Final answer:
The document not usually included in a Financial Plan is 3) price lists from suppliers. The money on a bank balance sheet may not be in the bank due to fractional reserve banking. The willingness to pay more or less for loans in the secondary market depends on the borrower's payment history, changes in overall interest rates, and the borrower's financial condition.
Step-by-step explanation:
The document usually not included in the Financial Plan of a business is price lists from suppliers. A Financial Plan generally consists of the statement of cash flows, income statement, and projected balance sheet. These are essential tools for forecasting the financial health of the business and are used to track the flow of money, profitability, and financial position over time.
Regarding the money listed under assets on a bank’s balance sheet, it may not actually be present in the bank because banks often engage in fractional reserve banking. This means they are required to hold only a fraction of their deposit liabilities in reserve, with the rest being used for loans or investments. Therefore, the asset entries on a balance sheet may represent loans or investments rather than physical cash held in the bank.
When considering purchasing loans in the secondary market, several factors affect the price one might be willing to pay. For instance:
- If a borrower has been late on a number of loan payments, one might pay less due to increased risk of default.
- If interest rates have risen since the loan was made, you might pay less, because the existing loan has a lower interest rate than current market rates, making it less lucrative.
- If the borrower is a firm that has just declared a high level of profits, you might pay more, because the firm’s financial strength implies a lower risk of default.
- If interest rates have fallen since the loan was made, you might be willing to pay more, as the loan rate may be higher than current market rates, increasing the potential profit.