Long-Term Business Projection and Analysis Guidance
Enhance your business acumen with insights on long-term performance and cash flow projections, profit vs. cash differentiation, and strategies for improving profitability and cash flow. Dive into forecasting, analysis, and strategic planning to propel your company forward.
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Presentation Transcript
Module 2: Session 5 BUSINESS PLAN: LONG TERM PROJECTIONS Module 5: Session 5 1
Session Objectives 1) To make long term performance projections 2) To make long term cash flow projections 3) To differentiate between long term profits and cash using profit and cash flow projections 4) Review long term profitability and cash flow and make appropriate adjustments Module 5: Session 5 2
Procedure for 5 year forecasting Make assumptions on growth in works, revenues and costs Identify long term investment needs Make assumptions on capital development needs and preliminary capital structure. Economic assumptions on price and costs Assumption on the long term horizon such as on drawings, asset replacement, taxation. Identify capital needs and work backward to restructure capital. Module 5: Session 5 3
Analysis Generate the income and the cash flow out of the forecasted data and analyze it. Identify emerging patterns Work out revenue trends Work out cost trends Work out profit and loss in long term Work out cash flow Derive balance sheets Module 5: Session 5 4
Long term profit projection format Year Yr 1 Yr 2 Yr 3 YR 4 YR 5 Total Revenues Revenues from other sources Total Expenditure: Materials Administration and overheads Labour Machinery and equipment Start up costs Depreciation Interest on loans Total Profit/loss Module 5: Session 5 5
Long term cash flow projection format Year Yr 2 Yr 2 Yr 3 YR 4 YR 5 Total Accounts receivables Receipts from other sources Capital from owners or term loans Total PAYMENTS: Materials suppliers Administration and overheads Labour Equipment suppliers Drawings or dividends Taxes paid Total NET CHANGE IN CASH Balance from previous period Balance carried to next period Module 5: Session 5 6
Activity 1) Using assumptions in case study develop a performance forecast for five years 2) Make five year cash flow projections 3) Note any emerging trends in profit and cash flow 4) Propose strategies that may be undertaken by Munaku to improve both profitability and cash flow Relate the strategies to your company. Module 5: Session 5 7
THE END Q & A Module 5: Session 5 8
