Create FinancialsStephen Lawrence and Frank Moyes
Graduate School of Business
University of Colorado
Boulder, CO 80309-0419
Course Outline
This Week
Create Financial Statements
Financial Projections– Drivers
– Model
– Assumptions Financial Dynamics Dean Abrams Present Operations Plan
Financial Plan
Income Statement Balance Sheet Cash Flow Summary Assumptions
Operating Expenses
Year 1 Year 2 Year 3Marketing 30 45 65R & DAdministration Total 60 90 140
Cost of Goods
Year 1 Year 2 Year 3Direct 70 130 160Indirect 30 70 90Total 100 200 250
Income Statement
Year 1 Year 2 Year 3Revenue 250 350 500COG’s 100 200 250Oper Expenses 60 90 140
Fixed Assets (Plant)
Year 1 Year 2 Year 3Assets 200 300 400Depreciation 140 210 260 Fixed Assets 60 90 140
Working Capital
Year 1 Year 2 Year 3Receivables 100 200 300Inventory 50 75 125
Balance Sheet
Year 1 Year 2 Year 3Receivables 100 200 300Inventory 50 75 125Fixed Assets 60 90 140
Revenue Drivers
Number of customers, transactions or units Price per customer, transaction or unit Average revenue per customer or
transaction Distribution channel discount Market penetration Response rate Churn rate Growth rate New services or product
Cost of Revenue Drivers
Personnel costs (labor and/or salary) Materials costs Yields Website operating costs Systems costs Warehouse and shipping expenses Returns Outsourcing expenses Lease and/or rental expenses Cost reductions Depreciation large capital expenditures
Operating Expense Drivers
Sales & Marketing– Customer acquisition cost
– Personnel expenses
– Sales commissions
– Exhibitions
– Brand building
– Tech support
– Customer service
Operating Expense Drivers
Research and Development– Personnel expenses– Beta testing– Time to market– Patent and copyright application – Prototyping– Subcontracting
General and Administration– Personnel expenses– Recruiting expenses– MIS expenses– Office rent and utilities
Financial Dynamics
Who does the financial projections?
Investor questions Drivers Optimism vs. Pessimism
Financials Spreadsheet Template