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SET THE CONTEXT
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MARKET ANALYSIS AND BUSINESS POSITIONING
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DEVELOP YOUR SALES FORECAST
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DEVELOP YOUR OPERATIONAL AND COST PLAN
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DEVELOP YOUR CASH FLOW PROJECTIONS
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DETERMINE YOUR FINANCING STRATEGY
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INTERPRETING THE INCOME STATEMENT
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INTERPRETING THE BALANCE SHEET
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INTERPRETING THE CASH FLOW STATEMENT
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CONCLUSION
How to read a balance sheet
TYPE OF ASSETS
- Current assets = convertible to cash in 1 year
- Cash
- Accounts receivable
- Inventory
- Prepaid expenses and deposits
- Long-term assets = held for more than 1 year
- Property, plant and equipment
- Land and buildings
TYPE OF LIABILITIES
- Current liabilities = payable within 1 year
- Accounts payable
- Accrued expenses
- Long-term liabilities = due after 1 year
- Long-term debt
OWNER’S EQUITY
- This is the net worth of your business
- Owner’s investment
- Retained earnings