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    Homework 7

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    anhpham.31211025397
    The document outlines various risk management strategies and financial planning topics for a business including contingency plans for unmet sales forecasts, competitive threats, industry downturns, labor issues, production risks, distributor risks, regulatory risks, and capital risks. It also discusses sources and uses of funds, financial practices, cash flow statements, balance sheets, profit and loss statements, breakeven analysis, financial ratios, and intellectual property.

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    Homework 7

    Uploaded by

    anhpham.31211025397
    2 views5 pages
    The document outlines various risk management strategies and financial planning topics for a business including contingency plans for unmet sales forecasts, competitive threats, industry downturns, labor issues, production risks, distributor risks, regulatory risks, and capital risks. It also discusses sources and uses of funds, financial practices, cash flow statements, balance sheets, profit and loss statements, breakeven analysis, financial ratios, and intellectual property.

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    The document outlines various risk management strategies and financial planning topics for a business including contingency plans for unmet sales forecasts, competitive threats, industry downturns, labor issues, production risks, distributor risks, regulatory risks, and capital risks. It also discusses sources and uses of funds, financial practices, cash flow statements, balance sheets, profit and loss statements, breakeven analysis, financial ratios, and intellectual property.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    2 views5 pages

    Homework 7

    Uploaded by

    anhpham.31211025397
    The document outlines various risk management strategies and financial planning topics for a business including contingency plans for unmet sales forecasts, competitive threats, industry downturns, labor issues, production risks, distributor risks, regulatory risks, and capital risks. It also discusses sources and uses of funds, financial practices, cash flow statements, balance sheets, profit and loss statements, breakeven analysis, financial ratios, and intellectual property.

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    Homework 7

    Risk Management Strategies

    1. How will you deal with unmet sales forecasts? What will you do if the market
    responds differently than planned?

     Underdemand?

     Overdemand?

    2. How will you respond if competitors:

     underprice you?

     overcome your competitive advantage?

     introduce newer/better technology?

    3. What will you do if the industry takes a downturn?

    4. How will you handle labor issues/problems?

     Skilled labor is unavailable or insufficient to meet your needs.

     Government regulation raises benefit/compensation costs.

     Your workforce unionizes.

     Your union workforce strikes.

    5. What production/supply risks might you face? What are your contingency plans
    for those risks? How will you handle suppliers who:

     raise prices?

     become erratic in their deliveries or their quality?

    6. Any distributor risks? Contingency plans?

    7. Any regulatory risks? Contingency plans?

    8. Capital-related risks--potential cash flow problems, notes coming due, etc.?


    Contingency plans?

    9. What insurance coverage do you have?


     On key people?

     On physical plant, equipment, and inventory?

    10. What other potential risks are part of your specific business?

    Sources and Uses of Funds

    1. Where is your money coming from?

    How will it be used?

    Sources of Funds:

    Debt:

    Term Loans $ __________

    Refinancing of old debt $ __________

    Lines of credit

    Line 1 $ __________

    Line 2 $ __________

    Mortgage $ __________

    Equity:

    Investments $ __________

    Uses of Funds:

    Property $ __________

    Inventory $ __________

    Equipment (itemized)

    1. $ __________

    2. $ __________

    Etc. $ __________

    Working capital $ __________

    Cash reserve $ __________


    2. What will be the return for investors?

     When can investors cash out?

     In what form?

    Financial Practices

    1. What is your accounting method?

     Cash.

     Accrual.

    2. What are your collection practices?

    3. How will you manage your accounts receivable?

    4. How will you manage your accounts payable?

    5. How will you control costs?

     How will you monitor and control funds?

     Who has that responsibility?

    Cash Flow Statement.

    1. State your assumptions.

     Percent of cash sales versus credit sales.

     Minimum cash balance desired.

     Collection pattern for credit sales.

    2. Prepare three different cash flow statements based on:

     a pessimistic sales forecast.

     a most likely sales forecast.

     an optimistic sales forecast.

    Cash Budget?

    Balance Sheet?
    Profit and Loss Statement?

    Breakeven Analysis?

    Financial ratios

    (Choose the ones that make the most sense for your business.)

    1. Financial ratios show investors both that you are a sophisticate in financial
    management and that you are staying on top of your day-to-day business
    operations. Some ratios from which to choose:

    Liquidity.

    Current ratio.

    Quick ratio.

    Inventory to net working capital.

    Implications of liquidity ratios.

    Profitability.

    Gross profit margin.

    Return on assets.

    Return on equity.

    Implications of profitability ratios.

    Leverage/debt.

    Debt to assets.

    Debt to equity.

    Long-term debt to equity.

    Implications of leverage ratios.

    Activity.

    Inventory turnover.

    Fixed-asset turnover.

    Average collection period.


    Implications of activity ratios.

    Intangibles--Intellectual Property

    1. What patents do you hold?

    2. Any copyrights?

    3. Any trademarks registered?

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