The paper “ Budget Preparation and Implementation ” is a potent example of an assignment on finance & accounting. You are the General Manager of Finance. You are responsible to plan for financial management, establish budgets, and allocate funds, Implement budgets, and reporting on finances. The Chief Executive Officer (CEO), has asked you to prepare a 12 month budget for the 2015/16 financial year. Use the case study to complete your tasks. PreparationReview and analyze the company financial data for the previous years to specify the following components for the preparation of the budget: Identify the areas which have generated profit or loss and the reason for that (Profit budget in the appendix). In this financial statement, the profit center includes the revenue where, when the company makes more sales, then it will generate higher profits compared to a situation where it makes lesser sales.
Additionally, when the cost is low, then the amount of profit generated will increase while increases cost makes the profit decline. On the other hand, an increase in expenses drives the profit down. Analyze cash flow trends, such asIdentify the possible reasons for previous profits and lossesBased on the statement of financial income, it is evident that the company recorded profits due to an increased number of sales.
Additionally, the company had fewer expenses compared to the gross profit, which made the organization to record profit in its financial statementsComment on the effectiveness of existing financial management approachesThe approach of making a budget in the organization is an effective cost estimation approach since the management can estimate the most likely cost that the company is likely to incur. It also ensures effective readiness to carry out a business where the benefits are explained the expenditures are then represented by the company’ s infrastructure. Explain all assumptions made when developing the budgetWhen developing a budget, assumptions are made where it is assumed that the sales prices will remain constrain during the budgeted period.
Additionally, the variable costs per unit are also made to remain unchanged during the period that is budgeted. During this period, the fixed cost also remains constant