Enterprise 4.2

• Short term funds - are utilized to fund the working capital of the enterprise.
• Financial analysis - include profitability and vertical and horizontal analysis.
• Profitability - measure the gain or return on the owner's equity or investment.
• Vertical analysis - matches the amounts or accounts in a common- size F/S through the use of percentages of a common base.
• Horizontal analysis - involves matching accounts in the F/S through percentage change calculations, for two or more consecutive periods.
• Financial plan - involve forecasting only the cash financing requirement of the enterprise.
• Cash receipts - are drawn from the forecasted sales value in the marketing study.
• Cash disbursement - are taken from the cost of product or service in the operations study.
• Working capital - used to purchase the materials and/or supplies required for the business to operate.
• Salaries and wages - no. of employees × wage rate per period × period covered
• Material expenses - no. of units × purchase cost per unit
• Supplies expense - no. of units × purchase cost per unit
• Marketing expenses - units × purchase cost per unit
• Transportation expenses - gas expense, vehicle hire, and/or vehicle fares.
• Communication expense - phone and internet charges
• Utilities - power and water charges for period covered
• Income statement - also called the 'profit and loss statement'.
• Balance sheet - statement of owner's equity and cash flow submission
• Horizontal analysis - is a left-to-right comparison of performance for comparative periods.
• Vertical analysis - evaluates financial statement accounts with each account expressed as a percentage of the base account.
• Vertical analysis - this performance measurement determines proper balances for given accounts
• Ratio analysis - limited to profitability ratios
• Profitability - measure the capability of the enterprises to earn profits from their operations.
• Ratio of gross profit to net sales = gross profit/net sales
• Ratio of net income to net sales = net income/net sales
• Operating ratio = cost of sales + operating expenses/net sales
• Ratio of income to owner's equity = net income for the period/average owner's equity
• Ratio of net income to total assets = net income/total assets
• Ratio of net sales to total assets = net sales/total assets.
• Operations study - includes the decision areas such as product or service description; supplier-partner description; and cost of product or service.
• Product or service description - involves the design of the good and/ or service and its quality standards.
• Product or service description - include these trade and quality marks, and the business names and registrations of the purchased products.
• Operations study description - focuses on the providers or sources of the inputs
• Marketing study description - involves the users of the output.
• PSD - How long would each service unit delivery take?
• PSD - What are the steps involved in the service delivery?
• Supplier partner description - include the process, supply chain management, and inventory management tasks for the owner-proprietor and teams.
• SPD - What is the lead time for delivery of the purchased goods?
• SPD - Is there a minimum volume for discounted purchase goods?
• SPD - Is there a setup cost for tools or equipment?