Assignment on Business Finance (pdf)

Added on - 22 Nov 2020

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Business Finance
TABLE OF CONTENTSINTRODUCTION...............................................................................1MAIN BODY......................................................................................1PART – A..........................................................................................2PART – B..........................................................................................6CONCLUSION...................................................................................8REFERENCES...................................................................................9
INTRODUCTIONBusiness Finance is considered as a process of employment of funds, money and capitalresources in the business organisation required for conducting business operations. Decisionsrelated to the financial aspects of business have to be made properly as it is the corerequirement of every business organisation. Procurement of funds and its effective utilizationin the business can lead to smooth functioning as well as achievement of goals and objectivesin a cost effective manner. The present report is based on Snappy Drinks Plc, which is amanufacturer of energy drink on international basis. The report will discuss aboutpreparation, purpose as well as its process of Budget. Further, the report will streamline aboutthe meaning of traditional and incremental budgeting approach. Also, alternative budgetmethods will be defined along with their drawbacks and applications. At last, the report willshed light on making suggestion that which budgeting method is appropriate for company.MAIN BODYPART – A1.Concept of preparing the budget for company and its purpose.Budget is considered as formulation of the financial plan particularly designed ordeveloped by the company. Such financial plan helps the company in making estimation of
revenue and expenditure amount for a specified period of time. When company is havingproper budgets and plans it can assists in making estimates of income to be earned from thefuture sales and expenditure to be minimized for specific business task (Chohan, 2019).Various types of budgeting tools help in forecasting of revenue and expenditure amountabout all the financial transaction with the help of previous data and information of thecompany. With the help of budget, a company is able to make use of limited budgetedresource and amount available effectively and efficiently. Budgeting helps in makingbusiness plans and evaluates performance.The purposes of preparing budget are as follows:1.Monitoring and measuring of the business performance –With the use of budgetmake projections of sales, revenue and expenditure amount for future time period.Budget assists company in measuring the business performance level by makingcomparison of actual outcome with the budgeted or expected one.2.Allocation of resources –Every company should make analysis of its businessrequirements and needs as per the goals and objectives (Krause and Thörnig, 2016).Effective and proper allocation of limited funds and other business resources as perthe budget designed helps company in attaining maximum profit with minimum costfactor.3.Income and expenditure can be forecasted –Budgetary methods help the companyin making forecast of the amount of income and expenditure to be made in the nearfuture from carrying on a particular business task or operations.4.Predict cash flows –It helps in making prediction of cash flows for the definite timeperiod. Company is able to ascertain the amount of cash inflow and outflow madewith the help of budget.5.Tool for decision making –Budget is considered as one of the most important toolfor making sound business decision. It helps in formulation of effective and accuratestrategies and plans related to allocation of fund resources, business operations ormethod to be followed etc. which helps in successful accomplishment of businessgoals and objectives.Process of preparing budget is as follows:1.Business goals and objectives should be specific and clearly define –The firstmost important process in preparing a budget is defining the goals and objectives
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