Financial Parameters

The Financial Parameters screen is used to enter various financial and operational information as follows:

Days Payable - Purchases: Enter the terms of payment to suppliers for goods, not including salaries or equipment. This parameter will influence your cash flow. For example, if you pay your supplier 30 days after you receive an invoice, enter 30.

Days Payable - Salaries: Enter the terms of payment for salaries. For example, if you pay employees every two weeks, enter 15. If you pay employees on a monthly basis but the payment is not made until the 15th of the following month, you should enter 0.

Inventory Level (Days): Given normal sales, enter the number of days your Inventory can last. For example, if your Stock is worth $50,000 and your yearly cost of sales is $600,000, your average Stock level equals one month of sales.

Φ Note: If you're a manufacturer, don't forget to calculate for raw materials and work in progress.

Business Planner calculates the stock level in each period, and then includes it in the balance sheet. For example, if you enter 60 stock days in April, Business Planner divides 60 by the number of days in April (30) to come up with 2. It then multiplies the cost of goods and services for April by 2.

The stock increase or decrease influences the purchase figures in the Cash Flow report.

Minimal Inventory: Enter the minimum required inventory amount. This amount will be added to the inventory calculated by days as mentioned above.

Pre-Paid Tax (%): Enter the estimated taxes paid in advance. Enter this amount as a percentage of operating profit. While this does not include the tax deductibility of interest payments, it is a reasonable calculation.

Pre-Paid Tax (Amount): If you don't enter pre-paid tax as a percentage of operating profit, enter the dollar amount of estimated taxes paid in advance.

Income Tax (%): Enter the average tax rate paid by the company on its profit. This includes the Federal, State and Local tax rates. Calculate the average rate as the percentage of net profit before tax.

Income Tax (Amount): Enter the tax amount paid by the company. This includes the Federal, State and Local tax rates. Please note that the amount entered here is added to the amount calculated by the percentage entered in the previous row. Usually you will enter data for the tax either by percentage or by amounts.

Interest Rate - Debit (%): Enter the average annual interest rate for your bank loans and overdrafts. Business Planner uses this rate for calculating short-term loans required to meet cash shortfalls in the projections.

Interest Rate - Credit (%) Enter the average annual interest rate for your bank deposit accounts. Business Planner uses this rate for calculating interest income on cash balances.

Product Pricing Trends (%): Enter the rate of change you anticipate in pricing your products or services. Business Planner uses the change rate to make projections. For example, if the unit price of a product is $100 and you enter 10% as the rate of change in Product Pricing Trends for April, the price projections increase to $110. If you enter 10% as the rate of change for September as well, the price projections will then increase to $121.

Salary Trends (%): Enter the salary increase (as a percentage) you expect to make in a period. Business Planner applies this rate of change to figures for the previous period, as explained in the Product Pricing Trends above.

Product Cost Trends (%): Enter the rate of change you anticipate in the costs of producing or handling your products or services. Business Planner applies this change rate to figures for the previous period, as explained in the Product Pricing Trends above.

Other Expenses (Amounts): Enter any other expenses you expect, that are not part of the current production and operation expenses of the business (e.g. registration fees). These expenses will be calculated and presented in the Profit and Loss report after the Operational Profit.

Other Income (Amounts): Enter any other income you expect from other sources, that is not part of the current income/sales of the business (e.g. profit derived from sales of fixed assets). This income will be calculated and presented in the Profit & Loss report after the operating profit.

Other Operating Income (Amounts): Enter any other income you expect, that is part of the sales of the business but is not entered in the Sales Plan screen. This income will be calculated and presented in the Profit & Loss report in a different row under the sales row.

Minimum Cash Reserve (Amounts): The software calculates the cash flow, period by period. If cash is required it will be first reduced from the opening Cash balance for this period, until it is zero, then the remaining will be calculated as a bank overdraft. But in a real business you will not want the Cash balance to be reduced to zero. You will want a minimum Cash reserve. Enter the minimum cash reserve that you want to keep in this row and the software will not reduce the Cash Balance to zero but to the figure you have entered here.

Unrecoverable Debts (% of Sales): The expected unrecoverable debts entered as a percentage of sales in each period.

Warranty (% of Sales): The expected warranty expenses entered as a percentage of sales in each period.

Investment in Goodwill: The amounts of Investment that are planned to be done in Goodwill and other intangible assets during the plan period.

Amortization of Goodwill: The amount of Amortization of Goodwill and other intangible assets, planned for each plan period.

Credit Line: Enter the amount of the business credit line (you can also enter the amount of your overdraft line, revolver, or other short-term credit here instead). These figures are used in the Cash Flow report to measure variances from the approved credit.

Guarantees: Guarantees are important part of the financial status of a business. You can enter information about Guarantees issued by the business and the cost related to it. This will be used in the Operating Cash Flow analysis to compare the financial requirements of the business, including the Guarantees, to the total amount of liabilities that the bank permits the business to have, including credit line and guarantees. The data for the guarantees are entered in the following lines.

Guarantees Issued: The amount of guarantees that the business plans to issue in each plan period.

Guarantees Ended: The amount of Guarantees that will be expired in each of the plan periods.

Cost of Issuing Guarantees: The cost of issuing new guarantees. This cost will be included in Other Expenses in the Profit and Loss report.

Cost of Maintaining Guarantees (%): The cost of maintaining the existing guarantees, as percentage of the net amount of guarantees that are valid (the issued guarantees less the expired guarantees). This cost will be included in Other Expenses in the Profit and Loss report.

Credit Line including Guarantees: The whole amount of short term liability that the bank allows the business to use including issued guarantees.

Note: The line for "Average Salary per Production Employee" was removed from the Financial Parameters screen. This line was used in the past to calculate an average number of employees in the production and present it in the Financial Ratio screen.

Toolbar Buttons

All the tables include similar toolbar that appears at the top of the window and includes the following buttons:

OK - Close screen (and save all changes if applicable)

Exit - Close screen and discard any changes if applicable.

Print Table - Create a report for the current table, showing it on the print preview screen

Forecast - Copy cell values across next periods

Export to MS Excel file - Exports the displayed table to MS Excel