Budgetary Forecasts

This report discusses the concept of budgetary forecasts and their importance in financial planning. It focuses on the cash budget forecast and profit forecast for Westhorpe Leisure Limited, a company that owns several medium-scale hotels. The cash budget forecast shows the net cash inflow for the next 6 months, while the profit forecast indicates the expected income and expenses for the same period. The report concludes that the company is projected to earn profits and generate positive cash flows in the future.

Budgetary Forecasts

Table of Content
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
TASK 2............................................................................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Budget refers to an anticipation of the revenue & expenses over the specified time period
and is been compiled or re-evaluated on the periodic basis. Budget could be made for the people
or group, government and business in order determine or predict the receipts or payments that
would be earned by them in coming years so that they could plan their projects or proposal
accordingly (Mariana, 2018). The present study is based on Westhorpe Leisure Limited that
owns several medium scale hotels in south-east & Wales England. Furthermore, the study
highlights the cash budget forecast for the period of 6 months by showing the net amount of the
cash inflow. Moreover, the report also presents the profit forecast for the month of January to
June for the year ending 30th June 2020 (Ríos and et.al., 2018). This shows the amount of
expenses and income that would be incurred or earned by the company in coming or future
periods.
TASK 1
Cash budget- It refers to an estimate of the cash receipts and payments during the future
time period (Turner, 2016). It mainly deals with the other budgets like labor, material, R&D
and overheads. It means as statement of the payment & receipt of the cash and is counted as an
indicator of the probable income and disbursements. In case the payments are higher than
revenue, in such type of condition appropriate cash management would be enforced. In other
words, if there is surplus, expenses seem as less than the income, in such situation decision
relating to utilizing the surplus is been taken (EQUIVALENTS, 2018). Financial plans are
been drawn up to the anticipated periods of low & high availability of the cash. Large amount of
cash balance implies that business had not able to best possible profits rate. Lower cash related
reserves means that business is unable in meeting all its dues (Abor, 2017). The firm must have
sufficient cash balances in meeting its forecasted cash needs in addition to the reserves for
meeting uncertain or unforeseen contingencies that might occur in coming years.
Jan
Februar
y March April May June
£ £ £ £ £ £
Receipts :
Collection from
Room Sales 122,625 126,925 134,750 143,575 147,125 167,500
Food & Beverage 44,500 40,100 43,300 42,600 40,200 36,500
Rent 950 950 950 950 950 950
Commission 25 55 20 15 10 40

Total Receipts 168,100 168,030 179,020 187,140 188,285 204,990
Payments :
Laundry 6,250 6,250 6,250 6,250 6,250
Printing and
stationary 2,000 2,000 2,000 2,000 2,900 2,000
Toiletries 46,000
Salaries 110,000
Wages 11,667 11,667 11,667 11,667 11,667 11,667
Marketing cost 60,000
Payment to
suppliers 0 2,000 12,300 2,000 16,400 2,000
Van 28,000
Petrol and diesel 1,000 1,000 1,000 1,000 1,000 1,000
Restaurant
Improvements 8,800 22,000
General
Maintenance 5,000 5,000 5,000 5,000 5,000 5,000
Lighting & heating 27,500 27,500
Rates 21,668 5,417 5,417
Total payments 19,667 73,917 102,517 49,584 48,634 252,834
Balance b / f 265,000 413,433 507,547 584,050 721,606 861,257
Net cash flow in
month 148,433 94,113 76,503 137,556 139,651
(47,844
)
Balance c / f 413,433 507,547 584,050 721,606 861,257 813,413
Interpretation- The above analysis shows that the company would be earnings profits in
coming 6 months as its receipts are greater than payment. The cash budget prepared reflects the
net cash flows that the company will gain after making payment of expenses or reducing the
payments from receipts (Zietlow, 2020). In terms of receipt, the company earns collection
from sale of room, beverages & food, commission and rent. However, in payment it includes

printing, laundry, Salaries, Toiletries, cost of marketing, wages, supplier payment, van,
restaurants improvement, lightning and rates (Mwanza and Benedict, 2018).
Working Note:
Particulars Nov Dec Jan
Februa
ry March April May June
Room sales
1230
00
1080
00
130,5
00
125,00
0
140,0
00
145,5
00
148,0
00
178,0
00
Food & beverage
3600
0
4700
0
44,50
0
40,100 43,30
0
42,60
0
40,20
0
36,50
0
Rent 950 950 950 950 950 950 950 950
Commission 120 15 25 55 20 15 10 40
Room Sales
Business concerns
35% 37800 45675 43750 49000 50925 51800
Individuals 84825 81250 91000 94575 96200
11570
0
Collection from
sales
12262
5 126925
13475
0
14357
5
14712
5
16750
0
Payment to
Suppliers Jan
Februa
ry March April May June
In room beverages 2000 2000 2000 2000 2000
Bedding bundles 700
Kettle trays
Complimentary
items 9600 14400
Total 0 2000 12300 2000 16400 2000
TASK 2
Profit budget indicates the amount of disbursements, profit and income that is would be
earned by firm over an entire period of the budget (Mirgorodskaya and et.al., 2017). It tells
the company regarding the amount of the profit that is likely to be expected with respect to the
trading level (Williams and Calabrese, 2016). Budgeting helps in diagnosing the problems
prior the period it tends to occur. This budget does not reflect the position of cash. In other terms,
it means as the planned financial predictions for net earnings of business (Zhang and et.al.,
2016). A manager in the charge of anticipating financial performance of the firm in future that

may produce the profit budget for the purpose of facilitating adequate estimate in relation to the
projected revenue which would permit an entity and their shareholders in assessing the manner in
which it is achieving its goals and objective in effective and efficient manner (Mäkinen, 2017).
Jan Feb Mar Apr May Jun
Room sales 130,500 125,000 140,000 145,500 148,000 178,000
F & B sales 44,500 40,100 43,300 42,600 40,200 36,500
Total sales revenues 175,000 165,100 183,300 188,100 188,200 214,500
Rental Income 950 950 950 950 950 950
Commission Income 25 55 20 15 10 40
Total Revenues 175,975 166,105 184,270 189,065 189,160 215,490
Expenses
In room beverages 2000 2000 2000 2000 2000 2000
Bedding bundles 700
Complimentary items 2000 2000 2000 2000 2000 2000
Laundry 0 6,250 6,250 6,250 6,250 6,250
Printing and stationary 2,000 2,000 2,000 2,000 2,900 2,000
Toileteries 3,833 3,833 3,833 3,833 3,833 3,833
Salaries 18,333 18,333 18,333 18,333 18,333 18,333
Wages 11,667 11,667 11,667 11,667 11,667 11,667
Marketing cost 5000 5000 5000 5000 5000 5000
Petrol and diesel 1,000 1,000 1,000 1,000 1,000 1,000
General Maintenance 5,000 5,000 5,000 5,000 5,000 5,000
Lighting & heating 9166.7 9166.7 9166.7 9166.7 9166.7 9166.7
Rates 5416.7 5416.7 5416.7 5416.7 5416.7 5416.7
Depreciation van 416.7 416.7 416.7 416.7
Depreciation minibus 333.3 333.3 333.3 333.3 333.3 333.3
Total Expenses 65750 72000
73116.6
7
72416.6
7
73316.6
7
72416.6
7
Profit 110,225 94,105 111,153 116,648 115,843 143,073
Interpretation- From the above table it has been analyzed that the company will generate
profits in the future period as the forecast shows that the expenses incurred are lesser than
revenue and other income (Sharkasi, Rajasekera and Sumita, 2018). It reflects that the
revenue of the firm will be increasing on monthly basis which shows that the performance of an

enterprise will get improved or better from one month to the other due to the increase in room
sales (Yao, Cui and Xin, 2018). On the other hand, some expenses of the firm are assumed as
fixed for all the months but are lower than the income so it is forecasted that an organization will
be earning profits in future years (Talib and Ismail, 2017). This in turn depicts that an entity
will achieve its profitability goals effectively and could achieve growing success in the future
periods (Wang, Li and Jia, 2020). This indicates that the firm will attain a leading growth and
stable business in the long run period and will be gaining higher amount of profits in probable
periods.
CONCLUSION
The above report concludes that forecast shows the growth of business in future as it will
earn increased level of profits and revenue with full control over the expenses. Further, an
enterprise will generate adequate amount of the income through selling of its room and by way
of rental income (Tang, Tang and Yuan, 2016). The cash reflected the positive cash flows or
inflows in the firm for the next 6 months which is considered as very much beneficial for an
entity to enhance its reputation and brand awareness in the future. It would also help the
company in attaining competitive advantage or edge in overall market or industry.

REFERENCES
Books and journal
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financial tools.
Mwanza, P. S. and Benedict, H. O., 2018. Journal of Entrepreneurship &
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Ríos, A. M. and et.al., 2018. The influence of transparency on budget forecast
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