Business Finance Assignment | Leeworthy Ices Ltd Report
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Added on 2020-01-28
Business Finance Assignment | Leeworthy Ices Ltd Report
Added on 2020-01-28
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Table of ContentsINTRODUCTION......................................................................................................................3PART 1.......................................................................................................................................31. Understanding the importance of budget and its process for the business development...32. Application of traditional budgeting approaches to the business.......................................53. Analyzing whether traditional budgeting approach is appropriate to the business............6PART 2.......................................................................................................................................71. Understanding of alternative budgeting system and its benefits for Leeworthy Ices Ltd..72. Application of alternative budgeting system to Leeworthy ices........................................94.Assessing one or combination of methods which are highly suitable to the business. .10CONCLUSION........................................................................................................................10REFERENCES.........................................................................................................................12
INTRODUCTIONBusiness finance is corporate area that deals with the financing related activities likefund gathering, devise financial plans and policies for its management, future year forecastingand so on. It gains a critical importance in the entrepreneurial success through having enoughor adequate financial source to meet sudden financial consequences that may cause due tosudden and drastic changes in the market environment. In the report, a leading manufacturingcompany or supplier of organic dairy ice cream products, named Leeworthy Ices Ltd hasbeen taken into account. The present assignment is designing with the aim of understandingthe traditional as well as modern budgeting requirement of the company for the betterfinancial status in the competitive marketplace. PART 11. Understanding the importance of budget and its process for the business developmentAs per the stated case study, Leeworthy Ices Ltd manufactures different organic dairyice creams in processing and packaging in Devon, Derbyshire and Wiltshire andheadquartered near Watford. It has number of supermarkets from where it offers their goodsand services and also has sales offices in Berlin, Prague and Copenhagen. On 23rd June 2016,refendum or separation of UK from EU, Leeworthy Ices owner is concerned about thepotential changes in manufacturing process which may be possible without EU restrictionsi.e. investment in new machinery, expansion of production capacity and so on. The entity alsowants to step up efforts to market into Gulf, North America and Far East and recentlyapproached by US food producers who are interested in establishing a joint veture (JV)agreement to pursue these markets after withdrawal of EU membership. Scenario clearlypresented that Leeworthy’s finance manager, Vinita has utilized traditional budgeting systemfrom the last 3 years. Budgeting: In corporate sector, financial manager is often concerned with the futurefinancial planning through projecting the expected results of future business activities &operations (Breunig and Jones, 2011). There are various methods of budgetary planning thatmight be used by the finance manager for making the estimation of revenues andexpenditures regarding future period. Budgetary planning and controlling is a processwhereby Leeworthy Ices Ltd can compare the standard sets with the actual results and
examine the same for making viable decisions and right business strategies for the futuresuccess (Ferry and Eckersley, 2011). It is important for the establishment to prepare budgetdue to the following reasons, pointed out hereunder:1.It facilitates Leeworthy Ices Ltd to forecast their future earnings and expenditures andhelps to devise necessary policies, plans and strategies on prior basis. 2.It works as warning indicator that warns the firm against possible financial risk thatmay cause in the forthcoming period. As a result, policies and plans can be preparedon right time to overcome any prospective risk and gain win position. 3.Cash budgets provides essential information about the drive-in cash and its outgoing,as a result, Leeworthy Ices Ltd can easily detect that whether it will have sufficientcash funds or not to continue their regular business activities (Lapsley and et.al.,2011). With this, proper cash management strategy can be devised without any delayfor the sufficient cash availability. 4.Comparison of the decided targets with the actual performance assist Leeworthy IcesLtd to determine the areas with the reasons why targets had not been achieved. As aresult, management can set appropriate plans for overcome negative deviations andreach success (Jones, Zalányi and Érdi, 2014). 5.It helps to create business growth & expansion plans and strategies through properfinancial management. It also assist Leeworty Ices Ltd to maximize revenues throughquality offerings at right prices, whilst, cost can be minimized through better andeffective monitoring and controlling operations. Budgeting process: The process defines the steps that Leeworthy managers are involved orengaged for the creation of budgets and its implementation in the business, describedunderneath:Budget assumptions: During the first stage, budgeting committee of the company have tomake necessary assumptions that will be followed during the preparation of budgets. It isimportant for the business to follow these assumptions while plan their budgeting (Jones andBaumgartner, 2012).
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