Financial Guide for SMEs - SME Corporation Malaysia
Financial Guide for SMEs - SME Corporation Malaysia
Financial Guide for SMEs - SME Corporation Malaysia
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<strong>Financial</strong> <strong>Guide</strong> <strong>for</strong> <strong><strong>SME</strong>s</strong>Table of ContentsIntroduction.................................................................................5Glossary of Terms ......................................................................6Section I : Business Finance Basics.....................................9Chapter 1: Understanding <strong>Financial</strong> Statements .......................11Income Statement .................................................................12Balance Sheet .......................................................................16Statement of Cash Flows ......................................................19Chapter 2: Assessing the <strong>Financial</strong> Health of Your Business ...23Liquidity Ratios ......................................................................23Solvency Ratios .....................................................................25Profi tability Ratios..................................................................26Management Ratios ..............................................................27Balance Sheet Ratios............................................................28Chapter 3: Budgeting....................................................................31Profi t and Loss Budget ..........................................................32Assumptions ..........................................................................33Monitoring and Managing Your Profi t and Loss Budget ........36Section II : Improving Business Finances...........................37Chapter 4: Maintaining Profitability.............................................39Profi tability Measures ............................................................39Discounting Sales..................................................................43Expense Management ..........................................................45Chapter 5: Improving Cash Flow .................................................47Managing Inventory ...............................................................49Managing Payments to Suppliers ..........................................54Managing Work-in-progress ..................................................58Managing Receivables ..........................................................60Working Capital Cycle – Cash Conversion Rate ...................642chapter 1 01-21 Eng.indd 28/15/11 5:01:21 PM
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