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CHAPTER 8 MASTERING YOUR MONEY
(Note: Figures in bracket indicate “Negative”)
Again, certain assumptions are made based on your knowledge
about the industry. Here are some of the assumptions made:
• Since this is a retail business, cash revenue is received
immediately when the sale is recorded. Note that for a
‘Business to Business’ company, cash is received only 30-
60 days after the sales revenue is recorded
• A bank loan of $65,000 is taken in January. Installments
of $1,200 must be paid monthly over 5 years. Of this
$1,200, $500 is recorded as an interest expense (in the
Profit & Loss Statement)
• Rental plus 2-months deposit (i.e. $9,000) is made the
moment the retail space is taken over in January.
• Sales revenue is collected inclusive of 7% sales tax. This
total sales tax is then paid to the government after 3 months
(i.e. paid $14,700 in April)
• Cash is paid to suppliers (i.e. cost of goods sold) 30 days
after the expense is recorded.
By doing such a cash flow projection, you will be able to have
an idea of the cash requirements required every month and
SECRETS OF BUILDING MULTI-MILLION DOLLAR BUSINESSES 259