Budget Report: Cash Budget, Ratio Calculation, Flexible Sales Budget

Budget report

Table of Contents
PART A.......................................................................................................................................................................................................3
Cash Budget.............................................................................................................................................................................................3
Examining the Cash Budget....................................................................................................................................................................4
Evaluation of Sources of Finance............................................................................................................................................................4
PART B.......................................................................................................................................................................................................5
Ratio Calculation.....................................................................................................................................................................................5
Comparing Performance of Both the Years.............................................................................................................................................9
Part C.........................................................................................................................................................................................................10
Flexible Sales Budget............................................................................................................................................................................10
Identification & Discussion of Issues....................................................................................................................................................11
REFERENCES............................................................................................................................................................................................1

PART A
Cash Budget
Particulars April May June July August September
Opening Balance -10000 5690000 5390000 6590000 -3110000 195000
Cash inflows
Cash Received From Trade Receivables 4200000 4200000 4200000 4300000 4305000 4400000
Cash Sales 82500000 85500000 90000000 92000000 99000000 120000000
Total cash inflows 86700000 89700000 94200000 96300000 103305000 124400000
Cash outflows
Cash Paid To Trade Payables 72000000 80500000 84000000 87000000 91000000 93000000
Repayment of Loan 10000000
Corporation Tax 500000
Other Overheads 9000000 9000000 9000000 9000000 9000000 9000000
Total cash outflows 81000000 90000000 93000000
10600000
0 100000000 102000000
Cash deficit / surplus or closing cash balance 5690000 5390000 6590000 -3110000 195000 22595000
Examining the Cash Budget
The cash budget of the Gaia Ltd. is prepared as per the accounting standards. For the month of April, the opening balance is
77300000 which is the surplus of cash from the previous month. Further each of the month cash inflow includes the cash received
against the trade receivables for the credit sales made in the previous month. In addition to this cash sales that are expected for the

month are also included to the cash inflows (Kurniawati, 2022). Further for the month of April, the firm expects to have a bank
overdraft of 10,000 pounds. The cash outflowing activities for the Gaia Ltd are expected to be making of payments to the creditors of
the firm from whom it purchases materials on credit. Such payments are made after a month, so any of the particular month contains
payments for the credit purchases that are done in the month previous to it. The month of July includes a repayment of loan of
10,000,000 pounds. Further, there is a payment of 500000 pounds against the head corporation tax, other overheads accounts to be
9,000,000 pounds every month. The firm is having enough positive cash flow for each of the months, it should make effective use of
such funds to earn more income.
Evaluation of Sources of Finance
 Issue of Shares – Issuing of equity shares is known to be the main source for a firm to arrange the amount of funds that are
required by itself. Such shares are issued to the general public. Equity shareholders do not get any kind of preferential rights in
terms of repayment and receiving of dividend. The company have to give the equity shareholder their share from the
company’s residual income. There are various advantages that Gaia Ltd. can enjoy by using this source to raise funds. To
begin with the company will get funds that are of permanent in nature and hence it will not have any kind of liability in terms
of repayment. Furthermore, it will not create any obligation of the business enterprise in terms of paying the dividends. Lastly
the credit worthiness of the company will enhance. The limitations include cost of equity is the highest as compared with all
the sources of funds that are available to a company (Wadesango and et.al., 2019). The dividends that are paid to equity
shareholder are not tax deductible, and also the floatation expenses are high.
 Debentures – The literal meaning of debentures is to take loan or borrow. Issuing of debentures by the company is like issuing
of unsecured loans. The company will have to pay the debentures holders fixed interest payments and repay the principal
amount in the event of repayment. The advantage is that this source is more effective than the issue of shares option. The
company will retain its ownership rights among its existing owner. Interest payments are tax deductible so it will be