Business Finance: Concepts, Working Capital, Budgeting

Business Finance

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
PART 1............................................................................................................................................1
1. Explain the following terms.....................................................................................................1
2. Application of concepts...........................................................................................................3
3. Recommendation for the company to improve cash flow through working capital
management.................................................................................................................................4
PART 2............................................................................................................................................4
1. Purposes of preparing budget and alternative budgetary systems...........................................4
2. Demonstration of the application of the methods to show their use in planning future cost
management.................................................................................................................................6
3. Analysis of whether traditional or alternative budgetary system is appropriate to all or any
parts of the business.....................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business finance refer to the funds which required by the organization in order in order to
perform their operational activities. Every organization required finance to complete their
activities such as purchase raw material to manufacture goods, assets, pay salary etc. Complete
all the economic activities business required funds. Initial contribution in terms of capital is not
enough to perform task (Burns and Dewhurst, 2016). They required additional funds from the
various sources and it can be short term as well as long term according to the requirement. This
project report cover various topics such as profit, cash flow, working capital, receivable,
inventory, payable etc. it also include that how change in working capital affect the cash flow. In
addition, this report include that how company manage the affect of financial results and give
some recommendation to improve it. Along with this, include the purpose of budgeting where
traditional as well as alternative methods of budgeting included. Application of these methods
and used in the future cost management for the business.
MAIN BODY
PART 1
1. Explain the following terms
a. What is mean by profit, cash flow and how both are different from each other:
Profit: Profit is the financial gain which individual get from the business activity and it
will be calculating through subtracting all the expenses which company have to done at the time
of completing process (Canales, 2016). Profit is the income which remain after deducting total
cost from the total revenue. Below mention formula will helps in calculating profit of the
company.
Profit = Total Revenue – Total cost
Cash flow: It is the total amount of cash & cash equivalence which transferred into
business for the operational activities. Basically, with the help of cash flow statement
organization able to create value for their shareholders through identifying that which activity
will generate more revenue for the company. There are various types of cash flow which used by
the organization and it mentioned below:
1