Financial Plan for Small Business - Research Paper Example

The financial plan in this case is based on NASDAQ listed 1st Century Bancshares, Inc (Ticker: FCTY). The total market capitalization of the company is $66.44 million as on May 9, 2014 (Yahoo Finance, 2014). The balance sheet is the most important financial statement of any business irrespective of its size or market capitalization. It presents the financial position of the business on a given date. It is divided into three sections namely, assets, liabilities and owners’ equity. Assets and liabilities are further classified on basis of period of maturity.

Assets include, cash, accounts receivables, inventory, land & buildings, goodwill, etc. Liabilities include account payables, debt capital, creditors, etc. The positive difference between total assets and total liabilities is the shareholders’ equity (Ramachandran and Kakani, 2009, pp.3-9). The historical balance sheet of business reveals that during the period 2011 to 2013, the company had very strong cash and its equivalents. However, the net cash and cash equivalents declined by 5.7 percent annually to $0.

155 million in 2013. The total current assets of the company comprised of net receivables, cash and cash equivalents only. The total assets of the business increased by 15.2 percent historically from 2011 to 2013. In comparison, the current liabilities and total liabilities of the business increased by 15.8 percent historically from 2011 to 2013. The company does not intend to issue debt instruments as it has sufficient cash resources available for attaining its financial objectives. Historically, the shareholders’ equity increased by approximately 10.

9 percent at compounded annual growth rate. The historical information about the financial position of the business will assist in determining the probable course of action of the business through projected financial forecasts. The pro-forma balance sheet of the business is presented below: By observing the historical information about the