Finance Report: Working Capital, Cash Flow, and Budgeting

Finance report

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Part 1................................................................................................................................................1
i).......................................................................................................................................................1
a. Meaning of profit and the cash flow with reflecting contrast between them..........................1
b. Meaning of working capital, payables, inventory and receivables.........................................2
c. Different ways in which the working capital changes might impact the cash flow................2
ii)......................................................................................................................................................3
The way company is managed may affects its financial results.................................................3
iii).....................................................................................................................................................3
Recommendation to improve company's cash flow with the better working capital
management................................................................................................................................3
PART 2............................................................................................................................................4
i) Purpose to prepare different types of budget...........................................................................4
a) Traditional budgeting approaches...........................................................................................4
b) Alternative budget methods....................................................................................................5
ii) Application of these methods with respect to planning of future cost management of Boat
World Plc....................................................................................................................................6
iii) Analysing whether traditions or alternative budgetary system is appropriate to all or part
of a business................................................................................................................................6
CONCLUSION...............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
It is very important for the business to prepare and manage its working capital management
as it directly helps to increases the cash flows. Present study is based on the two organisations
that are Bright Lawns Ltd and Boat World Plc. Bright Lawns Ltd is private limited company that
as incorporated in the year 2008 (Ali, Ormal and Ahmad, 2018). On the other hand, Bright lawns
Ltd is an international leisure company that is operating its business in UK and France. Report
will include about profit and cash flows with respect to Bright Lawns and will indicate the ways
by which working capital affects the cash flow. Further report will include different ways in
which company manage and the way it affects its financial results. Report will include an
effective recommendation that will help the business to get idea and have a better working
capital management. Report will also include traditional budget and different alternatives with its
advantages and disadvantages(Mathuva, 2015).
Part 1
i)
a. Meaning of profit and the cash flow with reflecting contrast between them
Profit- It refers to the financial gain that has been earned by Brightlawns Plc. after paying
off the amount in the operating, producing and buying something. In other words it means the
monetary gain that is been derived from the business transactions that in turn stated as excess of
the revenues over the outlays and the expenses in the business enterprise over an accounting
period(Mathuva, 2015).
Cash flow- It is defined as the summary of the inflow and an outflow of the cash for a
specific time period. It reflects the reasons changes in the cash position of Brightlawn Plc. by
providing a view of the receipts and the expenses incurred in the ordinary course of the business.
It breaks out the cash resources of the company into 3 categories that is operating activity,
investing activity and financing activity (Pais and Gama, 2015). It is considered as the measure
of a company's liquidity which comprises of the net income after deducting the taxable and the
charges that does not involve cash.
Profit Cash flow
It depicts the money that is left after reducing
sales revenue and cost incurred.
It is represented as the cash received from
various sources(Filbeck, Zhao and Knoll, 2017
1