itb chap 12
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Introduction to Business© Thomson South-Western
ChapterChapterChapterChapter
Financial Management
12-112-1 Financial Planning
12-212-2 Financial Records and Financial Statements
12-312-3 Payroll Management
12-412-4 Financial Decision-Making
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Introduction to Business© Thomson South-Western
Chapter 12
Slide 2
LESSON 12-1
Financial Planning
Goals Recognize important financial questions
that must be answered in a business. List the steps in budget preparation. Describe three types of business
budgets.
Introduction to Business© Thomson South-Western
Chapter 12
Slide 3
Key Terms
revenue expenses budget start-up budget operating budget cash budget
Introduction to Business© Thomson South-Western
Chapter 12
Slide 4
FINANCIAL PLANNING
Beginning a business Ongoing operations Business expansion
Introduction to Business© Thomson South-Western
Chapter 12
Slide 5
BASIC FINANCIAL EQUATION
Revenue – Expenses = Profit or Loss
Introduction to Business© Thomson South-Western
Chapter 12
Slide 6
>> C H E C K P O I N T
What is the basic financial equation for businesses?
Introduction to Business© Thomson South-Western
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Slide 7
DEVELOPING BUSINESS BUDGETS Sources of budget information Budget preparation
Introduction to Business© Thomson South-Western
Chapter 12
Slide 8
>> C H E C K P O I N T
What are the four steps in preparing a business budget?
Introduction to Business© Thomson South-Western
Chapter 12
Slide 9
TYPES OF BUDGETS
Start-up budget Operating budget Cash budget
Introduction to Business© Thomson South-Western
Chapter 12
Slide 10
>> C H E C K P O I N T
Identify and describe the three types of budgets needed by all businesses.
Introduction to Business© Thomson South-Western
Chapter 12
Slide 11
LESSON 12-2
Financial Records and Financial Statements
Goals Identify several types of financial
records needed by businesses. Describe the differences between an
income statement and a balance sheet.
Introduction to Business© Thomson South-Western
Chapter 12
Slide 12
Key Terms
financial records assets liabilities owner’s equity balance sheet income statement
Introduction to Business© Thomson South-Western
Chapter 12
Slide 13
FINANCIAL RECORDS Types of records
Asset records Depreciation records Inventory records Records of accounts Cash records Payroll records Tax records
Maintaining financial records
Introduction to Business© Thomson South-Western
Chapter 12
Slide 14
>> C H E C K P O I N T
How has the process of maintaining financial records been affected by technology?
Introduction to Business© Thomson South-Western
Chapter 12
Slide 15
FINANCIAL STATEMENTS
The balance sheet The income statement
Introduction to Business© Thomson South-Western
Chapter 12
Slide 16
Introduction to Business© Thomson South-Western
Chapter 12
Slide 17
Introduction to Business© Thomson South-Western
Chapter 12
Slide 18
>> C H E C K P O I N T
What is the difference between a balance sheet and an income statement?
Introduction to Business© Thomson South-Western
Chapter 12
Slide 19
LESSON 12-3
Payroll Management
Goals Describe the components of a
business’ payroll system. Identify information included in payroll
records and paychecks.
Introduction to Business© Thomson South-Western
Chapter 12
Slide 20
Key Terms
payroll payroll record direct deposit
Introduction to Business© Thomson South-Western
Chapter 12
Slide 21
PAYROLL SYSTEMS
Income taxes Social Security and Medicare Unemployment taxes
Introduction to Business© Thomson South-Western
Chapter 12
Slide 22
>> C H E C K P O I N T
What is the purpose of the payroll system?
Introduction to Business© Thomson South-Western
Chapter 12
Slide 23
PREPARING A PAYROLL
Payroll records Preparing paychecks
Introduction to Business© Thomson South-Western
Chapter 12
Slide 24
AN EMPLOYEE’S PAYCHECK AND EARNINGS REPORT
SamplePaycheck
SampleEarningsReport
Introduction to Business© Thomson South-Western
Chapter 12
Slide 25
>> C H E C K P O I N T
What is the difference between a payroll record and an earnings report?
Introduction to Business© Thomson South-Western
Chapter 12
Slide 26
LESSON 12-4
Financial Decision-Making
Goals Recognize important financial
information managers use to make decisions.
Identify the steps in making financial decisions in business.
Introduction to Business© Thomson South-Western
Chapter 12
Slide 27
Key Terms
financial performance ratios discrepancies
Introduction to Business© Thomson South-Western
Chapter 12
Slide 28
USING FINANCIAL INFORMATION Important financial information Understanding financial performance
ratios Current ratio Debt to equity ratio Return on equity ratio Net income ratio
Introduction to Business© Thomson South-Western
Chapter 12
Slide 29
FINANCIAL PERFORMANCE
RATIOS
Introduction to Business© Thomson South-Western
Chapter 12
Slide 30
>> C H E C K P O I N T
Identify four important financial performance ratios used by managers to determine how well the business is performing.
Introduction to Business© Thomson South-Western
Chapter 12
Slide 31
MAKING FINANCIAL DECISIONS Prepare a budget Look for discrepancies between actual
and budgeted performance Make needed adjustments
Introduction to Business© Thomson South-Western
Chapter 12
Slide 32
>> C H E C K P O I N T
List the three steps in financial decision-making.