Chapter Objectives
On completing this chapter, you should be able to:
• Forecast sales for your business.
• Prepare pro forma statements.
• Estimate capital requirements.
• Pursue funding to start your business.
a. The Financial Plan
Debt is money that is borrowed and that must be repaid on some predetermined schedule, with interest; normally a lender does not receive any ownership interest in the business. Borrowing money at the very start of a new business will create an additional and regular cash requirement to make the debt payments.
Equity represents the exchange of funding for partial ownership of the company; such funds represent money invested in the firm without any requirement of date or form of repayment. ...
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