Discussion 5

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Embry-Riddle Aeronautical University *

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318

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Finance

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Jan 9, 2024

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docx

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Discuss the importance of preparing financial plans and how an entrepreneur might use financial projections and financial ratio analysis. Post your initial response to the discussion question no later than Thursday at 11:59 PM EST/EDT. You will not be able to see any of your classmates' posts until you have posted your initial response. If you are posting your initial response, click the Start a New Thread button. If you are responding, click the Reply to Thread button for the thread you wish to respond to. Respond to at least two of your classmates no later than Sunday at 11:59 PM EST/EDT. Financial plans refer to a business document that is equipped with an individual s current money situation and long-term monetary objectives and strategies that are needed in an organization to achieve the set objectives. A financial plan is one of the crucial documents that an entrepreneur should have as it provides them with information on how much revenue they might be able to make and how much they will be required to invest to make much money. In general, financial plans will help an entrepreneur estimate whether their proposed business will be profitable. On the other hand, financial projections and financial ratio analysis can be defined as the estimations of the future financial performance of a business. As an entrepreneur, working on organizational financial projections is categorized as one of the most crucial things needed to be done each year. Financial ratio analysis are used by an entrepreneur to achieve useful data and financial trends concerning a business venture. In general, financial ratio analysis are used by entrepreneurs to determine the health of an organization before seeking investment or financing. Financial projections are used by entrepreneurs in
compiling the internal and external accounting information that is used in the day-to-day management of the organization. An entrepreneur will project his revenues and expenses to help achieve a more accurate view of how successful an organization can be. References: Whatman, P. (2023, February 3). 9 key benefits of Business Financial Planning. Spendesk. https://www.spendesk.com/blog/business-financial- planning/
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