BergerLewis Accountancy Corporation

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Budgeting and Cash Flow Management
Tom Bondi, C.P.A. Principal BERGER/LEWIS
Accountancy Corporation 99 Almaden Blvd., Suite
600 San Jose, CA, 95113 Tel [phone] Fax
[phone] tcbondi_at_bergerlewis.com
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Why do a budget?

• The budget should reflect the objectives of the
  business
• Budgets are used for
• managing the business
• obtaining funding
• forecasting cash flow/shortfalls
• adding resources

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Terms Used and Definitions

• Gross Profit
• Difference between total revenue and cost of
  goods sold
• Gross Profit
• Gross profit divided by total revenue

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Terms Used and Definitions

• Revenue Drivers
• Identified as activities that result in
  generating revenue
• Cost Drivers
• Identified as activities that result in costs
  being incurred

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Revenue Forecast Assumptions

• Revenue is generated from multiple products
• Advertising Revenue (example)
• Site traffic is measured by the number of
  cumulative users
• Advertising is shown on 80 of pages viewed
• Each user clicks through 5 pages

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Summary Income Statement
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Revenue Drivers
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Cost Drivers
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Co-location Costs
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General Administrative Costs
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Salary Expense Forecast
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Headcount Forecast
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Balance Sheet Assumptions

• A/R is collected 30 days from sale
• Fixed assets are computer equipment only
• Depreciation is based on five-year MACRS
• A/P reflect a 45-day payment cycle
• Salaries are paid semi-monthly
• Taxes are paid at a combined rate of 40

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Cash Flow Forecast
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Summary Balance Sheet
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Thank You!