(Solved) Business Finance : Assignment

BUSINESS
FINANCE

Table of Contents
Executive Summary ........................................................................................................................1
PART 1............................................................................................................................................1
(i) Purpose of preparing budget and process that need to follow................................................1
(ii) Application of traditional budget approach ..........................................................................3
(iii) Traditional budgetary system is appropriate to all................................................................4
PART 2............................................................................................................................................4
(iv) Alternative budget methods such as rolling, zero base and activity based budget ..............4
(v) Potential application of these method and statement how it can perform effectively............6
(vi) Analysing of selected method that may be more appropriate to company...........................6
CONCLUSION................................................................................................................................7
REFERENCE...................................................................................................................................8

Executive Summary
This report summarises that the Snappy Drinks is an multinational company who
manufactures different types of energy drinks that helps to attract the customers. This
organisation want to expand its business, for this it need to arrange business finance. As finance
is required to buy the variety of assets, raw material and fill the basic needs to perform business
activities. The business concern arranges the funds from different sources that helps to make
planning for future business activities (Alyousef and Alnasser, 2015).
PART 1
(i) Purpose of preparing budget and process that need to follow
Every business requires finance to run a business efficiently that fulfil the basic needs and
wants by purchasing and selling the goods and services. The organisation prepares different
types of budget that gives an estimation of future income and expenses and give ideas what
should do to expand the business activities. Budgets are helpful to get future revenues and
expenditures. Budget plays a crucial role in all organisation such as it helps to helps make
planning that how much should to invest in order to run a business and from where should
purchase the raw material that helps to run a profit. Moreover, it helps to control the business
activities and excess expenditure which are arising during business activities.
Purpose of preparing a budget
To forecast the income and expenditure: The main purpose of budget is to forecast the
future income and expenses that helps to run a business effectively. By preparing budget a
business concern and managers can predict whether a business will give profit or not. It provide
a business model that shows how a business make efforts in order to forecast income and
expenditure. The manager of Snippy Drinks prepares a budget that helps to predict the future
income and expenditure and make efforts in order to increase the profitability.
To monitor the business performance: Another purpose of budget is to monitor the
business performance by measuring actual and budget information. Such as business is living up
on expectation that may be correct or not. For reducing the cost and increasing profitability an
organisation should prepare budget and need to monitor the performance. The manager of
Snippy Drinks prepares a budget by recording all transaction which relates to business activities
1