Marketing Essentials

Chapter 36: Financing the Business

Chapter Summaries

Section 36.1

• Five important financial documents are the personal financial statement, the start-up cost estimate, the income statement, the balance sheet, and the cash flow statement. They can show lenders how much money is needed to operate the business and if the business owner will be able to pay off a loan.
• The personal financial statement is a summary of the entrepreneur’s current personal financial condition, including all assets and liabilities.
• Start-up costs are a projection of how much money will be needed for the business’s first year of operation.

Section 36.2

• The financial document that is used to calculate a business's revenue, costs, and expenses is the income statement. The owner can make conservative estimates of revenue and expenses if the business has not yet opened.
• A balance sheet is a summary of a business’s assets, liabilities, and owner's equity.
• A cash flow statement is a monthly plan that indicates when a business owner anticipates cash will come into the business and when cash will be paid out. A cash flow statement can show if enough money will be available when the bills are due.