Practicing Success

Target Exam

CUET

Subject

Entrepreneurship

Chapter

Entrepreneurial Planning

Question:

Which component of financial plan summarizes all the projected sources of funds available to the venture to raise finance?

Options:

Proforma investment decisions

Proforma financing decisions

Break-even point

Proforma cash flow

Correct Answer:

Proforma financing decisions

Explanation:

The correct answer is option (2) - Proforma financing decisions

Proforma financing decisions: The component of the financial plan that summarizes all the projected sources of funds available to the venture to raise finance is "Proforma financing decisions." This part of the financial plan outlines how the venture plans to obtain the necessary funds, including details on equity financing, debt financing, or any other sources of capital. It provides a comprehensive overview of the financial structure and how the venture plans to meet its funding requirements.

Other Options are not correct.

Proforma investment decisions: This part of financial plan relates to how the enterprise's funds are invested in different assets so that the enterprise is able to earn the highest possible returns on investment. An estimate of various components of capital nature i.e. fixed assets and of working capital should be clearly mentioned in this part of business plan.

Break-even point: This metric indicates the point where total revenue equals total costs, not directly related to sources of funding.

Proforma cash flow: This statement forecasts the incomings and outflows of cash over a specific period, but may not explicitly summarize all potential funding sources.