Financial planning

Financial plan includes three documents: 

• income and expenditure statement;
• plan-balance;
• statement of cash flows.

Income and expenditure statement 
In order to evaluate the profitability of the enterprise you must have the following original information:
• Forecast of sales volume;
• the estimated value of direct expenses;
• the value of overhead charges.
Forecast of sales volume. Determination of factors, which can influence on business, and consists of:

•  seasonal variations in sales volume;
• development of new products;
• exemption from the trade of certain goods;
• local particularities of economic situation;
• an expansion of the production areas;
• an organization of the sellouts and others.

The direct expenses. Direct expenses are expenses connected with the organization of sale of goods. From the point of view of planning the profits it is very important to present the direct expenses in the manner of percent from a volume of sales. Spares of goods at separate moments can vastly increase, and this is necessary to keep in mind in process of profit planning.
The overhead expenses. In many cases a value of overhead expenses is defined by a simple division  of the supposed amount of overhead expenses for a year into on 12.
As a rule, expenses, connected with a realization of commercial activity, include: 

• a rental;
• a salary;
• a transport expenses;
• a tax payments;
• a travelling expenses;
• expenses on stationery;
• a payment  for use of  communication services;
• percents on bank credit and different money payments;
• expenses on advertisment;
• amortization charges.

Plan-balance
Usually, the balance of the company is present in the form of a consolidated table, indicating sources of capital and means of its accommodation.
In the left part of the balance table there are the  assets of a company, that is materially-bankrolls, which disposes the enterprise and which are actively "occupied" in economic activity. The right part of the balance there are liabilities, they include different sources of reception of the necessary capital and other facilities.
The simplified form of the balance table is given below.  

Assets of balance include two main parts:

• circulating assets or current assets, it is expected that they turn  into a cash (or turn) during a year.
• main means or fixed assets, as a rule, they turn in several years, that is they  serve the company for a long time.

Intangible assets are formed from a cost of patents, licenses and that like, and also  from the so named "price of the company" - "goodwill" that is a value, reputation of  its trademark, which too can be a subject bathed-sale. At present else only some Kazakhstan companies can define its goodwill, but overseas this is rather wide-spread.
The liabilities include the obligation of the company before their own obliges and own (share) capital of the company.
The obligations, in their turn, are divided into the current (short-term) – they are expected to be paid during a year, and long-term, taken for more long period.
The balance of the reporting period serves as a base for analysis of financial stability of the enterprise.

Report about moving of  bankrolls (Cash Flow)
With the help of the plan of moving bankrolls a businessman can value the volume  of the bankrolls which are in its disposal, at any time time and define a necessity in short-term credit for renewing of their own circulating assets.
Unlike the report about profits, the report about money flow it reflects the actual arrival of all money from all sources, including receipts from sales of products, from selling the actions debt money, and from the remedies for sale or liquidations of some assets. The report about money flow  includes an actual payment of all expenseses.
To form the plan of moving of bankrolls, it is necessary to define two important factors. They are:

• expected money arrivals
• expected payments.

Receipts
Receipts include transfers on a current account and cash payments.  The receipts are usually connected with the trade activity of the enterprise and appear as a result of sale of goods or services. The other sources of receipts are:

• bank credits;
• credits of the other institutions or physical persons;
• lease payments for delivered in lease trade appartments;
• payments for use of some unnecessary enterprises of the main fund, a present time.

Payments
The payments include an enormous amount of varied articles, and mainly a purchase of goods for maintenance of the storage spare, buying of  equipment, the current expenses and additional expenses, and so on. The report about bankrolls does not include an amortization. The future need in bankrolls must be evaluated so that their has been enough for financing of the magnified volume of sales and payment all planned expenses.

Estimation of the financial state
Scheduling of the financial statements is not yet a finishing step in financial planning. It is necessary to check its qualitative forming i.e. a correspondence to the earlier designed rate and standard, which in its turn are indicators of condition of company and can reveal the weak places. The followings are included in a list of indicators:

• rates of the financial state of the company, which characterize an efficiency of the operative activity of the company in the course of realization of plans. They are the factors of profitability; profitability of capital; rates of financial activity (liquidity, profitability of the turn and financial stability).
• rates of investment efficiency, which are indicative of efficiency investment in concrete projects: pay-back periods, showing the time of the return of the deposited facilities and characterizing a risk of project; a pure value of an income, reflecting the scales of the planned and sizes of profitability of  new production or new facilities; the internal rate of profitability and a rate of investment profitability.