Page 268 - merged.pdf
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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

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