IntroductionStay Health Medical Practice Pty limited performs in the medical field and is looking towards reducing the effect of recession so that they can ensure proper performance for the company. The variance between the calculated and actual financial figures highlights the various areas Stay Health Medical Practice Pty limited needs to work upon so that they are able to reduce the effect of recession and grow. This will help Stay Health Medical Practice Pty limited to ensure that they grow their business according to the planned objective and ensure proper budgeting for the organization. Effectiveness of financial management processStay Health Medical Practice Pty limited has ensured that their projected and estimated budget reflects effectiveness which is reflected in the growth of the organization.
Some of the effectiveness which has been highlighted in the financial management process is as Firstly, Stay Health Medical Practice Pty limited has looked towards integrating both the financial and non financial information as it is seen that the company has accounted for all the expenses that the business will encounter. This has ensured that Stay Health Medical Practice Pty limited is able to meet its expenses by having a proper forecast for the future. Secondly, Stay Health Medical Practice Pty limited has ensured that the advertising expenses match the revenue earned by the company.
For this Stay Health Medical Practice Pty limited has ensured the use of proper accounting principle and matching the cost with revenues. This highlights consistency and reliability in information. Thirdly, Stay Health Medical Practice Pty limited highlights the use of matching principle as the expenditure made on travel is matched by the revenues earned by the company thereby highlighting consistency. Fourthly, Stay Health Medical Practice Pty limited has apportioned the expenses incurred by them by distributing them along all the months.
This has ensured that expenses are apportioned equally and the different shocks of the economy are being absorbed easily by the business. Thus, Stay Health Medical Practice Pty limited highlights various effectiveness in their financial process but has the following assumptionsAssumptionsThe assumptions which has been taken in the budgeting process of Stay Health Medical Practice Pty limited is as followsFirstly, the indirect cost has been apportioned equally over all months.
This will result in discrepancies as certain month’s results in more expenditure than other but on a long term basis it helps to provide consistency and ensures proper standards. Secondly, advertising and travelling have been directly apportioned as a percentage of revenues highlighting the fact that increased revenue increases the cost of advertising and travellingThirdly, the budgeting process takes into account the economic conditions and based on it the budgeting incomes and expenses are forecasted for the future highlighting the understanding of external environment in the budgeting process. Improvements NeededStay Health Medical Practice Pty limited has a sound financial management process and has a few assumption but working on the following areas and improving it will help to ensure better financial management process.
Some of the improvements needed are as