Estimate New Capital

New equity capital is included in the cash flow statement of the projection as a positive figure as it represents cash flowing into the business from investors. For example, if in year two the plan inject new capital of 5,000 to finance the purchase of new machinery, the figure of 5,000 should be included in the cash flow statement on the proceeds from the issue of new share capital line.

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Operating Expense Formula

Customized operating expense formulas can be used in lines 7 to 9 of the Financial Projections Template to link operating expenses to another template cell value such as revenue, this allows amendments to be made to the estimated operating expenses for each of the five years without having to manually enter each amount.

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Revenue Projection Formula

Customized revenue projection formulas can be used in line three of the Financial Projections Template to allow amendments to be made to the estimated revenue for each of the five years without having to manually enter each amount.

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Enter New Debt Payment Term

Debt finance is normally evidenced by a note or document which specifies the amount, interest rate, and date of repayment. The date of repayment will dictate the payment term for the debt, for example a debt might be payable in five years time.

In the previous step the new debt was entered, and in order to allow for this debt to be repaid, a new debt payment term needs to be entered.

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Estimate New Debt

For a business, debt can take many forms including loans, mortgages, borrowings, overdrafts, credit cards, and generally any form of finance on which interest is paid.

New debt is included in the cash flow statement of the projection as a positive figure as it represents cash flowing into the business from lenders. For example, if in year two the plan is to borrow 46,000 to finance the purchase of new equipment, the figure of 46,000 should be included in the cash flow statement on the new debt line.

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Estimate Capital Expenditure

Capital expenditure is amounts spent of long term assets during the accounting period.

Long term assets are assets which have a long life and are for use within the business and not held for resale, they include for example land, buildings, equipment, and plant and machinery, needed to get the new business up and running, ready to start producing and selling goods and services.

Capital expenditures are included in the financial projection as a negative amount in the cash flow statement, as money flows out of the business to pay for them.

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Enter Opening Debt Payment Term

Debt finance is normally evidenced by a note or document which specifies the amount, interest rate, and date of repayment. The date of repayment will dictate the payment term for the debt, for example a debt might be payable in five years time.

In the previous step the opening balance sheet debt was entered, and in order to allow for this debt to be repaid, an opening debt payment term needs to be entered.

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How to Determine Inventory Days

Inventory or stock as it is sometimes referred to, is the total of raw materials, work in process, and finished goods that a business holds for the purpose of resale.

If the value of the inventory is divided by the value of the average daily cost of sales, then the resulting figure is the average number of days sales which the business is holding. This number is referred to as inventory days, days inventory outstanding, inventory turnover days, or stock days.

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How to Determine Days Payable Outstanding

A business which purchases on account from its suppliers will at any point in time have amounts outstanding to them for unpaid invoices. The amount outstanding is referred to as accounts payable or sometimes as trade creditors.

If the value of the accounts payable is divided by the value of the average daily cost of sales, then the resulting figure is the number of days of payable which are outstanding. This number is sometimes referred to as days payables outstanding, accounts payable days or trade creditor days.

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How to Determine Days Sales Outstanding

A business which sells on account to its customers will at any point in time have amounts outstanding from them for unpaid invoices. The amount outstanding is referred to as accounts receivable or sometimes as trade debtors.

If the value of the accounts receivable is divided by the value of the average daily sale, then the resulting figure is the number of days of sales which are outstanding. This number is sometimes referred to as day sales outstanding, accounts receivable days or trade debtor days.

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Enter Capital Opening Balance

The opening day capital balance forms part of the opening balance sheet of the business. Capital represents cash and cash equivalents introduced by the owners of the business.

The capital opening balance is recorded in the balance sheet of a business under its own heading of capital and together with retained earnings, forms part of the owners equity in the business.

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Enter Debt Opening Balance

The opening day debt balance forms part of the opening balance sheet of the business. Debts are amounts which are owed by the business to providers of debt finance sometimes referred to as lenders.

Debts include many types of finance including loan, borrowings, mortgages, credit cards and generally any form of finance which involves the payment of interest.

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