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With that said, banks generally offer various types of loans.
In short, it provides details on how potentially profitable the business will be, how much debt and equity capital is required for the business venture, and when debts are scheduled to be repaid to investors.
In addition, this section includes your financial statement forecasts, and the assumptions made when creating your financial projections.
The Financial Section of your business plan relies on Forecasted Financial Statements.
Forecasted financial statements help an entrepreneur determine the feasibility of his/her business venture.
While the current asset ratio is helpful, it might be even more helpful to conduct a calculation on the quick asset ratio.
This is calculated by taking your equity and short-term assets divided by your liabilities.
Most business owners draft a 3-year and 5-year projection to ensure that proper projections are made to not only keep your company financially afloat, but also to expand and grow both financially and in size if so desired.
For example, in addition to increasing your profits, you might want to hire 10 new employees for your small business.
Such assets will include both short-term and long-term assets.
Those short-term assets include accounts receivable that you expect to receive within the next year.