1. Basic Finances
Davender Gupta, MS, MBA

2. Accounting
How we track progress
How we communicate
How we make decisions

3. Your
Dashboard
How much
money do I
have?
How much
money do I
need?
How much
money am I
making?
How much
money am I
spending?
How much
money am I
keeping?

4. Profit is not sufficient
but it is absolutely
essential

5. You are tracking two things
Assets
•What you
have
Liabilities
•What you
owe

6. Three main
dashboards
Balance Sheet
Income Statement
Cash Flow Projections

7. The Balance Sheet = GPS Current Position
Cash
Accounts Receivable
Inventory and Equipment
Equipment
ASSETS (WHAT YOU HAVE) LIABILITIES (WHAT YOU OWE)
Short-Term Liabilities
Accounts Payable
TOTAL LIABILITIES
EQUITY (WHAT YOU INVEST)
Owner’s Equity
Retained Earnings
TOTAL EQUITY
Long-Term Liabilities
TOTAL ASSETS TOTAL LIABILITIES + EQUITY
Other Assets
TOTAL ASSETS MUST EQUAL TOTAL LIABILITIES+EQUITY

8. The Income Statement = Odometer
SALES
Less: Cost of Goods Sold
NET SALES
EXPENSES
INCOME STATEMENT FOR THE PERIOD 1 JANUARY TO 31 DECEMBER
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AMORTIZATION (EBITDA)
Salaries
Rent
Marketing
TOTAL EXPENSES
Interest, Taxes, Depreciation, Amortization
NET INCOME
$100,000
$45,000
$55,000
$30,000
$10,000
$5,000
$45,000
$10,000
$3,000
$7,000

9. Cash Flow Projections = Speedometer
Number of units sold / customers
Total Billings
CASH OUT
Capital Expenses
CASH IN
Inventory and Supplies
Operational Expenses
Salaries
Rent and Utilities
Marketing
Development
Total Expenses
NET CASH FLOW
MONTH 1 MONTH 1 MONTH 1 MONTH 1 MONTH 1 MONTH 1 YEAR 1

10. Telling Your Story
• Numbers Tell A Story
• Your Assumptions and Hypothesis give CONTEXT
• List all your Assumptions and Hypothesis
• “We assume that a customer will purchase on
average 1.5 pairs”
• “We assume that a customer will come back
three times a year”
• “We assume that a designer costs _____”

11. For a
startup at
the
DEFINITION
stage
• Can your business make money?
Focus on the Cash Flow Statement
• 6 months month-by-month
• Then cumulative for the first year
SHOW
• All your hypothesis
• All your assumptions
LIST

12. Include in your Final Presentation
A Cash Flow Projection (1 year)
A list of your main hypothesis and assumptions
Don’t go too much in detail
Bottom line
decision
Do you believe that this idea is worth
developing to the next stage?