Technology Entrepreneurship

Entrepreneurs

and

The Business of

Accounting, Finance and Economics

Technology Entrepreneurship

What About Your PRESENTATION…?

Make Some Magic…!!!

Technology Entrepreneurship

Ten Accounting Items

1. Revenue

2. Expense

3. Asset

4. Liability

5. Equity

6. Assets= Liab.+Equity

7. Rev – Exp = Income

8. Debits on the Left

9. Credits on the Right

10. Dr must equal Cr

Technology Entrepreneurship

Financial…Information

Managerial…Information

Operational…Information

Technology Entrepreneurship

Financial

Financial Statements

Cash Flow Statements

Capital, Investments and Returns

Technology Entrepreneurship

Financial

Financial Statements…GAAP

“Generally Accepted Accounting Principles”

What about them???

Technology Entrepreneurship

Financial

Cash FlowsCash Balance…

Cash - In Flows…

Cash – Outlays…

Ending Cash Balance

Technology Entrepreneurship

Financial

Cash flows-Monthly ScheduleCash Flow Budget Worksheet

[Month] [Month] [Month] [Month] [Month] [Month] TotalBeginning Cash Balance $0 $0 $0 $0 $0Cash Inflows (Income):

Accts. Rec. Collections 0Loan Proceeds 0Sales & Receipts 0Other:

00

Total Cash Inflows $0 $0 $0 $0 $0 $0 $0Available Cash Balance $0 $0 $0 $0 $0 $0Cash Outflows (Expenses):

Advertising 0Bank Service Charges 0Credit Card Fees 0Delivery 0Health Insurance 0Insurance 0Interest 0Inventory Purchases 0Miscellaneous 0Office 0Payroll 0Payroll Taxes 0Professional Fees 0Rent or Lease 0Subscriptions & Dues 0Supplies 0Taxes & Licenses 0Utilities & Telephone 0Other:

000

Subtotal $0 $0 $0 $0 $0 $0 $0Other Cash Out Flows:

Capital Purchases 0Loan Principal 0Owner's Draw 0Other:

0 Subtotal $0 $0 $0 $0 $0 $0 $0 Total Cash Outflows $0 $0 $0 $0 $0 $0 $0

Ending Cash Balance $0 $0 $0 $0 $0 $0

Technology Entrepreneurship

Financial

Capital, Investments and Returns

• The Time Value of Money

• Present Value

• Discounted Cash Flows

• Cost of Capital

Technology Entrepreneurship

Financial

Time Value of Money

interest rate 0.05time 0 1 2 3 4 5yr-totalcash out flow ($100)future value $105.00 $110.25 $115.76 $121.55 $127.63

Technology

Financial

NPV and Discounted Cash Flows

Periodic Cash Flowsrate 10%time 1 2 3 4 5Cash flow = 420,000 420,000 420,000 420,000 420,000NPV = 1,751,343

Technology Entrepreneurship

Cost of Capital

Cash has a price…

• The Cost of Debt…..

• The Cost of Equity…

• Cost of Funds…???... Concept and Framework!!!

Technology Entrepreneurship

Managerial

Cost, Volume, Profit Analysis

Contribution Margin

Break Even

Technology Entrepreneurship

Contribution Margin Statement

Sales (400 units)… .$100,000 ($250/unit)

Less Var. Cost……..$(60,000) ($150/unit)

Contribution Margin $40,000 $100/unit

Less Fixed Cost….....$(35,000)

Net Operating Inc……..$5,000

Technology Entrepreneurship

Break Even

In Units…..(CM per unit=CM/units sold)

Q =TFC / CM per unit

Q = $35,000 / $100

Q = 350 units sold

Technology Entrepreneurship

Break EvenIn Dollars….

(CM Ratio=Sales/CM)

$ = TFC / CM Ratio

$ = $35,000 / 40%

$ = $87,500 in Sales

Technology Entrepreneurship

Target Profit of $20,000

In Dollars….

$ = Target Profit + TFC / CM Ratio

$ = $20,000 + $35,000 / 40%

$ = $137,500 in Sales

Technology Entrepreneurship

Break Even…$0 profit

$87,500 / $250 selling price

350 Units

Target Profit of $20,000

$137,500 / $250 selling price

550 Units

Can the class prove it?

Technology Entrepreneurship

OperationalActivity Based… Costing

toActivity Based Funds Flow

Design

Production

Quality

Technology Entrepreneurship

Good Night

&

Good Luck

Technology Entrepreneurship

Intentionally

BLANK