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Module 3 Key Takeaways

1) A financial plan must be congruent with the corporate vision and mission, with long term plans translating to short term plans. 2) A plan is useless if not quantified, represented through budgets and projected financial statements. 3) Key financial metrics include the cash conversion cycle, working capital, float, and use of zero balance accounts.

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68 views1 page

Module 3 Key Takeaways

1) A financial plan must be congruent with the corporate vision and mission, with long term plans translating to short term plans. 2) A plan is useless if not quantified, represented through budgets and projected financial statements. 3) Key financial metrics include the cash conversion cycle, working capital, float, and use of zero balance accounts.

Uploaded by

made moiselle
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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MODULE 3 KEY

TAKEAWAYS
SUBMITTED BY:
ALVARAN, MHERIE AUDRINE J.

FINANCIAL PLAN
It must be congruent with the corporate vision and

mission. Financial planning starts with long term plans

which would then translate to short term plans.

VISION AND MISSION


Vision conveys the ultimate goal of the organization. It

outlines the final map of what the business will be and where

the business is going while the mission of the business sets the

current business activities and outlines what the business is

for.

QUANTIFIED PLAN
A plan is usless if not quantified. A quantified plan is

represented through budgets andpro-forma or projected

financial statements.

BUDGET
Budget refers to a plan which is expressed in a quantitative

monetary value. It simply indicates the amount of money

involved to realizee the approved strategic and operating

plans of the business. Budgeting can be expressed in the

statement “If this is the strategic plan, then the corresponding

amount involved in materializing the plan will be this much.” As

a plan, the budget should provide clear directions to the

business in attaining the predetermined goals and objectives.

CASH CONVERSION CYCLE (CCC)


CCC = OC - APP

(Operating Cycle) OC = AAI + ACP

CCC = AAI + ACP - APP

(Average Age of Inventory) AAI = Inventory / (COGS / 365)

(Average Collection Period) ACP = Accts.. Rec. / (Sales / 365)

(Average Payment Period) APP = Accts. Pay / (Purchases / 365)

WORKING CAPITAL
It refers to the fiaancial resources that support the daily

operations of a business. It also strictly refers to the current

assets. Net Working Capial is the difference between curent

assets and current liabilities.

FLOAT
It refers to the funds that has been sent by the payer but are

not yet usable funds to the payee. Float has three component

parts which are the mail float, processing float, and clearing

float.

ZERO BALANCE ACCOUNT (ZBA)


It is a disbursement account that always has an end-of-day

balance of zero because the firm deposits money to cover

checks drawn on the account only as they are presented for

payment each day.

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