1. A business budget focuses on future profits and future capital requirements. A budget can help the business owner determine the amount of profit the business is expected to make, the amount of sales it will take to reach a goal, and what of expenses are attached to those sales. A business establishes a , a goal to work toward. A business the sales that will be needed to reach this target.Projecting or planning ahead is part of business planning. When creating a income statement, a business owner tries to determine how to reach the target. The annual profit must be sufficient to the owner a return for his or her time spent operating the business, plus a return on the Investment. The owner′s target income is the sum of a reasonable salary for the time spent running the business and a normal return on the amount invested in the firm.After projecting the income needed, the business owner has to the target profit into a net sales figure for the forecasted period. The owner has to determine whether this sales volume is . One useful technique is to break down the required annual sales into a daily sales figure to get a better of the sales required to yield the annual profit.At this stage in the financial plan, the owner should create a picture of the firm′s expected operating expenses. Many books and business organizations give operating statistics data, based on a percentage of net sales. The business′s accountant can help you assign dollar values to anticipated expenses.Developing a projected income statement is an important part of any financial plan, as the process forces the business owner to examine the firm′s future profitability.
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