“If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem”
J.P. Getty, American business executive
If one component of a business plan attracts more attention that any other, this is certainly the financial plan. The financial plan is a forecast of the business financial statements and includes a minimum of a profit and loss account and a cashflow statement, over multiple years. Before we can generate a financial forecast we need to develop a good understanding of one-year financial statements.
Download Financial Statements and Valuation, an 80-page book-within-a-book covering the following chapters:
- Chapter 4: Understanding Financial Statements
- The Rationale behind Financial Statements
- The Statement of Cashflow
- The Profit and Loss Account
- The Balance Sheet
- Key Ratios
- Generating a Financial Statement Forecast
- Chapter 5: Valuing Businesses
- A Holistic View on Value and Valuation
- ‘Multiples’ Valuation based on Key P&L Figures
- The Net Present Value (NPV)
- The Economic Value Added (EVA®)
- The NPV Terminal value, or the Multiples Method Revisited
- Estimating the Weighted Average Cost of Capital (WACC)
- Estimating the Cost of Debt
- Estimating the Cost of Equity
- Don’t Use the Internal Rate of Return (IRR)
- Chapter 6: Checklist of common pitfalls
Enjoy!