The paper “ Cash Budget for Omega Solution Limited and Evaluating R-n-D Projects” is an informative example of the assignment on finance & accounting. This report delivers a cash budget for Omega Solutions Limited for the months of October, November, and December for this year and January and February for next year and provides recommendations focusing on the outlined projections. Based on the sales projections for the period specified, the preparation of the cash budget is based on the below key assumptions. Sales and production volume would go up by 50%The selling prices to be decreased by 10% so as to sustain an increased demand. The payment of trade receivables will be made in two months. Based on the above assumptions, the cash budget was developed as illustrated in Appendix A. It is projected that Omega Solutions Ltd.
Will maintain a cash balance surplus at the end of every month over the next five months. It was noted that apart from the increased payment period for the trade receivables, all the policies of working capital would be maintained as they are present. The price, sales volume, and payment period changes if they would occur will begin with the sales transacted from December 1 of this year. Recommendations: From the unfolding developments, the following recommendations were put forward. The sales price should be reduced by 10% to give discounts and attract more business. The payment period should be allowed to be completed in two months. Appropriate credit terms should be negotiated by the buyers so as to allow them to purchase more goods and at the same time, the company also remains competitive in the market.
The production volume to improve by 50%, to realize this, the company should make credit arrangements with its suppliers so that they could be allowed to pay for the goods on a later date agreed upon.
This will also enhance the liquidity position of the company. Budgeting: According to (Antoniou et al. 2009) a budget is a statement outlining the planned business performance. These plans ideally deal with financial units; however, they may also consist of certain measurable units, for instance, output units.
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