Exercise 3

Answer the following questions

1. Comprehend the function of budgets in planning and preparing pro forma statements?

2. Realize why positive profits can still result in a negative cash flow?

3. Explain how to prepare monthly pro forma cash flow, income, balance sheet, and sources and
   uses of funds statements for the first year of operation?

4. Explain the application and calculation of the break-even point for the new venture?