4) (Enter Sec. 1 Line 15) NOTES AND ACCOUNTS RECEIVABLE ( Money Payable or 0wed to you Ind1v1dually-lndicate by a if Others have an Ownership Interest) Balance Due Balance Due Bal. Due Notes MAKER/DEBTOR When Due Origmal Amount SECURITY (If Any) Good Accounts Doubtful Accounts Rei. & Fnends ""' $ $ $ $ E REAL ESTATE OWNED TITLE IN NAME OF Descriptton & Location Date Acquired Ongmat Cost TOTALS $ $ $ (Enter Sec. 1 Lone 5) (Enter Sec. 1 Lone 13) (Indicate by a ""' if Others have an Ownership Interest) Present Value of Real Estate Homestead- $ $ $ Amount of Ins. Camed (Enter Sec. 1 Lone 14) MORTGAGE OR CONTRACT PAYABLE Bal Due Payment Matunty To Whom Payable TOTAL $ TOTA L $ (Enter Sec. 1 Lone 11) ',Enter Sec. 1 Line 34) F MORTGAGES AND CONTRACTS OWNED (Indicate by a ""' if Others have an Ownership Interest) MAKER Cont. Mtge. PROPERTY COVERED Sta rt1 ng Date Payment Maturity Balance Due Name Address $ $ - G PERSONAL PROPERTY (Indicate by a ""' tf Others have an Ownersht ;n Interest) DESCRIPTION Date When New Cost When New Automobiles- $ $ $ Value Today Balance Due TOTALS $ (Enter Sec. 1 Line 121 LOANS ON PROPERTY To Whom Payable H TOTAL $ '-;;IE"'nt"'er'"'S'"'ec':'".-:1 L"in""e"16;;-11 NOTES (Other than Bank, Mortgage and Insurance company Loans), Other Obligors Notes Due To Notes Due 'Others' Accounts & Bills PAYABLE TO When Due (If Any) Rei. & Friends (Not Banks) Payable ACCOUNTS AND BILLS AND CONTRACTS PAYABLE Contracts Payable COLLATERAL (If Any) $ $ _.. TOTALS (Enter Sec. 1 Line 22) (Enter Sec. 1 Lone 23) (Enter Sec. 1 Line 24) (Enter Sec. 1 Lone 28) For the purpose_ of procuring credit from t1me to time, 1/We furn1sh the foregoig as a true and accurate_statement of my/our 1nancial condition. Author1zat1on IS hereby g1ven to the Lender to ver1fy 1n _a_ny manner 1t deems appropnate any and all items.ndicated on thts statement. The undersigned also agrees to not1fy the Lender immediately 1n wnt.ng of any s1gn1f1cant adverse change 1n such fmanc1al cond1t1on. Date Signeu..._, 19--- Signature Signature ""ioo-t.,-h-er""'po-e-rs_o_n""' fccac-p-p,.-;oc-a.,..b,.-le.,..l-----

What is the difference between Cash Flow and Profit and Loss.

INCOME STATEMENT 1st Month 2nd Month 3rd Month 4th Month Revenue PMS income $7,500 $7,500 $7,500 $7,500 NAVL income $11,600 $11,600 $11,600 $11,600 Total Revenue $19,100 $19,100 $19,100 $19,100 Cost of Goods Sold NAVL Hauling $850 $850 $850 $850 Gross Margin $18,250 $18,250 $18,250 $18,250 Expenses Employee Salaries $2,600 $2,600 $2,600 $2,600 Travel/Road Help $1,000 $1,000 $1,000 $1,000 Taxes/Licenses $625 $625 $625 $625 Insurance $1,250 $1,250 $1,250 $1,250 Maintenance $420 $420 $420 $420 Office Exp $65 $65 $65 $65 Utilities inc. phone $540 $540 $540 $540 Supplies $50 $50 $50 $50 Advertising $200 $200 $200 $200 Fuel $2,000 $2,000 $2,000 $2,000 Warehouse Exp $425 $425 $425 $425 Other $500 $500 $500 $500 $0 $0 $0 $0 Depreciation Exp $150 $150 $150 $150 Interest Exp $1,100 $1,100 $1,100 $1,100 Total Op. Expenses $10,925 $10,925 $10,925 $10,925 Earnings Before Tax ( $7,325 $7,325 $7,325 $7,325 Taxes Incurred $2,564 $2,564 $2,564 $2,564 Net Profit $4,761 $4,761 $4,761 $4,761 Cash Flow Statement 1st Month 2nd Month 3rd Month 4th Month Beginning Cash * ($202,000) $21,675 $25,350 $29,025 * last month ending cash PMS income $7,500 $7,500 $7,500 $7,500 NAVL income $11,600 $11,600 $11,600 $11,600 Loan Proceeds $220,000 (1) Total Cash Available $37,100 $40,775 $44,450 $48,125 NAVL Hauling $850 $850 $850 $850 Employee Salaries $2,600 $2,600 $2,600 $2,600 Travel/Road Help $1,000 $1,000 $1,000 $1,000 Taxes/Licenses $625 $625 $625 $625 Insurance $1,250 $1,250 $1,250 $1,250 Maintenance $420 $420 $420 $420 Office Exp $65 $65 $65 $65 Utilities inc. phone $540 $540 $540 $540 Supplies $50 $50 $50 $50 Advertising $200 $200 $200 $200 Fuel $2,000 $2,000 $2,000 $2,000 Warehouse Exp $425 $425 $425 $425 Other $500 $500 $500 $500 $0 $0 $0 $0 $0 $0 $0 $0 (2) Total Expense $10,525 $10,525 $10,525 $10,525 (3) Balance (1-2) $26,575 $30,250 $33,925 $37,600 (4) Less Owners Withdrawl $3,000 $3,000 $3,000 $3,000 (5) Balance (3-4) $23,575 $27,250 $30,925 $34,600 (6) Less Fixed Loan $1,900 $1,900 $1,900 $1,900 (7) Other loans Ending Cash (5-6-7) $21,675 $25,350 $29,025 $32,700

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What is the difference between the Profit and Loss Statement and the Cash Flow Statement

A balance sheet is a snapshot of a company at a specific point in time.

What is the banker looking for??

What is a ratio? What does the banker do with them Where does he get the comparison So What?

Ratio Analysis Key Formulas For Small Business Owners Finance and Accounting Concepts Current Ratio Current Assets / Current Liabilities Use of short term assets above and beyond short term liabilities Receivable Turnover Net Sales / Accounts Receivable (A/R / 365) Number of days you are waiting to collect sales on account Inventory Turnover Cost of Goods Sold or Net Sales / Merchandise Inventory Measures the liquidity or turnover to cash of inventory levels Asset Turnover Sales / Total Assets Measures how effectively we are managing our assets Debt to Assets Total Debt / Total Assets Measures financial leverage or share of debt to our assets Gross Margin on Sales Gross Margin / Sales Gross Margin = Sales less cost of goods sold or cost of materials sold Measures the level of coverage above cost of goods sold or cost of materials (First line indicator of profitable success) Profit Margin on Sales Net Income / Sales Measures the net profit activity

CASE STUDY: CASCADE OFFICE SYSTEMS Balance Sheet Spreadsheet as of November 30 ASSETS -Cash -Accounts Receivable - Inventory Other - AIR Officer Prepaid Other Total Current Assets Leasehold Improvements Vehicles Furniture/Fixtures/Office Equip. Equipment Buildings Land Accumulated Depreciation Fixed Assets (net) Other - patent acquisition Total Assets LIABILITIES & NET WORTH Notes Payable - bank Current Portion -long-term debt Accounts Payable - trade Accruals Other Other Total Current Liabilities Long-Term Debt Mortgages Other Total Long-Term Liabilities Total Liabilities Year 1 Year 2 Year 3 Trends 41,700 16,500 12,300 169,400 167.000 270,000 212,200 164,800 419,000 3,000 10,700 16,700 24,800 437,000 365,000 726,100 < 25,700 30,700 30,700 24,300 28,300 59,700 108,300 120,300 120,300 130,000 267,700 267,700 20,000 20,000 30,000 (85,000) (106,000) (132,000) 223,300 361,000 376,400-28,500 660,300 726,000 1,131,000 52,800 63,400 (282,400) 32,500 30,000 ( 25,000) 99,800 127,800 310,000 44,100 55,200 67,300 26,700 33,400 49,600 255,900 309,800 734,400 144,300 114,300 (89,3ocf) 144,300 114,300 89,300 400,200 424,100 823,700 Capital Stock Additional Paid-In Capital Retained Earnings Net Worth Total Liabilities & Net Worth 60,000 60,000 60,000 200,100 241,900 247,300 260,100 301,900 307,300 660,300 726,000 1,131,000 2011 Business Resource Services, Inc PROFIT MASTERY- 2: 8