Explain any six components of a financial plan.

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Six components of a financial plan: (i) Proforma investment decisions - relate to how the enterprise's funds are invested in different assets for the highest possible returns; they cover land and building, machinery and plant, installation cost, preliminary expenses, margin for working capital, research and development expenses and investment in short-term assets like raw material and cash level. (ii) Proforma financing decisions - summarise the projected sources of funds, i.e., owner's funds and borrowed funds; the entrepreneur chooses the best mix to minimise capital cost and financial risk and maximise return on investment and profitability. (iii) Proforma income statement - the projected net profit computed as projected revenue minus projected costs and expenses; it summarises the first year's profit data, with 'sales by month' forecast first. (iv) Proforma cash flow - reflects the projected cash available (projected cash receipts minus projected cash disbursements); cash flows when payments are actually received or made, and 'cash in LESS cash out' is used for internal monitoring. (v) Proforma balance sheet - reflects the business position at the end of the first year, summarising projected assets, liabilities and net worth. (vi) Break-even point - the level of production volume where the firm neither profits nor loses, as total revenue equals total cost; break-even analysis helps determine the units or sales volume needed to cover total variable and fixed expenses. The financial plan may also mention economic and social variables such as employment generation, import substitution and export promotion.