Business Finance Assignment Solved - Snappy Drinks Plc
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Added on 2020-10-23
Business Finance Assignment Solved - Snappy Drinks Plc
Added on 2020-10-23
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Business Finance
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1MAIN BODY...................................................................................................................................1PART 1............................................................................................................................................11. Purpose and processes of preparing a budget & its support in development of the business 1model...........................................................................................................................................12. Application of traditional budgeting approaches including incremental budgeting...............3Application of Incremental budget are as follows:..........................................................................33. Making analysis of traditional budgetary system is appropriate for planned future form......3PART 2............................................................................................................................................51. Alternative budget methods. ..................................................................................................52. Application of alternative methods of budgeting. ..................................................................73. Analysing method appropriate to the company......................................................................8CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................10
INTRODUCTIONThe term business finance refers to the process of procurement and utilization of funds, moneywhich is needed by the company in carrying on its business operations effectively andefficiently. Business finance is thus defined as the amount of capital, money and credit employedby the company in its business operational functions. Financing activity of business is concernedwith raising of funds from different sources and making investment in various alternative optionsavailable with different purposes and returns. The report is about SnappyDrinks Plc, which is aninternational manufacturer of energy drinks & produces 60 different products. The report willprovide a deep insight about Budget concept. It will explain purpose and process of preparing abudget. The report will also shed light on traditional budgeting approaches and its application. Atlast the report will explain alternative budget methods along with its drawbacks and benefits.MAIN BODYPART 11. Purpose and processes of preparing a budget & its support in development of the business model.The term budget is defined as the financial plans & strategies made for a define period oftime for meeting future expenses. Budgeting is thus a process of designing, formulating,implementing and operating budgets (Wildavsky, 2017). It is considered as the managementprocess of planning, directing, organising, controlling and preparation budget and other budgetrelated procedures. The purpose of preparing budget for SnappyDrinks Plc is as follows:1. Putting business strategy into operation - Budgeting aids in making and coordinating shortterm plans. A company should makes business strategies and plans for making profits. Companyshould formulate different business plans, policies and frameworks which aids in smoothfunctioning of business operations and business activities effectively and efficiently.2. Allocating resources – Procurement and utilization of resources related to businessorganisation on time helps SnappyDrinks Plc in gaining competitive advantages. Companyshould grab the opportunity as and when arises in making profits and also for acquiring marketshare (Gachoka and et.al., 2018). Company should focus on proper and effective allocation ofresources in a cost effective manner which yields high production levels.1
3. Assigning control – Company should focus on budget making process and assign controllingand directing power to the management of the company. There are two types of control in everybusiness organisation viz. Centralised control and Decentralised control. Centralised controlemphasizes for budget making decisions at the level of institutional department where as inDecentralised control the decisions related to budget are made at the department level. 4. Forecasting of income and expenditure – The process of budget helps in making predictionfor the future sales, production cost, manufacturing cost and other expenses related to businessoperations so as to earn high amount of revenues & income thereby minimising the possibility ofoccurring business losses.5. Monitoring business performance – The main purpose of budgeting is to make comparisonof the actual business performance against the forecasted business performance (Van der Stede,2015). It enables SnappyDrinks Plc in measuring the performance level of business and suggestany modification required.Processes of preparing a budget for SnappyDrinks Plc are as follows:A budget process is defined as a process of directing and coordinating plans, strategies preparedfor operations and resources of a company expressed in the financial terms for some specifiedperiod of time in the future. It involves following steps:1.Defining goals and gathering data – The very first step of budget preparation involvesdetermination of goals and objectives to be achieved in near future (Gordon, Osgood Jrand Boden, 2017). Data gathering is done after goal is defined.2.Forming expectations and reconciling goals and data – After goals and objectives aredefined, the next step is to frame expectation and boundaries within which SnappyDrinksPlc has to complete its business operations.3.Creating the budget – After defining goals and objectives, the management ofSnappyDrinks Plc should focus on process of budget formulation.4.Monitoring actual outcomes and analysing variances – With the help of budgetingSnappyDrinks Plc can monitor and make comparison between the actual businessperformance against the forecasted business performance. 2
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