Business Finance - Snappy Drinks Plc

Business Finance

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
I. Explaining the purpose of formulating the budget and the process of budgeting...................1
ii. Application of the traditional budgets including incremental budgets for planning the future
cost..............................................................................................................................................2
iii. Analysing the usefulness of the appropriate budgetary system for Snappy Drinks Plc.......3
PART 2............................................................................................................................................4
iv Presenting the alternative methods of budget preparations....................................................4
V Application of the various methods discussed above.............................................................6
vi Analysing the best alternative method, appropriate for Snappy Drinks Plc..........................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
The business analysis its performance for a particular time period evaluation of its
budgets with the actual performance. The budgets are of vital importance to the businesses as it
sets the target for the business to achieve a certain goal in predetermined funds allocated to each
activity. In the present report the Snappy Drinks Plc is presented with the knowledge over the
preparation of the budgets, use and application of the traditional budget in the business.
Moreover the the different alternative of budgets methods are explained with their advantages
and disadvantages, their application and usefulness of the best methods amongst all.
PART 1
I. Explaining the purpose of formulating the budget and the process of budgeting
Overall purpose for preparing the budget is to make effective planning for different
functions of the operations of business and to coordinate the activities of several divisions of the
Snappy drinks. With the formulation of the budget effective control can be ensured over the
various phases of operations (Grossi, Reichard and Ruggiero, 2016). The major purpose for
framing the budget is to facilitate a model which states the way in which the business activities
must be performed and reflects the strategies, plans, events etc that are to be carried out. The
objective of forecasting the income, expenditure and the profitability are met with the
preparation of the budget.
Process of budgeting-
Setting up of objectives for budgeting- The first and the foremost step of the budgeting is
before evaluating the budget, the budget committee must set the objectives for meeting the future
goals of Snappy drinks. Objectives might include controlling cost, sales target, expansion etc.
Different purposes requires different form of the budgeting so it is necessary to set the objective
first.
Identifying the resource availability- After setting the objectives, availability of the
sufficient resources must be analyzed so that goals can be achieved effectively and efficiently.
Available resources must include cash as well as the other loans and the outside investments
made by the Snappy drinks. Under this the company must also project for its future sales in the
coming years.
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