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The Financial Forecasts for the Business Plan


... our business plan Allow us to change our plans in advance to optimize the real financial results after analyzing the forecast financial statements. – PowerPoint PPT presentation

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Title: The Financial Forecasts for the Business Plan

The Financial Forecasts for the Business Plan
  • Shad Valley
  • 2011

Contact Info
  • Ken Hartviksen
  • Office RB 1043
  • 343-8497
  • Web links
  • http//
  • http//

Todays Agenda
  • Contact Info
  • Purpose of Financial Forecasts
  • Characteristics of Good Financial Forecasts
  • How to forecast and how to recognize assumptions
  • A tour of the financial forecasts required
  • Break even analysis
  • Purpose of each forecast and their
  • Data requirements and how they are generated
  • Annual Sales Forecast
  • Monthly Sales Forecast
  • Monthly Cash Budget
  • Pro forma Financial Statements

What we Hope to Accomplish
  • Understand the importance and use of
  • Cash flow
  • Financial forecasts
  • Learn how to develop loan amortization schedules
    and CCA schedules
  • Learn how to incorporate this forecast
    information into financial forecasts
  • Get you started on your own forecasts
  • Develop some skills in the use of Excel

The Purpose of Financial Forecasts
  • To
  • Predict the financial consequences of our
    business plan
  • Allow us to change our plans in advance to
    optimize the real financial results after
    analyzing the forecast financial statements.
  • To demonstrate to financial partners the ability
    of the business to give them an adequate return
    on investment.

The Purpose of Financial Forecasts What do
Investors Look For?
  • Ability to generate cash flow early enough and in
    sufficient quantity to ensure on-going financial
  • Time to break even
  • Time to positive cash flow
  • Time to profitability
  • Return on investment

Characteristics of Good Forecasts
  • Reasonable/plausible
  • Based upon good primary and secondary research
  • Congruent with operating and marketing plans
  • Can withstand stress testing
  • Conservative/achievable

Where do you Start?
  • When generating integrated financial statements
    you start with
  • Sales forecast
  • You will modify the annual sales forecast to a
    monthly sales forecast for the first year
  • Make projections of all expenses for the first
  • Start with a guess about the amount of initial
    financing required and where it is likely to be
  • Remember
  • The big difference between the cash budget and
    the pro forma Income Statement is that you
    include depreciation in the Income Statement and
    ignore it in the cash budget.
  • The other big difference is that you use total
    interest expense for the year in the income
    statement, but you use the total payments in the
    cash budget.

Integrated Financial Forecasts
Analyze forecasts, adjust inputs and forecast
Before we Get StartedLets Review Some Things
about Business Plans
  • A Business Plan is a forecast of what you hope
    to do.and how and when you hope to do it!

Characteristics of a Good Plan
  • readable
  • organized
  • targeted to the audience
  • integrated
  • complete
  • short

Uses of A Business Plan
  • Helps you understand the steps to implementing
    your idea and what key factors you must monitor
    to ensure success.
  • Support an application for financing
  • Solicit potential financial partners

How a Business Plan is Read
  • Determine the characteristics of the company and
  • Determine the terms of the deal
  • Read the latest balance sheet
  • Determine the caliber of the people in the deal
  • Determine what is different about this deal
  • Give the plan a once-over lightly

Abbreviated Contents
  • Title Page (with disclaimer)
  • Executive Summary
  • Table of Contents
  • Business Idea
  • Industry/Company
  • Market Research and Analysis
  • Economics of the Business
  • Marketing Plan
  • Design and Development Plans
  • Manufacturing and Operations Plan
  • Management Team
  • Overall Schedule
  • Critical Risk, Problems and Assumptions
  • The Financial Plan
  • Financing
  • Appendices

NOTE the location of the financial documents
IV. Economics of the Business
  • Gross and operating margins
  • Profit potential and durability
  • Fixed, variable and semi-variable costs
  • Months to Break even
  • Months to reach positive cash flow

XI. The Financial Plan
  • Actual financial statements (if an already
    established business)
  • initial investment required
  • cash budget
  • pro forma balance sheet
  • pro forma income state
  • break even chart
  • cost control

XII. Financing
  • Proposed sources of financing
  • use of funds
  • investors forecast rate of return on invested

The Basic Financial Forecasts
  • Shad Valley Lakehead

Types of Financial Forecasts
  • Break Even Analysis
  • Initial Investment Schedule
  • Monthly Cash Budget
  • Pro forma Income Statements
  • Pro forma Balance Sheets
  • Subsidiary forecasts
  • Loan Amortization schedule
  • CCA schedule
  • Statement of Forecast Assumptions

Break-even Analysis
  • Shad Valley 2007

Break - Even Analysis(Cost/Volume/Profit
  • This is a planning and control technique.
  • make informed decisions about pricing your
    product or service and the cost to produce it.
  • compare your actual results with those that you
    have forecast. (For example, your restaurant may
    require you to sell 10,000 meals at 10.00 per
    meal 100,000 in order to break even annually.
    This works out to 192 meals a week or 28 per day.
    If on the first day of operation you sell 30
    mealsyou are on track to break even!)

Break - Even Analysis(Cost/Volume/Profit
  • The break-even point can be found using the
    following equation
  • B.E. Point Fixed Costs
  • Contribution Margin
  • Fixed Costs
  • Selling price/unit - Variable Cost/unit

Cost Behaviour
  • You can classify fixed and variable costs
    according to how they change in response to
    changes in sales volume.
  • Fixed Costs
  • are costs that (within the relevant range) dont
    change in response to changes in sales volume.
  • Examples include depreciation expense, rent,
    salaries and other overhead costs.
  • Variable Costs
  • are costs that (within the relevant range) change
    in response to changes in sales volume.
  • Examples include direct materials and direct
    labour costs (wages paid by hour).

Relevant Range
  • The relevant range is the range of output (units
    produced and sold) that the cost and pricing
    assumptions can reasonably be expected to hold.

Relevant Range
  • If sales are expected to push the firm beyond its
    current physical capacity, (beyond the relevant
    range) cost behaviour assumptions must be revised.

Break - Even Analysis(Cost/Volume/Profit
Total Revenue Line
of Sales and Costs
1 2
Number of units produced and sold
Break - Even Analysis(Cost/Volume/Profit
Total Revenue Line
of Sales and Costs
1 2
Number of units produced and sold
Break - Even Analysis(Cost/Volume/Profit
Total Revenue Line
Total Variable Cost
Contribution Margin per unit 2.50
Number of units produced and sold
Contribution Margin
  • For most small businesses, it is relatively easy
    to determine the variable cost per unit.
  • What you want to determine is how much it costs
    you in terms of direct material and direct labour
    to produce your product or service.
  • Once you know the variable cost per unit, this
    becomes a good guide to you in the pricing
    decision. Obviously, if you price your product
    under your variable cost per unit, you will lose
    money each time you sell one unit. The more you
    sell, the more money you lose.
  • Look at the following example..

Contribution Margin Example
  • You plan to start a bagel shop.
  • The average customer will purchase a dozen
    bagels, some cream cheese and a coke.
  • You have determined that your variable costs to
    produce this average customer purchase as
  • Variable Cost per unit
  • Coke and cup 0.85
  • 12 Bagels cooked (materials and
    electricity) 2.99
  • Cream cheese and container 1.65
  • Straw/napkins/bag and other condiments 0.75
  • Direct labour costs (counter help cook) 2.75
  • Total variable cost per unit 8.99
  • Given your analysis you initially price coke at
    2.00 and a dozen bagels with cheese for 8.50
    giving you a contribution margin of 1.51 per
    unit. Total cost to the customer is 10.50 plus
    PST and GST or 12.08

Contribution Margin .
  • You now find out that the Great Canadian Bagel
    sells coke for 1.75 and a dozen bagels with
    cheese for 6.50 for a total cost to the customer
    of 9.49 (including Gst and Pst)this is below
    your estimated variable cost per unit!
  • The Great Canadian Bagel is a franchise that
    benefits by the fact that the franchisor has
    tremendous buying power (centrally negotiates
    purchases and prices with suppliers for flour,
    cream cheese and coke). This gives them a
    competitive advantage over you...
  • Variable Cost per unit Great Canadian Bagel
  • Coke and cup 0.85 0.45
  • 12 Bagels cooked (materials and
    electricity) 2.99 1.50
  • Cream cheese and container 1.65 1.20
  • Straw/napkins/bag and other condiments 0.75 0.5
  • Direct labour costs (counter help
    cook) 2.75 2.75
  • Total variable cost per unit 8.99 6.40

Contribution Margin .
  • Conclusion if you are to compete with the
    Great Canadian Bagel purely on price, you will
  • Variable Cost per unit Great Canadian Bagel
  • Coke and cup 0.85 0.45
  • 12 Bagels cooked (materials and
    electricity) 2.99 1.50
  • Cream cheese and container 1.65 1.20
  • Straw/napkins/bag and other condiments 0.75 0.5
  • Direct labour costs (counter help
    cook) 2.75 2.75
  • Total variable cost per unit 8.99 6.40
  • Selling Price to the Public per
    unit 10.50 8.25
  • Contribution margin per unit 1.51 1.85
  • Your variable cost per unit is higher than the
    Great Canadian Bagels variable cost per unit.
  • Your proposed selling price is 27 higher than
    your competition yet your proposed contribution
    margin is 18 lower.

Contribution Margin Analysis
  • Faced with this pricing and costing analysis, you
    have some choices
  • forget about going into this business
  • seek to negotiate arrangements where your direct
    operating costs can be lowered
  • devise a product or marketing strategy that would
    induce consumers to purchase your products over
    the Great Canadian Bagel product (higher quality
    product, perceived greater value that justifies
    the higher price)
  • seek to locate your business somewhere there is
    no direct competition. (Nipigon, Marathon,
    Atikokan, Sioux Lookout)
  • Of course, further analysis will be required
    (before proceeding) to determine whether you
    could actually make a profit at the business.

Contribution Margin
  • The contribution margin is the amount of money
    that is available from the sale of each unit to
    cover the fixed costs of the firm.
  • Once those fixed costs are covered, any further
    units that are sold will result in profit.

Break Even Point
  • Is the point where total revenue equals to total
  • Variable and Fixed costs are summed to equal
    total costs.
  • Break even point in units Annual Fixed
    Costs / contribution margin

Break Even Chart
Annual Fixed Costs of the Bagel Business
  • Let us assume for a moment that you have decided
    to locate your proposed business in Nipigon where
    you are sure that there is no competition, and it
    is unlikely competition would enter the market
    after you arrive.
  • You estimate that once established, you will face
    the following fixed costs each year to run the
  • Annual building lease costs (12 months _at_
    2,000/month) 24,000
  • Office expenses (bank charges, accountant
    etc.) 8,000
  • Depreciation of equipment (ovens, microwave,
    etc.) 4,400
  • Gross Salary for the manager 34,000
  • Employer contribution to CPP/EI and employer
    health tax 9,520
  • Other fixed costs (advertising and
    promotion) 2,000

Break Even Point of the Bagel Business
  • The breakeven point, given your analysis to this
    point is
  • Break-even point in s of meals annually
    Annual Fixed Costs
  • Contribution Margin
  • 81,650
  • 1.51
  • 54,073 meals
  • This works out to 4,507 meals per month or 149
    meals per day.

Break Even Point of the Bagel Business
  • Break-even point 54,073 meals
  • This works out to 4,507 meals per month or 149
    meals per day.
  • This implies baking and selling 1,788 bagels per
    day with no wastage.
  • Do your ovens and facilities have the capacity
    to produce this volume each day?
  • If you are closed on Christmas, New Years or any
    other dayyou will have to sell more on the other
    days on average.
  • NOW - the big question.what is the market for
    your product in that locationwho would buy
    bagels? How frequently? What is their
    purchasing behaviour? Attitudes toward price?

Break Even Point of the Bagel Business
  • Break-even point 54,073 meals
  • At an average price per sale of 10.50, that
    volume of meals means annual sales revenue of
  • Annual Sales Revenue Price per meal times of
  • 10.50 54,073
  • 567,766.50

Initial Investment Schedule
Initial Investment Schedule
  • The purpose of the initial investment schedule
  • Identify proposed sources of capital
  • Identify proposed initial uses of capital

The Monthly Cash Budget
The Monthly Cash Budget
  • The purposes of the monthly cash budget
  • Illustrate projected sources of cash timing and
  • Illustrated projected uses of cash timing and
  • Demonstrate the time to producing a positive cash

The Pro Forma Income Statement
The Pro Forma Balance Sheet
Subsidiary Forecasts
  • You will need to make a series of forecasts that
    will be incorporated into your overall financial
  • Some of it will require outside data gathering
    for example
  • Employer contributions to CPP and EI
  • WSIB premiums
  • The most common subsidiary forecasts are
  • Loan amortization schedule
  • Capital Cost Allowance Schedule

Types of Small Business Loans
  • Standard Bank Financing
  • Fixed term
  • Fixed rate
  • Variable rate
  • Operating Line of Credit
  • Government Financing
  • Northwestern Ontario
  • FedNor
  • Thunder Bay Ventures
  • Business Development Bank of Canada

Fixed Term Blended Payment Loans
This is a diagram of the cash flows involved
Effective Annual Rate Calculations
  • You wish to borrow 10,000
  • Assume you are quoted a fixed term, fixed payment
    loan at 2.5 percent above the prime lending rate
  • The prime lending rate is currently 4.5
  • The loan amortization period is 1 year

Calculating an Effective Monthly Rate
  • Since most loans require monthly payments, it is
    necessary to determine the monthly rate that
    would equal the effective annual rate

Calculating the Monthly Loan Payment
  • Now we know all of the variables
  • 10,000 loan
  • 7 APR 1-year term loan
  • We can calculate the loan payment

Preparing a Loan Amortization Schedule
Use of the Loan Amortization Schedule
  • The loan payment each month is a cash outflow
    that must be included in your cash monthly cash
  • The total interest expense for the year is
    included in the pro forma income statement.
  • NOTE - repayment of principal is not a tax
    deductible expense.
  • - the total payment is a cashflow burden
    borne by the firm

Effective Annual Rates of Return
  • Most loan rates are quoted in APR terms (annual
    percentage rate)
  • However, APR financing does not take into account
    the effects of compounding
  • Most loans are compounded semi-annually. (ie.
    Interest is calculated and credited every six
    months). This effectively increases the rate of
    interest that the consumer faces.

The Nature of Depreciation
  • Capital assets such as buildings and equipment
    and land are very costly, but usually have a
    useful life of greater than one year.
  • Buildings and equipment tend to wear out over
    time (ie. They have a useful life of perhaps 10,
    20 or 30 years)
  • Land doesnt wear out.
  • The cost of the buildings and equipment is spread
    out over their useful lives, and only the amount
    of wastage (wear and tear) is deductible from
    income in that year for the purposes of
    calculating taxes.
  • CCRA predominantly uses one method of
    depreciationit is known as Capital Cost

CCA gives rise to a Tax Shield Benefit to the
  • CCA is a non-cash deduction from income that
    would otherwise be subject to income taxation.
  • As a result of the CCA deduction, taxable income
    is reduced.
  • This results in a savings in tax payable.
  • The tax shield benefits is equal to T(CCA)
  • t corporate tax rate
  • CCA the dollar amount of CCA claimed
  • A firm with a 40 corporate tax rate and a 2,000
    CCA deduction will save 800 in taxes.

K. Hartviksen
ExampleConsider two firms that report 10,000
in earnings before CCA and taxes, face a 40 tax
rate. One firm has no CCA to claim, the other
can claim 2,000 in CCA
  • Company A Company B
  • Earnings Before CCA Tax 10,000 10,000
  • CCA 2,000 0
  • Taxable Income 8,000 10,000
  • Taxes _at_ 40 3,200 4,000
  • Net Income 4,800 6,000
  • Add back non-cash expense 2,000 0
  • Cash flow from Operations 6,800 6,000

Note that company A is better off by 800 because
of the 2,000 non-cash deduction of CCA. That is
the amount of taxes saved.
K. Hartviksen
CCA Rules
  • Assets are grouped into pools or classes and
    depreciated as a group
  • CCA rates are found in the regulations to the
    Income Tax Act and can be changed by
  • There is no need for an estimate of salvage value
    or useful life
  • 1/2 of the regular CCA rate for the class applies
    to the net additions to the pool for that year.
  • CCA cannot be used to create a tax loss.

K. Hartviksen
CCA Over Time - A Simple ExampleAssume you
acquire a depreciable asset with a cost base of
100,000 and there are no other assets in this
pool. The CCA rate for the pool is 10. Note
you are allowed only 1/2 the regular CCA rate on
the net additions to the pool in the year of
K. Hartviksen
CCRA Form forecasting CCA out three years for one
asset class
NOTE Regarding Depreciation in your Financial
  • You never include depreciation (CCA) on a cash
    flow (cash budget) forecast
  • You use depreciation only in your pro forma
    income statement, and on your pro forma balance

Initial Startup Capital Required
  • The initial estimate can and probably will be
    revised depending on your first iteration of the
  • Separate the estimate into two categories
  • Working capital
  • Fixed assets (plant and equipment)
  • You do this because when you look for financing
    for these investments, the fixed assets can
    usually be pledged as collateral for any
    borrowing, whereas the working capital needs
    usually has to be financed out of the owners

Initial Investment
  • In your business plan you will have to prepare a
    schedule that details the initial financial
    investment that is required to make your business
    a success.
  • It is best is you divide the schedule up into two
  • Working capital requirements
  • Capital Equipment

Initial Investment Required Example
The Cash Budget
  • Incorporates your startup capital estimates
  • Is strongly a function of your sales forecasts
    (that are predicated on your market research and
    some assumptions about your market penetration

Importance of Cash Flow
  • Planning to have cash available to pay bills of
    the business as they become due is a critical
    aspect of business survivalit is a management
  • Understanding the cash flow cycle of a firm can
    help you manage those elements that are critical
    to ensuring you can pay your bills.
  • Cash flow forecasting through a cash budget
    provides important information to you and to your
    potential funding partners about your operating
    financial needs and most particularly, the timing
    and magnitude of any projected cash deficits or

Cash and Materials Flow
Cash Sales
Shareholders equity
The Cash Budget
  • Cash budgets are most often prepared on a monthly
  • Most funding partners expect to see three years
    of projects. Some may require as many as seven
  • If your business expects to encounter any
    seasonality in the sales cycle, you will find
    some interesting effects that may dramatically
    affect the amount of start-up financing that you
  • If there is seasonality effects, you will have to
    carefully manage your cash flows, inventories and
    accounts receivable to remain solvent.

Cash Budgets
  • allow us to forecast the cash flows of a firm
    over time (between balance sheet dates).
  • identifies the timing and magnitude of expected
    cash surpluses and deficits - thereby providing
    the manager with the opportunity to prepare, in
    advance, to finance expected deficits, or to
    invest surpluses.
  • may be used as the basis for pro forma financial

General Form - Cash Budget
Assumptions of Cash Budgets
  • that cash inflows and outflows occur evenly
    throughout the month.
  • this is rarely the case
  • disbursements often are predictable
  • wages/salaries due on 15th and 30th
  • payments to suppliers on 15th or 30th, etc.
  • cash receipts depend on how we manage accounts
    receivable....depending on how we do this they
    may largely occur between the 20th and 30th of
    the month...
  • what is the impact of the foregoing?
  • how can we overcome this?

General Form - Cash Budget
General Form - Cash Budget
Cash Balance
Analyzing your financial forecasts
  • Lakehead Shad Valley

Ratio Analysis
  • This is a technique used by investors and bankers
    (lenders) alike to assess the financial strength
    of your proposed business.
  • Once your business begins, ratios will be used to
    examine how well you are managing your business.

  • Is one number divided by another!
  • Purpose is the provide some insight into the
    complexity of financial information.
  • Example
  • Current Ratio Current Assets
  • Current Liabilities

Categories of Ratios
  • Liquidity
  • Asset Management
  • Debt Management
  • Profitability

Liquidity Ratios
  • Purpose
  • to examine the ability of the business to pay
    its bills on time.
  • A firm that cant survive in the short-term wont
    have to worry about the long-term!

Liquidity Ratios
  • Examples
  • Current Ratio Current Assets
  • Current Liabilities
  • Quick Ratio Current Assets - Inventories
  • Current Liabilities

Asset Management Ratios
  • Purpose
  • to give some insight into how well the business
    is being managed.

Asset Management Ratios
  • Examples
  • Inventory Turnover Sales
  • Inventory
  • Average Collection
  • Period Receivables
  • Sales/365

Asset Management Ratios
  • Examples
  • Fixed Asset
  • Turnover Sales
  • Fixed Assets
  • Total Asset
  • Turnover Sales
  • Total Assets

Debt Management Ratios
  • Purpose
  • to examine the impact that the chosen methods of
    financing are having (likely to have) on the
    financial health of the business.
  • Lenders will also be concerned with your
    liquidity ratios because those ratios assess your
    firms ability to pay the bills when they come

Debt Management Ratios
  • Examples
  • Debt to
  • Total Assets Total Debt
  • Total Assets
  • Times interest
  • earned Operating Income
  • Interest Charges

Profitability Ratios
  • Purpose
  • to examine the historical (or prospective rate of
    return in the case of pro forma financial
    statements) rates of return earned on invested

Profitability Ratios
  • Examples
  • Profit margin
  • on sales Net income
  • Sales
  • Return on
  • Equity Net income
  • Common Equity

Profitability Ratios
  • Examples
  • Return on
  • Assets Net income
  • Total Assets

Seasonality of Sales
  • most firms experience a seasonal variation in
    sales volume...times of the year when sales
    increase, and times of the year when sales
    volumes are low or non-existent.
  • there are financial implications for firms that
    experience a marked seasonal sales cycle
  • what is the best time in the seasonal sales cycle
    to have the fiscal year end?
  • how do we finance the seasonal build-up in
    inventory levels?
  • what happens to the balance sheet accounts at
    different points in the seasonal sales cycle?
  • how comparable are two firms in an industry with
    a marked seasonal sales cycle if they have differ
    fiscal year ends?

Balance Sheet Accounts over time
Selecting the Fiscal Year End
  • tax considerations
  • for smaller, owner/managed enterprises, there are
    greater tax-planning opportunities if the
    corporate fiscal year end is set sometime after
    the calendar year end
  • the firms financial position
  • firms will look most healthy if the fiscal year
    end is set sometime after the seasonal sales
    peak....long enough afterward to see receivables
  • auditors preferences
  • auditors are busy around the calendar year
    end...with firms and individuals that have
    selected Dec 31 as their year end.
  • auditors are busy from February through May with
    income tax

Ratio Analysis
  • a ratio is just one number over another number.
    If the ratio is poor when compared to something
    else, it could be a result of the numerator, or
    the denominator, or both.
  • a ratio is just a number. It must be compared
    to something else if it is to begin to take on
    some meaning. Common comparators include
  • industry average ratios
  • historical ratios for the firm itself
  • other current ratios for the same firm
  • it is important to take the context into
    account when interpreting the financial
    performance of the firm...what industry is the
    firm in? how rapidly has the firm been growing?
    what is happening in the industry?
  • ratio analysis is a starting point in analyzing
    the firm. It must be supplemented by analysis of
    the overall economy, the industry, etc.

Income Statement Ratios
  • Absolute Common Size Industry Avg.
  • Sales 250,000 100.0 100
  • Cost of Goods Sold 173,000 69.2 70
  • Gross Margin 77,000 30.8 30
  • Admin Expenses 50,000 20.0 10
  • EBIT 27,000 10.8 20
  • Interest Expense 5,000 2.0 5
  • Net Income 22,000 8.8 15
  • Profit Margin on Sales 8.8 15
  • You can see from the common size data, that this
    firm differs from the industry in overhead costs
    and in interest expense. Without further
    information it is difficult to draw any specific
    conclusions, however, you should note, that
    direct operating costs are in line with the
    industry. Why is selling and admin. expenses
    double that of the industry? The firms fixed
    financing costs are it just low cost or
    are they using less debt than others in the

Use of Ratios
  • Evaluate your past financial performance
  • Evaluate your financial forecasts

Role of Ratios in Your Business Plan
  • Your business plan forecasts your firms future
    financial performance.
  • Conduct ratio analysis on your forecast position
  • determine whether you should pursue your plans
  • revise your plans.

Role of Ratios in Your Business Plan
Prepare Pro Forma Financial Statements based on
your business plans
Revise plan if necessary
Analyze your forecasts using ratio analysis
Once you are satisfied with your
forecastsproceed to raise the capital and
implement the plan
The Articulation of forecast Income Statements
and Balance Sheets
  • Articulation refers to the fact that the forecast
    income statements and balance sheets are
    integrally linked.
  • For example
  • Assets like building and equipment are stated on
    the balance sheet at their net value (net of
  • The retained earnings account on the balance
    sheet will be the accumulated retained earnings
    over time as found historically on the income
    statements. (The difference between last years
    R/E balance and next years, is the amount of
    income after tax that is retained in the firm.)

  • Good Luck
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