Business Finance Analysis - Doc
12 Pages3207 Words32 Views
Added on 2020-10-04
Business Finance Analysis - Doc
Added on 2020-10-04
ShareRelated Documents
Business Finance
ContentsIntroduction......................................................................................................................................3Part 1................................................................................................................................................31. Benefit of having budget.........................................................................................................32. Traditional budgeting approach...............................................................................................43.Analysis of effectiveness of traditional budgeting system.......................................................5Part 2................................................................................................................................................64. Alternative budget system and its benefits..............................................................................65. Potential application of alternative budgeting method and potential problems associatedwith it...........................................................................................................................................76. Analysis of one effective budgeting method...........................................................................8Conclusion.......................................................................................................................................9References......................................................................................................................................10
IntroductionFinance is the life blood of business. Organization has to spend money for conducting itsoperations. Without having adequate money it can not run its business smoothly. Budgt is theessential part of entity, by allocating sufficient money to each department company becomes ableto meet withs organizational objectives (Shoval and et.al, 2015). Present report is based onuniDate firm which is an international dating agency. It offers IT facilities and staff to relatedcorporations. Unidate uses traditional budgeting process due to which many errors takes place inits financial management. Current assignment will describe benefits of budgeting process in theorganization. Furthermore, it will explain traditional budgeting application. In addition, it willexplain alternative budget system and its advantage to the business unit.Part 11. Benefit of having budgetBudget can be defined as financial planning of entity that helps in effective allocation ofmonitory resources. Budgeting plays significant role in the organization (Kelly, 2015). Companyhas to spend huge amount for conducting business operations, it is essential for the entity that toensure that such spending can be beneficial for the organization and it can generate more money.Benefits of budgeting system are as following:Create financial roadmap: It is the great process through which Unidate can prepare itsroadmap. By looking at this budget firms can identify in the last financial years howmuch it has earned profit over its spending. On the bases of last year budget it can makenew budget so that its profitability can be increased (Réka, Ştefan and Daniel, 2014).Plan for future growth: Firms generally prepare budget for planning its future activities.With the help of this tool Unidate can monitor its expenditures and can make effectivecontrol over unnecessary spending. It helps in saving cost of the entity and increasingprofit of Unidate. Profitability review: Budgeting system is the great process which supports a firm inreviewing its profitability. It helps in identifying drawback of the system and makingeffective control over unnecessary activities (Andor, Mohanty and Toth, 2015).
Cash allocation: Financial manager has to allocate resources for each activity. Bypreparing budget Unidate can allocate funds to each task easily and can generaterevenues from these activities. It helps managers in identifying which task requires howmuch cash. Forecasting: Budgetary system is beneficial tool that helps the firm in forecasting futurereturn. With the help of this tool manager of Unidate can scan business environment andcan identify potential of company of generating revenues in future (Sarrafzadeh, Wangand Yang, 2013). Tracking of progress: Budgeting process helps in continuously tracking progress inachieving enterprise’s objectives. By this way cited firm can control over risk and canmanage it well.Coordinate with other functional units: Budget aids in making effective coordination withother functional units so that it can meet with its objectives (Roncalli, 2013). It is the toolthrough which Unidate can evaluate its policies and can make necessary changes in itspolicies so that goal of the firm can be achieved. By looking at the budget managers can track its progress and can make profitablechanges in its operations so that its revenues can be increased and cost can be ccontroled.It supports in the development of business unit to great extent (Klychova, Safiullin andZakirova, 2014). 2. Traditional budgeting approachTraditional budgeting is the simple process in which manager of the company allocatefunds randomly and all records are maintained manually. UniDate always uses traditionalbudgeting system, due to which it is facing many challenges. It is the type of budget in whichcited firm takes support of last year budget and prepare budget for future (Franklin, Krane andEbdon, 2013). Changes in budget are done on the bases of changing inflation, deflation rate.Though it is great and many benefits are associated with it such as implementation, stability,decentralization etc. On other hand traditional budgeting is fixed and rigid. Due to which it isvery difficult for Unidate to make modification in middle of the year. In traditional budgetingsystem cited firm do not give priority to allocation of resources. It just focuses on fixed methodso allocate funds as per the given pre defined priorities. It does not look upon factors which cangive high revenues to business unit (Bingtao, 2015).
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
Business Finance Assignment - Unidatelg...
|11
|3288
|44
Analysis of Traditional Budgetinglg...
|11
|2858
|43
Business Financelg...
|12
|3159
|357
Budgeting Table of Contents INTRODUCTIONlg...
|12
|3902
|33
Budget and Importance of Budget Process : Assignmentlg...
|11
|3018
|343
Business Finance Budgeting : Assignmentlg...
|15
|3740
|361