desa petrovic - financial management
DESCRIPTION
Financial managementTRANSCRIPT
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FINANCIAL MANAGEMENT
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AREAS:
Financial reports Ratio analysis Accounting control Business plan Sources of financing
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1. FINANCIAL REPORTS
BALANCE SHEET INCOME STATEMENT CASH FLOW ANALYSIS
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BALANCE SHEETASSETS
1.Current assets (1.1.+…+1.7.) 20.000
1.1. Cash and equivalent Counter, account, papers of value 20.000
1.2. Requirement of customers Yield that customers owe according to deal
1.3. Reserve: raw material Bought meterial
1.4. Reserve: production in progress
Costs of material and work for goods
1.5. Reserve: final products Final products ready for sale
1.6. Beforehand paid obligations Rent, insurance
1.7. Other current assets
2. Fixed assets ( 2.1.+ 2.2.+2.3) 520.000
2.1. Land Purchase cost of land
2.2. Business buildings Purchase cost of objects
2.3. Machines and equipment Purchase cost of machines and equipment
520.000
3. Amortization Amortization of fixed assets 0
4. Net value of fixed assets (2-3) 520.000
5. TOTAL ASSETS ( 1+4) 540.000
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BALANCE SHEETLIABILITIES
6. Current liabilities (6.1.+..+6.5.) 0
6.1. Liabilities according to providers
Yield which you owe to providers
6.2. Outstanding taxes Taxes of accounted salaries, immoovable property and owing gain
6.3. Outstanding interests Not paid interests
6.4. Short-term credits Principal of credits
6.5. Other short-term liabilities Not implied items previously
7. Long-term liabilities 100.000
7.1. Long-term credits Principal of credits 100.000
8. Total liabilities (6+7)
9. Capital (9.1.+9.2.+9.3) 440.000
9.1. Owners equity Initial owners equity 440.000
9.2. Investment capital New owners capital
9.3. Reinvestment gain Previously reinvestment gain
TOTAL LIABILITIES (8+9) 540.000
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INCOME STATEMENTTotal sales 210.000
Basic and industrial costs 90.000
Salaries+overtime+special bonus and additions 15.000
Taxes and contributions of net salaries (social, health, literacy) 10.800
Items used in production, but not object of sales 1.800
Repair and preserve, renovation, whitening and other 1.000
Advertising 1.000
Cars expences 0
Traveling and representation expences 3.000
Accounting, juristical, management consalting 1.500
Rent; phone, fax and internet; electricity, water, gas, heating 5.700
Property and employees insurance 450
Immoovable property taxes 0
Interests costs 0
Amortization of elementary means 13.000
Previously not implied liabillities 0
Amotrtization of fixed assets 143.250
66.750
Accounted taxes on valid metre of tax on gain 13.350
53.400
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CASH FLOW ANALYSIS
Jan.’07 Feb.’07 Mar.’07
1. Cash on Hand (beginning of period) 20.000 20.000 20.000
2. Cash receipts
2.1. Cash sales 40.000 45.000 50.000
2.2. Initial owners capital 420.000 0 0
2.3. Loan cash 100.000 0 0
2.4. New owners investment capital 0 0 0
2.5. Other cash receipts 0 0 0
TOTAL CASH RECEIPTS 560.000
45.000 50.000
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CASH FLOW ANALYSIS3. Cash paid out Jan.’07 Feb.’07 Mar.’07
3.1. Flux according to operative activity (OA)
3.1.1. Material (basic + auxillary) 20.000 20.000 20.000
3.1.2. Salaries 5.000 5.000 5.000
3.1.3. Taxes and contributions of salaries 3.600 3.600 3.600
3.1.4. Office material 0 1.800 0
3.1.5. Repairs & maintenance 1.000 0 0
3.1.6. Advertising 500 500 0
3.1.7. Car park 0 0 0
3.1.8. Travel expences and representation 1.000 1.000 1.000
3.1.9. Audit consultancies 500 500 500
3.1.10. Rent 2.100 0 0
3.1.11. Phone, fax and internet 700 700 700
3.1.12. Municipals 500 500 500
3.1.13. Insurance 450 0 0
3.1.14. Taxes 0 0 0
3.1.15. Other liabilities 0 0 0
TOTAL FLUX – OPERATIVE ACTIVITY 35.350 33.600 31.300
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CASH FLOW ANALYSIS3.2. Flux according to financial activity (FA) Jan.’07 Feb.’07 Mar.’07
3.2.1. Principal of credits 0 0 5.000
3.2.2. Interests 0 0 2.500
TOTAL FLUX – FINANCIAL ACTIVITY 0 0 7.500
3.3. Flux according to investment activity (IA)
3.3.1. Purchase of elementary means 520.000 0 0
3.3.2. Start-up expences 21.000 0 0
TOTAL FLUX – INVESTMENT ACTIVITY 541.000 0 0
3.4. Cash withdrawal by owner 0 10.000 0
3. TOTAL CASH PAID OUT (3.1. + ... + 3.4.) 576.350 43.600 38.800
4. Total cash (2-3) -16.350 1.400 11.200
5. Total cash in the end of the period (1+4) 3.650 5.050 16.250
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2. RATIO ANALYSIS
Liquidity ratios Solvency ratios Efficency ratios Profitability ratios Productivity ratios Net capital turnover analysis
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RATIO ANALYSIS
BALANCE SHEET
ASSETS LIABILITIES
Fixed assets 60.000Own sources (owner’s equity)
102.000
Current assets:- reserve- requirement- cash
96.00046.50034.50015.000
Long-term credits
12.000
Short-term credits
42.000
TOTAL 156.000 TOTAL 156.000
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LIQUIDITY RATIOS
Measure the ability of a firm to meet its short-term financial obligations. It is used:
Current ratio Quick ratio (Acid Test ratio) Cash ratio
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Current ratio
CURRENT ASSETSCR = ------------------------------------ SHORT-TERM OBLIGATIONS
96.000CR = ------------------- = 2,29 1
42.000
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Quick ratio (Acid Test ratio)
CASH + REQUIREMENTQR = -------------------------------------
SHORT-TERM OBLIGATIONS
15.000+34.500QR = --------------------- = 1,21
42.000
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Cash ratio
CASHCR = ------------------------------------ SHORT-TERM OBLIGATIONS
15.000CR = ------------------ = 0,351
42.000
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SOLVENCY RATIO
Sources structure of financing ratio shows real abilities of business
Debt ratio shows the level of owing
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Sources structure of financing ratio
OWNER’S EQUITYSSFR = -----------------------------
BORROWED EQITY
102. 000SSFR = ------------ = 1,891 54. 000
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Debt ratio
BORROWED FINANCING SOURCES DR = ------------------------------------------
TOTAL BUSINESS ASSETS
54.000 DR = ------------ x 100 = 34,6 % 156. 000
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EFFICENCY RATIO
Usually it is used:Reserve turnover ratioRequirement ratio (from buyers)Obligation ratio (toward provider)
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Reserve turnover ratio
PRICE OF REALISED PRODUCTSRTR = ----------------------------------------------- AVERAGE TOTAL RESERVE
150.000RTR = ------------------------------ = 3,2
1/2 ( 46.500 + 47.400)
360 DAYS
AVERAGE PERIOD OF RESERVE KEEPING = ----------------------------------
RESERVE TURNOVER RATIO
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Requirement ratio
INCOME OF REALISED PRODUCTS
TURNOVER BUYERS RATIO = -------------------------------------------------------- AVERAGE TOTAL BUYERS
360 DAYSAVERAGE PERIOD OF PAYMENT = --------------------------------- TURNOVER BYERS RATIO
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Obligation ratio
PRICE OF REALISED PRODUCTSTURNOVER PROVIDERS RATIO = --------------------------------------------------
---------- AVERAGE TOTAL PROVIDERS
360 DAYSAVERAGE PERIOD OF RECONCILE OBLIGATIONS =
-------------------------------------- TURNOVER PROVIDERS
RATIO
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PROFITABILITY RATIO
It is used:Meter of net gainMeter of yield on total assets
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Meter of net gain
NET GAIN MNG = ------------------------------------------------- INCOME OF PRODUCT REALISATION
45.000MNG = --------------- = 15%
300.000
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Meter of yield on total assets
NET GAIN METER OF YIELD ON TOTAL ASSETS = ----------------------- .
. AVERAGE ASSETS
45.000 METER OF YIELD ON TOTAL ASSETS= -------------------- = 29%
. . 156.000
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NET CAPITAL TURNOVER ANALYSIS
NCT = ( R + RE + C ) – STO R - reserve RE - requirement C - cash STO - short-term obligations
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Break-even point
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Break-even point can be shown by following formula: TFC BEP = ------------- U – VC/Uwhere is: TFC – total fixed costs, U – unit selling price, VC/U variable costs per unit
total profit (TP) = total costs (TC)
TP = unit selling price (U) x quantity of product (P) and TC = total fixed costs (TFC) + total variable costs (TVC) U x P = TFC + TVC TVC = VC/U x U U x P = TFC + ( VC/U x U) P ( U - VC/U) = TFC TFC P = -------------- U - VC/U
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3. ACCOUNTING CONTROL
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TARGETS
RELEVANT ASPECTS OF COST MANAGEMENT
WHAT’S THE TARGET OF: MANAGEMENT CONTROL
MANAGEMENT CONTROL TARGETS
WHAT’S MANAGEMENT CONTROL?
IT’S A DEFINED SYSTEM WITH:
* PROCEDURES* RESULTS
IT HAS NOT TO BE CONSIDERED A “UNA TANTUM ANALYSIS” OR A SUBPRODUCT OF GENERAL LEDGER
PRINCIPAL FEATURES OF MANAGEMENT CONTROL
HOW CAN YOU PROJECT A MANAGEMENT CONTROL SYSTEM
IT HAS TO BE DEFINED AS “SPECIFIC” SYSTEM FOR EACH COMPANY IT HAS TO BE DEFINED ACCORDING TO THE DECISONS
COSTS CLASSIFICATION WE WILL HAVE TO KNOW THE DIFFERENT WAYS TO CLASSIFY COSTS
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RELEVANT ASPECTS FOR COMPANY MANAGEMENT
AN EFFICIENT COMPANY MANAGEMENT
NEEDS
1.1. SKILLS TO MANAGE THE DIFFERENT “AREAS” IN SKILLS TO MANAGE THE DIFFERENT “AREAS” IN THE COMPANYTHE COMPANY
2.2. AN INFORMATION SYSTEMAN INFORMATION SYSTEM
3.3. HUMAN RESOURCES ABLE TO REACH ECONOMICAL HUMAN RESOURCES ABLE TO REACH ECONOMICAL TARGETSTARGETS
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SKILLS TO MANAGE THE DIFFERENT “AREAS” IN THE COMPANY
SALESSALES
NOT ONLY SALES, BUT
MARGINS
OPTIMIZE PRODUCTION COSTS :
* MAKE OR BUY* MANUFACTURING DEVELOPMENTPRODUCTIONPRODUCTION
ANALYSE GENERAL EXPENSES AND DECIDE
WHO WILL BE RESPONSABLE OF THEMGENERAL GENERAL EXPENSESEXPENSES
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INFORMATION SYSTEM (IS)THE FAST EVOLUTION OF MARKET
ASK FOR
INFORMATION SYSTEMINFORMATION SYSTEM
WHICH GIVES THE POSSIBILITY OF
ANALYSE
RESULTSSUPPORT DECISIONS
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INFORMATION SYSTEMINFORMATION SYSTEMINFORMATION SYSTEM
GENERAL LEDGERGENERAL LEDGER MANAGEMENT MANAGEMENT CONTROLCONTROL
•IT’S FOR LAW
•ONLY AMOUNTS
•IT’S FOR INTERNAL MANAGEMENT
* AMOUNTS AND QUANTITY UNIT SALESUNITS PRODUCTION
OVERHEADSEFFICIENCY AND PRODUCTIVITYAND SO ON ………
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INFORMATION SYSTEM
ECONOMICS RESULTS ANALYSISECONOMICS RESULTS ANALYSISECONOMICS RESULTS ANALYSISECONOMICS RESULTS ANALYSIS
CAN BE DONE WITH
GENERAL GENERAL LEDGERLEDGER
MANAGEMENT MANAGEMENT CONTROLCONTROL
INCOME STATEMENT
IN UE FORMAT
INCOME STATEMENT
IN
COST OF SALES
FORMAT
ECONOMICS REPORTS
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INCOME STATEMENT
SHOWS
GENERAL GENERAL LEDGERLEDGER
ACCOUNTING ACCOUNTING CONTROLCONTROL
GLOBAL GLOBAL RESULTSRESULTS
PRODUCT LINE PRODUCT LINE RESULTSRESULTS
SHOWS
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HUMAN RESOURCES ABLE TO REACH ECONOMICAL TARGETS
RESULTSRESULTS TOTALTOTAL COMPANYCOMPANY
SALES
•SELLING
•PRODUCTION
MANAGERSMANAGERS
SALES MANAGER
FACTORY MANAGER
VARIABLEVARIABLECOSTSCOSTS
GROSS MARGIN
•RESEARCH & DEVELOPMENT
•SELLING
•ADMINISTRATIVE
AND GENERAL
SELLIN AND ADMINISTRATIVE
MANAGERS
FIXEDFIXEDCOSTSCOSTS
EBIT
SALES MANAGER
GENERAL MANAGER
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INCOME STATEMENT
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THE INCOME STATEMENT FOR MANAGEMENT ACCOUNTING
THE PRINCIPAL AIMSTHE PRINCIPAL AIMS
OF INCOME STATEMENT FOR MANAGEMENT ACCOUNTING ARE
TO GIVE A SYNTHETICAL VISION OF ECONOMICAL RESULTS TO SUPPORT DECISIONS1
TO GIVE EVIDENCE TO :- OPERATING RESULTS- NOT OPERATING RESULTS
2
4
TO ANALYSE MARGING OF DIFFERENT PRODUCT LINES OR BUSINESS AREAS3
TO DEFINE DIFFERENT LEVELS OF MARGINS TO EVALUATE :- CONTRIBUTION MARGIN- MANUFACTURING MARGIN AND EBIT- CASH FLOW (OPERATING AND FINAL)
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DIFFERENT MARGINS AND RESULTS
CONTRIBUTION MARGIN
GROSS MARGIN/PROFIT
OPERATING PROFIT (EBIT)
GENERAL EXPENCES
DEPENDS BY VARIABLE AND FIX COSTS
IT DEPENDS BY ALL MANUFACTURING COSTS
IT DEPENDS BY ALL THE OPERATING COSTS
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NOT OPERATING COSTS
FINANCIAL
EXTRAORDINARY
FISCAL
TYPE CONTENTS
BANK INTEREST AND CHARGES
NON RECURRENT INCOMES OR COSTS
TAXES ON PROFITS
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DIFFERENT METHODS FOR “COSTING”
COSTING METHODCOSTING METHODCOSTING METHODCOSTING METHOD
THE COICE OF
IT’ S BASED ON
RECEIVERS AND USE
MANUFACTURING
PROCESS
COMPANY
ORGANIZATION
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DIFFERENT METHODS FOR “COSTING”
THE DIFFERENT METHODS WE CAN USE FOR
CAN BE SINTHETYZED IN
FULLFULLCOSTINGCOSTING
MANUFACTURING MANUFACTURING COSTINGCOSTING
DIRECT DIRECT COSTINGCOSTING
EVALUATE COSTSEVALUATE COSTS
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COST CALSSIFICATION
ACCORDING TO WHAT YOU HAVE TO
EVALUATE:
• PRODUCT
• COST CENTRE
DIRECT COSTSDIRECT COSTS
OBJECTIVELY IMPUTABLE TO PRODUCT OR COST CENTRE
I.E.: RAW MATERIALS, DIRECT LABOUR COST
INDIRECT COSTSINDIRECT COSTS
SUBJECTIVELY IMPUTABLE WITH “LOGICAL METHODS”
I.E.: GENERAL EXPENSES, FINANCIAL COSTS
ACCORDING TO THE RELATION WITH VOLUMES
•PRODUCTION
•SALES
VARIABLE COSTSVARIABLE COSTS
THEY CHANGE PROPORTIONALLY, IN RELATION WITH VOLUMES
I.E.:RAW MATERIALS, DIRECT LABOUR COST, COMMISSIONS
FIXED COSTSFIXED COSTS
THEY DO NOT CHANGE IN RELATION WITH VOLUMES, BUT THEY ARE LINKED TO TIME
I.E.:EMPLOYEES LABOUR COST., AMMORTISATION, SHOWS AND EXIBITION, …..
COSTS CLASSIFICATIONCOSTS CLASSIFICATION DESCRIPTIONDESCRIPTION
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FULL COSTING
FULL COSTINGFULL COSTINGFULL COSTINGFULL COSTING
CAN BE DONE ON TWO LEVELS
MANUFACTURING
COSTTOTAL COST
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MANUFACTURING COSTS
MANUFACTURING COSTMANUFACTURING COSTMANUFACTURING COSTMANUFACTURING COST
THE METHOD OF
IS BASED ON THE PRODUCT EVALUTION WITH ALL
COSTS CONCERNED WITHCOSTS CONCERNED WITH
MANUFACTURING PROCESSMANUFACTURING PROCESS
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TOTAL COSTS
TOTAL COSTTOTAL COSTTOTAL COSTTOTAL COST
THE METHOD OF
IS BASED ON THE PRODUCT EVALUTION WITH
MANUFACTURING COSTSMANUFACTURING COSTS GENERAL EXPENSESGENERAL EXPENSES
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DIRECT COSING
VARIABLE COSTVARIABLE COSTVARIABLE COSTVARIABLE COST
THE METHOD
IS BASED ON THE PRODUCT EVALUATION WITH
DEPENDING ONDEPENDING ON
SALESSALESDEPENDING ONDEPENDING ON
PRODUCTIONPRODUCTION
VARIABLE COSTSVARIABLE COSTS
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DIRECT COSTING
VARIABLE COSTS
DIRECT COSTING METHODDIRECT COSTING METHOD
THE PRODUCT IS EVALUATED WIYH ONLY
LIMITS:LIMITS:
1. POSSIBLE DIFFICULTIES IN DIVIDING COSTS INTO VARIABLE AND FIXED
2. PRODUCT IS EVALUATED WITH ONLY “FEW” COSTS
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DIRECT COSTING
VARIABLE COSTS
DIRECT COSTING METHODDIRECT COSTING METHOD
THE PRODUCT IS EVALUATED WIYH ONLY
ADVANTAGES:ADVANTAGES:
1. THE VARIABLE COST IS THE “MINIMUM LEVEL” TO ACCEPT A SALES PRICE
2. DIRECT COSTING CORRECTLY SUPPORT STRATEGIES FOR INCREASING SALES VOLUMES
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FULL COSTING
ALL THE COMPANY COSTS
FULL COSTINGFULL COSTING
THE PRODUCT IS EVALUATED WITH
LIMITS:LIMITS:
THE ATTRIBUTION OF GENERAL EXPENSES TO THE SINGLE PRODUCTS IS NEVER OBJECTIVE
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FULL COSTING
ALL THE COMPANY COSTS
FULL COSTINGFULL COSTING
THE PRODUCT IS EVALUATED WITH
ADVANTAGES:ADVANTAGES:
THE “THOUGHT” THAT A PRICE THAT WILL COVER ALL COSTS, GIVES YOU SURE EARNINGS
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COST CENTER AND RESPONSABILITY
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COST CENTER
COMPANY “ENTITY”COMPANY “ENTITY”COMPANY “ENTITY”COMPANY “ENTITY”
TO WHICH CAN BE ATTRIBUTED
COST CENTERCOST CENTER
A
COSTSCOSTS
IS A
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COST CENTER AIMS
COST CENTER AIMSCOST CENTER AIMSCOST CENTER AIMSCOST CENTER AIMS
THE PRICIPAL
CAN BE CONSIDERED
TO DEFINE
COST
DESTINATION
TO ATTRIBUTE
INDIRECT COSTS TO
PRODUCT
TO LINK RESPONSABILITY
AND COSTS
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COST CENTER CLASSIFICATION
COST CENTERSCOST CENTERS
IT CAN BE DEVIDED
BASING ON ACTIVITY:
PRODUCTION COST CENTER
OVERHEAD COST CENTER
AUXILIAR COST CENTER
1
2
3
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PRODUCTION COST CENTER
ALL THE
WHICH ARE DIRECTLY INVOLVED IN THE
PRODUCTION COST CENTERPRODUCTION COST CENTER
IT’S POSSIBLE TO CLASSIFY AS
MANUFACTURING PROCESSMANUFACTURING PROCESS
COMPANY ENTITIESCOMPANY ENTITIES
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OVERHEAD COST CENTERS
OVERHEAD COST CENTERSOVERHEAD COST CENTERSOVERHEAD COST CENTERSOVERHEAD COST CENTERS
IT’S POSSIBE TO CLASSIFY AS
WHICH ARE INVOLVED IN
GENERAL ACTIVITY MANAGEMENT:
COMPANY ENTITIESCOMPANY ENTITIES
ALL THE
SALES, PURCHASES, PRODUCTION MANAGEMENT,
RESEARCH AND DEVELOPMENT, FINANCE
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PRODUCT COSTS
PRODUCT COST PRODUCT COST
RAW MATERIAL
EXTERNAL SERVICES/PRODUCTION
INTERNAL MANUFACTURING COSTS
1
2
3
HAS TO BE COMPOSED BY
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PRODUCT COSTS
PRODUCT COST PRODUCT COST
RAW MATERIAL
EXTERNAL SERVICES/PRODUCTION
INTERNAL MANUFACTURING COSTS
1
2
3
HAS TO BE COMPOSED BY
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PRODUCT COSTS
EXTERNAL SERVICESEXTERNAL SERVICES
THE NUMBER OF “OPERATIONS” EXTERNALLY MADE
PURCHASE PRICE OF EVERY OPERATION
EXTERNAL SERVICES COSTS
1
2
DEPENDS ON
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PRODUCT COSTS
MANUFACTURING COSTSMANUFACTURING COSTS
THE NUMBER OF “OPERATIONS” INTERNALLY MADE
MANUFACTURING COST CENTER RATES
INTERNAL MANUFACTURING COSTS
1
2
DEPENDS ON
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PRODUCT COSTS
PRODUCT COSTSPRODUCT COSTS
DEPENDS ON THE SYSTEM WE HAVE CHOSEN, AND THE IMPACT OF THE DIFFERENT SYSTEM
WILL CHANGE ONLY THE MANUFACTURING COST, SO WE WILL HAVE:
VARIABLE MANUFACTURING COST AND VARIABLE PRODUCT COST
TOTAL MANUFACTURING COST AND FULL PRODUCT COST
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4. BUSINESS PLAN
Preparing a business plan
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What is a business plan? Writen resume of
past, present and futureactivities of your business.
Business itinerer of how to get from present position to one which is projected in future.
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Goal of preparing business plan?
Document which is used as a standard for: checking your planed business ideas
and projects tracking realisation of your elementary
planed business activities with current realised results
evaluation of projects at insurance additional needed capital for its realisationu
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Parametars of business plan (1)
Start-up Development of existing firm New project > new firm
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Parametars of business plan(2)
Structure of owner Caracter of program / action Owner’s capital
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Parametars of business plan (3)
Time dimension of business plan Aiming additional sources and
level of capital It is optimal to prepare chronological
Business plan based on term which shows investment term of repayment of capital.
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Elemens of Business plan Basic elements of business plan are: Cover page Resume Description of firm (company profile) Market analysis (branch analysis, activity) Production programme and production plan Human recources plan Selling plan Marketing plan Financial plan Plan of future development Addition
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On cover page it is shown:- firm- title of business plan- relate period - author(s)
Cover page
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Resume (1) This part of Business plan is compiled in
the end of its preparing, and it is placing on its beginning.It represent “window” of Business plan.It should be concise, descriptive and comprehensible, with size of one or two pages.It illuminate only the most important and key results which are obtained during preparing all other elements of business plan.
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Resume (2)
It is especially important to point up key details linked to:
programme/activity, technology, equipment and production
process, concurrent in product/service, market, and especially financial construction which
should give concise ilustration of level and dynamics of necessary investment, and also flow of assets repayment.
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Description of firmHere are given basic information about firm, which should demonstrate its business profile, and it includes data like:- business place,- type of ownership, level and sources of capital,- authority team (CV of management),- form of organisation,- available assets and liabilities, - business propaganda,- positional capital of firm, good will, and other.
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Market analysis (branch analysis, activity) In this part you shoud give answers on theese questions:
How large is production in country? How large is growth? Which are the most important regions? How large is volume of selling? Which are the basic trends? How is economy and loyal environment? Who is concurrent? What are the advantages og concurrent? What are the main barriers in entering the
market?
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Production programme and production plan (1)
This part of Business plan should give answers on next questions:
Identifying production programme (merit of product and assortment).
What are the main features of production process?
Choice of technology and necessary equipment.
Who are productors and delivers of equipment?
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Production programme and production plan (2) Which are and how are solved technical
demands (electrical energy, water i canalization and other) for using selected technology?
What kind of objects and location are needed?
Identifying of raw material and delivers for realisation of production programme.
Is all proces of production performed substantively and who are other under-performers?
How big are costs of production? What are future investments in
equipment?
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Human recources plan
Here is necessary to define next elements:
What are the tasks and works? What functions are officiated? Who are performers? How big are refunds and
obligations?
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Selling plan
In this part you should make analysis of selling which is believed to be accomplished on market. To do that next is necessary:
Create calculation of costs and form prices of products.
Forecast selling with more scenarios. Setup organisation of selling. Make buyers analysis.
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Marketing planThis part is most important for succesful realisation of Business plan. According to that it is necessary to do market analysis with answers to next questions:
What is aim group, apropos who are potential buyers of product?
What are like prices on market? How to do product promotion? Which are distribution chanels? What kind of advertising to use? How big are advertising expences?
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Financial planThis is together the most important and most complexed part of business plan. It shows financial adequacy of entering in business. To do it on valid way you shoul analyse next:
Initial and operative capital Income statement Balance sheet Cash flow analysis Break-even point Summary of amortization and credits.
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Plan of future development
This part of business plan should indicate on main directions and goals in next period.
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Addition
In this part is content all necessary materials and documentation which are important for realisation of whole business and Business plan.
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Realisation of business plan
It is necessary, as especially important for realisation of Business plan, to notice that in process of animation and attraction of potential partners or/and external buyers for realisation of Business plan, and during of process of negotiation with them, you should:
approach pheasantly and proceed selectively.
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CLASIFICATION OF BUSINESS PLAN
It is shown that you do not ought to give completed Business plan to all potential partners, but it is suggested its clasification on three parts, which are:
Resume with letter of purpose, Business plan without addition, and Addition. This three parts should be dimensioned
on that way to stop possible unauthorized malversation!
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RESUME of Business plan
RESUME of Business plan should show that the project is:
Attractive for market, Reliable fof investment, Mutualy profitable for potential
partner and investitor.
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Business plan
Business plan should give arguments from Resume and show that project is in:
management, organization, technology, production, market and marketing, cadre, optimaly quantitively and qualitively
dimensionised.
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Addition
Addition, with special details and clasified business data which are related on:
business politics (know-how), positional capital (good will) firm potential (who are buyers and
providers) should affirm that the project is
objectively efficient.
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Phases of realisation
Realisation process sholud be guided in next three phases:
Resume with letter of purpose, Business plan without addition,
and Addition.
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First phase First phase is delivery of Resume with letter of
purpose to all potential business addresses, like: business banks and institutional development
funds, public economy chambers and other business
and profession associations, private investment funds and “business angels”, existing business partners (buyers and
providers), potential business partners (producers and
sellers of equipment, tools and raw material), and all other informal contacts (relatives, friends
and similar).
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Second phase
Second phase is delivery of Business plan to selectively interested potential partners and/or creditors, by negotiations for:
affirmig grade of their interest, and outline limit under which they are
ready for business cooperation.
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Third phase
Third phase is showing Addition to selected external subjects with whom is entered in final phase of negotiation and their direct decision of willing for product realisation, where are defined final modes of relation in project realisation.
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5. SOURCES OF FINANCING
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SOURCES OF FINANCING
Business banks Republic fund for development Regional guarantee fund Investment funds
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FINANCIAL MANAGEMENT
Second day
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2. RATIO ANALYSIS
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RATIO ANALYSIS
Liquidity ratios Solvency ratios Efficency ratios Profitability ratios Productivity ratios Net capital turnover analysis
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RATIO ANALYSIS
BALANCE SHEET
ASSETS LIABILITIES
Fixed assets 60.000Own sources (owner’s equity)
102.000
Current assets:- reserve- requirement- cash
96.00046.50034.50015.000
Long-term credits
12.000
Short-term credits
42.000
TOTAL 156.000 TOTAL 156.000
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LIQUIDITY RATIOS
Measure the ability of a firm to meet its short-term financial obligations. It is used:
Current ratio Quick ratio (Acid Test ratio) Cash ratio
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Current ratio
CURRENT ASSETSCR = ------------------------------------ SHORT-TERM OBLIGATIONS
96.000CR = ------------------- = 2,29 1
42.000
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Quick ratio (Acid Test ratio)
CASH + REQUIREMENTQR = -------------------------------------
SHORT-TERM OBLIGATIONS
15.000+34.500QR = --------------------- = 1,21
42.000
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Cash ratio
CASHCR = ------------------------------------ SHORT-TERM OBLIGATIONS
15.000CR = ------------------ = 0,351
42.000
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SOLVENCY RATIO
Sources structure of financing ratio shows real abilities of business
Debt ratio shows the level of owing
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Sources structure of financing ratio
OWNER’S EQUITYSSFR = -----------------------------
BORROWED EQITY
102. 000SSFR = ------------ = 1,891 54. 000
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Debt ratio
BORROWED FINANCING SOURCES DR = ------------------------------------------
TOTAL BUSINESS ASSETS
54.000 DR = ------------ x 100 = 34,6 % 156. 000
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EFFICENCY RATIO
Usually it is used:Reserve turnover ratioRequirement ratio (from buyers)Obligation ratio (toward provider)
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Reserve turnover ratio
PRICE OF REALISED PRODUCTSRTR = ----------------------------------------------- AVERAGE TOTAL RESERVE
150.000RTR = ------------------------------ = 3,2
1/2 ( 46.500 + 47.400)
360 DAYS
AVERAGE PERIOD OF RESERVE KEEPING = ----------------------------------
RESERVE TURNOVER RATIO
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Requirement ratio
INCOME OF REALISED PRODUCTS
TURNOVER BUYERS RATIO = -------------------------------------------------------- AVERAGE TOTAL BUYERS
360 DAYSAVERAGE PERIOD OF PAYMENT = --------------------------------- TURNOVER BYERS RATIO
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Obligation ratio
PRICE OF REALISED PRODUCTSTURNOVER PROVIDERS RATIO = --------------------------------------------------
---------- AVERAGE TOTAL PROVIDERS
360 DAYSAVERAGE PERIOD OF RECONCILE OBLIGATIONS =
-------------------------------------- TURNOVER PROVIDERS
RATIO
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PROFITABILITY RATIO
It is used:Meter of net gainReturn on total assets
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Meter of net gain
NET GAIN MNG = ------------------------------------------------- INCOME OF PRODUCT REALISATION
45.000MNG = --------------- = 15%
300.000
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Return on total assets
NET GAIN RETURN ON TOTAL ASSETS =
----------------------- . . AVERAGE ASSETS
45.000 RETURN ON TOTAL ASSETS= -------------------- =
29% . 156.000
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NET CAPITAL TURNOVER ANALYSIS
NCT = ( R + RE + C ) – STO R - reserve RE - requirement C - cash STO - short-term obligations
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Break-even point
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Break-even point can be shown by following formula: TFC BEP = ------------- U – VC/Uwhere is: TFC – total fixed costs, U – unit selling price, VC/U variable costs per unit
total profit (TP) = total costs (TC)
TP = unit selling price (U) x quantity of product (P) and TC = total fixed costs (TFC) + total variable costs (TVC) U x P = TFC + TVC TVC = VC/U x U U x P = TFC + ( VC/U x U) P ( U - VC/U) = TFC TFC P = -------------- U - VC/U
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FINANCIAL MANAGEMENT
Third day
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3. ACCOUNTING CONTROL
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TARGETS
RELEVANT ASPECTS OF COST MANAGEMENT
WHAT’S THE TARGET OF: MANAGEMENT CONTROL
MANAGEMENT CONTROL TARGETS
WHAT’S MANAGEMENT CONTROL?
IT’S A DEFINED SYSTEM WITH:
* PROCEDURES* RESULTS
IT HAS NOT TO BE CONSIDERED A “UNA TANTUM ANALYSIS” OR A SUBPRODUCT OF GENERAL LEDGER
PRINCIPAL FEATURES OF MANAGEMENT CONTROL
HOW CAN YOU PROJECT A MANAGEMENT CONTROL SYSTEM
IT HAS TO BE DEFINED AS “SPECIFIC” SYSTEM FOR EACH COMPANY IT HAS TO BE DEFINED ACCORDING TO THE DECISONS
COSTS CLASSIFICATION WE WILL HAVE TO KNOW THE DIFFERENT WAYS TO CLASSIFY COSTS
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RELEVANT ASPECTS FOR COMPANY MANAGEMENT
AN EFFICIENT COMPANY MANAGEMENT
NEEDS
1.1. SKILLS TO MANAGE THE DIFFERENT “AREAS” IN SKILLS TO MANAGE THE DIFFERENT “AREAS” IN THE COMPANYTHE COMPANY
2.2. AN INFORMATION SYSTEMAN INFORMATION SYSTEM
3.3. HUMAN RESOURCES ABLE TO REACH ECONOMICAL HUMAN RESOURCES ABLE TO REACH ECONOMICAL TARGETSTARGETS
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SKILLS TO MANAGE THE DIFFERENT “AREAS” IN THE COMPANY
SALESSALES
NOT ONLY SALES, BUT
MARGINS
OPTIMIZE PRODUCTION COSTS :
* MAKE OR BUY* MANUFACTURING DEVELOPMENTPRODUCTIONPRODUCTION
ANALYSE GENERAL EXPENSES AND DECIDE
WHO WILL BE RESPONSABLE OF THEMGENERAL GENERAL EXPENSESEXPENSES
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INFORMATION SYSTEM (IS)THE FAST EVOLUTION OF MARKET
ASK FOR
INFORMATION SYSTEMINFORMATION SYSTEM
WHICH GIVES THE POSSIBILITY OF
ANALYSE
RESULTSSUPPORT DECISIONS
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INFORMATION SYSTEMINFORMATION SYSTEMINFORMATION SYSTEM
GENERAL LEDGERGENERAL LEDGER MANAGEMENT MANAGEMENT CONTROLCONTROL
•IT’S FOR LAW
•ONLY AMOUNTS
•IT’S FOR INTERNAL MANAGEMENT
* AMOUNTS AND QUANTITY UNIT SALESUNITS PRODUCTION
OVERHEADSEFFICIENCY AND PRODUCTIVITYAND SO ON ………
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INFORMATION SYSTEM
ECONOMICS RESULTS ANALYSISECONOMICS RESULTS ANALYSISECONOMICS RESULTS ANALYSISECONOMICS RESULTS ANALYSIS
CAN BE DONE WITH
GENERAL GENERAL LEDGERLEDGER
MANAGEMENT MANAGEMENT CONTROLCONTROL
INCOME STATEMENT
IN UE FORMAT
INCOME STATEMENT
IN
COST OF SALES
FORMAT
ECONOMICS REPORTS
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INCOME STATEMENT
SHOWS
GENERAL GENERAL LEDGERLEDGER
ACCOUNTING ACCOUNTING CONTROLCONTROL
GLOBAL GLOBAL RESULTSRESULTS
PRODUCT LINE PRODUCT LINE RESULTSRESULTS
SHOWS
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HUMAN RESOURCES ABLE TO REACH ECONOMICAL TARGETS
RESULTSRESULTS TOTALTOTAL COMPANYCOMPANY
SALES
•SELLING
•PRODUCTION
MANAGERSMANAGERS
SALES MANAGER
FACTORY MANAGER
VARIABLEVARIABLECOSTSCOSTS
GROSS MARGIN
•RESEARCH & DEVELOPMENT
•SELLING
•ADMINISTRATIVE
AND GENERAL
SELLIN AND ADMINISTRATIVE
MANAGERS
FIXEDFIXEDCOSTSCOSTS
EBIT
SALES MANAGER
GENERAL MANAGER
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INCOME STATEMENT
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THE INCOME STATEMENT FOR MANAGEMENT ACCOUNTING
THE PRINCIPAL AIMSTHE PRINCIPAL AIMS
OF INCOME STATEMENT FOR MANAGEMENT ACCOUNTING ARE
TO GIVE A SYNTHETICAL VISION OF ECONOMICAL RESULTS TO SUPPORT DECISIONS1
TO GIVE EVIDENCE TO :- OPERATING RESULTS- NOT OPERATING RESULTS
2
4
TO ANALYSE MARGING OF DIFFERENT PRODUCT LINES OR BUSINESS AREAS3
TO DEFINE DIFFERENT LEVELS OF MARGINS TO EVALUATE :- CONTRIBUTION MARGIN- MANUFACTURING MARGIN AND EBIT- CASH FLOW (OPERATING AND FINAL)
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DIFFERENT MARGINS AND RESULTS
CONTRIBUTION MARGIN
GROSS MARGIN/PROFIT
OPERATING PROFIT (EBIT)
GENERAL EXPENCES
DEPENDS BY VARIABLE AND FIX COSTS
IT DEPENDS BY ALL MANUFACTURING COSTS
IT DEPENDS BY ALL THE OPERATING COSTS
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NOT OPERATING COSTS
FINANCIAL
EXTRAORDINARY
FISCAL
TYPE CONTENTS
BANK INTEREST AND CHARGES
NON RECURRENT INCOMES OR COSTS
TAXES ON PROFITS
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DIFFERENT METHODS FOR “COSTING”
COSTING METHODCOSTING METHODCOSTING METHODCOSTING METHOD
THE COICE OF
IT’ S BASED ON
RECEIVERS AND USE
MANUFACTURING
PROCESS
COMPANY
ORGANIZATION
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DIFFERENT METHODS FOR “COSTING”
THE DIFFERENT METHODS WE CAN USE FOR
CAN BE SINTHETYZED IN
FULLFULLCOSTINGCOSTING
MANUFACTURING MANUFACTURING COSTINGCOSTING
DIRECT DIRECT COSTINGCOSTING
EVALUATE COSTSEVALUATE COSTS
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COST CALSSIFICATION
ACCORDING TO WHAT YOU HAVE TO
EVALUATE:
• PRODUCT
• COST CENTRE
DIRECT COSTSDIRECT COSTS
OBJECTIVELY IMPUTABLE TO PRODUCT OR COST CENTRE
I.E.: RAW MATERIALS, DIRECT LABOUR COST
INDIRECT COSTSINDIRECT COSTS
SUBJECTIVELY IMPUTABLE WITH “LOGICAL METHODS”
I.E.: GENERAL EXPENSES, FINANCIAL COSTS
ACCORDING TO THE RELATION WITH VOLUMES
•PRODUCTION
•SALES
VARIABLE COSTSVARIABLE COSTS
THEY CHANGE PROPORTIONALLY, IN RELATION WITH VOLUMES
I.E.:RAW MATERIALS, DIRECT LABOUR COST, COMMISSIONS
FIXED COSTSFIXED COSTS
THEY DO NOT CHANGE IN RELATION WITH VOLUMES, BUT THEY ARE LINKED TO TIME
I.E.:EMPLOYEES LABOUR COST., AMMORTISATION, SHOWS AND EXIBITION, …..
COSTS CLASSIFICATIONCOSTS CLASSIFICATION DESCRIPTIONDESCRIPTION
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FULL COSTING
FULL COSTINGFULL COSTINGFULL COSTINGFULL COSTING
CAN BE DONE ON TWO LEVELS
MANUFACTURING
COSTTOTAL COST
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MANUFACTURING COSTS
MANUFACTURING COSTMANUFACTURING COSTMANUFACTURING COSTMANUFACTURING COST
THE METHOD OF
IS BASED ON THE PRODUCT EVALUTION WITH ALL
COSTS CONCERNED WITHCOSTS CONCERNED WITH
MANUFACTURING PROCESSMANUFACTURING PROCESS
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TOTAL COSTS
TOTAL COSTTOTAL COSTTOTAL COSTTOTAL COST
THE METHOD OF
IS BASED ON THE PRODUCT EVALUTION WITH
MANUFACTURING COSTSMANUFACTURING COSTS GENERAL EXPENSESGENERAL EXPENSES
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DIRECT COSING
VARIABLE COSTVARIABLE COSTVARIABLE COSTVARIABLE COST
THE METHOD
IS BASED ON THE PRODUCT EVALUATION WITH
DEPENDING ONDEPENDING ON
SALESSALESDEPENDING ONDEPENDING ON
PRODUCTIONPRODUCTION
VARIABLE COSTSVARIABLE COSTS
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DIRECT COSTING
VARIABLE COSTS
DIRECT COSTING METHODDIRECT COSTING METHOD
THE PRODUCT IS EVALUATED WIYH ONLY
LIMITS:LIMITS:
1. POSSIBLE DIFFICULTIES IN DIVIDING COSTS INTO VARIABLE AND FIXED
2. PRODUCT IS EVALUATED WITH ONLY “FEW” COSTS
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DIRECT COSTING
VARIABLE COSTS
DIRECT COSTING METHODDIRECT COSTING METHOD
THE PRODUCT IS EVALUATED WIYH ONLY
ADVANTAGES:ADVANTAGES:
1. THE VARIABLE COST IS THE “MINIMUM LEVEL” TO ACCEPT A SALES PRICE
2. DIRECT COSTING CORRECTLY SUPPORT STRATEGIES FOR INCREASING SALES VOLUMES
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FULL COSTING
ALL THE COMPANY COSTS
FULL COSTINGFULL COSTING
THE PRODUCT IS EVALUATED WITH
LIMITS:LIMITS:
THE ATTRIBUTION OF GENERAL EXPENSES TO THE SINGLE PRODUCTS IS NEVER OBJECTIVE
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FULL COSTING
ALL THE COMPANY COSTS
FULL COSTINGFULL COSTING
THE PRODUCT IS EVALUATED WITH
ADVANTAGES:ADVANTAGES:
THE “THOUGHT” THAT A PRICE THAT WILL COVER ALL COSTS, GIVES YOU SURE EARNINGS
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COST CENTER AND RESPONSABILITY
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COST CENTER
COMPANY “ENTITY”COMPANY “ENTITY”COMPANY “ENTITY”COMPANY “ENTITY”
TO WHICH CAN BE ATTRIBUTED
COST CENTERCOST CENTER
A
COSTSCOSTS
IS A
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COST CENTER AIMS
COST CENTER AIMSCOST CENTER AIMSCOST CENTER AIMSCOST CENTER AIMS
THE PRICIPAL
CAN BE CONSIDERED
TO DEFINE
COST
DESTINATION
TO ATTRIBUTE
INDIRECT COSTS TO
PRODUCT
TO LINK RESPONSABILITY
AND COSTS
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COST CENTER CLASSIFICATION
COST CENTERSCOST CENTERS
IT CAN BE DEVIDED
BASING ON ACTIVITY:
PRODUCTION COST CENTER
OVERHEAD COST CENTER
AUXILIAR COST CENTER
1
2
3
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PRODUCTION COST CENTER
ALL THE
WHICH ARE DIRECTLY INVOLVED IN THE
PRODUCTION COST CENTERPRODUCTION COST CENTER
IT’S POSSIBLE TO CLASSIFY AS
MANUFACTURING PROCESSMANUFACTURING PROCESS
COMPANY ENTITIESCOMPANY ENTITIES
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OVERHEAD COST CENTERS
OVERHEAD COST CENTERSOVERHEAD COST CENTERSOVERHEAD COST CENTERSOVERHEAD COST CENTERS
IT’S POSSIBE TO CLASSIFY AS
WHICH ARE INVOLVED IN
GENERAL ACTIVITY MANAGEMENT:
COMPANY ENTITIESCOMPANY ENTITIES
ALL THE
SALES, PURCHASES, PRODUCTION MANAGEMENT,
RESEARCH AND DEVELOPMENT, FINANCE
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PRODUCT COSTS
PRODUCT COST PRODUCT COST
RAW MATERIAL
EXTERNAL SERVICES/PRODUCTION
INTERNAL MANUFACTURING COSTS
1
2
3
HAS TO BE COMPOSED BY
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PRODUCT COSTS
PRODUCT COST PRODUCT COST
RAW MATERIAL
EXTERNAL SERVICES/PRODUCTION
INTERNAL MANUFACTURING COSTS
1
2
3
HAS TO BE COMPOSED BY
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PRODUCT COSTS
EXTERNAL SERVICESEXTERNAL SERVICES
THE NUMBER OF “OPERATIONS” EXTERNALLY MADE
PURCHASE PRICE OF EVERY OPERATION
EXTERNAL SERVICES COSTS
1
2
DEPENDS ON
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PRODUCT COSTS
MANUFACTURING COSTSMANUFACTURING COSTS
THE NUMBER OF “OPERATIONS” INTERNALLY MADE
MANUFACTURING COST CENTER RATES
INTERNAL MANUFACTURING COSTS
1
2
DEPENDS ON
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PRODUCT COSTS
PRODUCT COSTSPRODUCT COSTS
DEPENDS ON THE SYSTEM WE HAVE CHOSEN, AND THE IMPACT OF THE DIFFERENT SYSTEM
WILL CHANGE ONLY THE MANUFACTURING COST, SO WE WILL HAVE:
VARIABLE MANUFACTURING COST AND VARIABLE PRODUCT COST
TOTAL MANUFACTURING COST AND FULL PRODUCT COST
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FINANCIAL MANAGEMENT
Fourth day
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4. BUSINESS PLAN
Preparing a business plan
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What is a business plan? Writen resume of
past, present and futureactivities of your business.
Business itinerer of how to get from present position to one which is projected in future.
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Goal of preparing business plan?
Document which is used as a standard for: checking your planed business ideas
and projects tracking realisation of your elementary
planed business activities with current realised results
evaluation of projects at insurance additional needed capital for its realisationu
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Parametars of business plan (1)
Start-up Development of existing firm New project > new firm
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Parametars of business plan(2)
Structure of owner Caracter of program / action Owner’s capital
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Parametars of business plan (3)
Time dimension of business plan Aiming additional sources and
level of capital It is optimal to prepare chronological
Business plan based on term which shows investment term of repayment of capital.
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Elemens of Business plan Basic elements of business plan are: Cover page Resume Description of firm (company profile) Market analysis (branch analysis, activity) Production programme and production plan Human recources plan Selling plan Marketing plan Financial plan Plan of future development Addition
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On cover page it is shown:- firm- title of business plan- relate period - author(s)
Cover page
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Resume (1) This part of Business plan is compiled in
the end of its preparing, and it is placing on its beginning.It represent “window” of Business plan.It should be concise, descriptive and comprehensible, with size of one or two pages.It illuminate only the most important and key results which are obtained during preparing all other elements of business plan.
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Resume (2) It is especially important to point up key details
linked to: programme/activity, technology, equipment and production
process, concurrent in product/service, market, and especially financial construction which
should give concise ilustration of level and dynamics of necessary investment, and also flow of assets repayment.
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Description of firmHere are given basic information about firm, which should demonstrate its business profile, and includes data like:- business place,- type of ownership, level and sources of capital,- authority team (CV of management),- form of organisation,- available assets and liabilities, - business propaganda,- positional capital of firm, good will, and other.
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Market analysis (branch analysis, activity) In this part you shoud give answers on theese questions:
How large is production in country? How big is growth? Which are the most important regions? How big is volume of selling? Which are the basic trends? How is economy and loyal environment? Who is concurrent? What are the advantages og concurrent? What are the main barriers in entering the
market?
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Production programme and production plan (1)
This part of business plan should give answers on next questions:
Identifying production programme (merit of product and assortment).
What are the main features of production process?
Choice of technology and necessary equipment.
Who are productors and delivers of equipment?
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Production programme and production plan (2) Which are and how are solved technical
demands (electrical energy, water i canalization and other) for using selected technology?
What kind of objects and location are needed?
Identifying of raw material and delivers for realisation of production programme.
Is all proces of production performed substantively and who are other under-performers?
How big are costs of production? What are future investments in
equipment?
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Human recources plan
Here is necessary to define next elements:
What are the tasks and works? What functions are officiated? Who are performers? How big are refunds and
obligations?
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Selling plan
In this part you should make analysis of selling which is believed to be accomplished on market. To do that next is necessary:
Create calculation of costs and form prices of products.
Forecast selling with more scenarios. Setup organisation of selling. Make buyers analysis.
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Marketing planThis part is most important for succesful realisation of Business plan. According to that it is necessary to do market analysis with answers to next questions:
What is aim group, apropos who are potential buyers of product?
What are like prices on market? How to do product promotion? Which are distribution chanels? What kind of advertising to use? How big are advertising expences?
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Financial planThis is together the most important and most complexed part of business plan. It shows financial adequacy of entering in business. To do it on valid way you shoul analyse next:
Initial and operative capital Income statement Balance sheet Cash flow analysis Break-even point Summary of amortization and credits.
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Plan of future development
This part of business plan should indicate on main directions and goals in next period.
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Addition
In this part is content all necessary materials and documentation which are important for realisation of whole business and Business plan.
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Realisation of business plan
It is necessary, as especially important for realisation of Business plan, to notice that in process of animation and attraction of potential partners or/and external buyers for realisation of Business plan, and during of process of negotiation with them, you should:
approach pheasantly and proceed selectively.
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CLASIFICATION OF BUSINESS PLAN
It is shown that you do not ought to give completed Business plan to all potential partners, but it is suggested its clasification on three parts, which are:
Resume with letter of purpose, Business plan without addition, and Addition. This three parts should be dimensioned
on that way to stop possible unauthorized malversation!
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RESUME of Business plan
RESUME of Business plan should show that the project is:
Attractive for market, Reliable fof investment, Mutualy profitable for potential
partner and investitor.
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Business plan
Business plan should give arguments from Resume and show that project is in:
management, organization, technology, production, market and marketing, cadre, optimaly quantitively and qualitively
dimensionised.
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Addition
Addition, with special details and clasified business data which are related on:
business politics (know-how), positional capital (good will) firm potential (who are buyers and
providers) should affirm that the project is
objectively efficient.
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Phases of realisation
Realisation process sholud be guided in next three phases:
Resume with letter of purpose, Business plan without addition,
and Addition.
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First phase First phase is delivery of Resume with letter of
purpose to all potential business addresses, like: business banks and institutional development
funds, public economy chambers and other business
and profession associations, private investment funds and “business angels”, existing business partners (buyers and
providers), potential business partners (producers and
sellers of equipment, tools and raw material), and all other informal contacts (relatives, friends
and similar).
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Second phase
Second phase is delivery of Business plan to selectively interested potential partners and/or creditors, by negotiations for:
affirmig grade of their interest, and outline limit under which they are
ready for business cooperation.
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Third phase
Third phase is showing Addition to selected external subjects with whom is entered in final phase of negotiation and their direct decision of willing for product realisation, where are defined final modes of relation in project realisation.
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FINANCIAL MANAGEMENT
Fifth day
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5. SOURCES OF FINANCING
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SOURCES OF FINANCING
Business banks Republic fund for development Regional guarantee fund Investment funds