SAB Lesson #6.1 Flashcard: Understanding the Financial Plan

Front

Which component of a financial plan describes how a business will generate income? Options: Balance Sheet, Revenue Model, Cash Flow Statement, Break-even Analysis

Back

Revenue Model

Front

What is the primary purpose of a projected profit and loss statement in a financial plan?

Back

To predict the business's profitability and operating efficiency

Front

Explain why a cash flow statement is crucial for a business, even if it is profitable.

Back

It reflects the inflow and outflow of cash, ensuring the business can meet its obligations.

Front

Which financial statement provides a snapshot of a company's financial position, listing assets, liabilities, and equity?

Back

Balance Sheet

Front

How does a break-even analysis help a business?

Back

It calculates the point at which the business will cover its costs and start making a profit.

Front

Discuss the importance of financial assumptions in a financial plan.

Back

They help investors understand the logic behind the projections.

Front

What is the role of a funding strategy in a financial plan?

Back

To describe the types of funding needed and the planned use of funds

Front

Why is it important for a business to have a clear financial strategy?

Back

To demonstrate to stakeholders that risks are understood and financial goals are achievable

Front

Identify the component of a financial plan that details the amount of money needed to start or grow a business.

Back

Capital Requirements

Front

How can a business use a projected profit and loss statement to improve its operating efficiency?

Back

By analyzing expected revenues, costs, and expenses to identify areas for cost reduction.