Factors affecting performance of Happy Chooks Limited, Motivating employees, Cash budget and disbursement

FINANCE
STUDENT ID:
[Pick the date]

Question 1
Two specific factors that might impact the performance of Happy Chooks Limited are as
follows.
 Poor cash management – This is adversely impacting the performance of the business.
This arises as the payment for raw materials is completed within two months while
the collection of the revenue takes three months with 80% credit sales. As a result, the
company tends to face cash crunch which could limit expansion and operations (Petty
et. al., 2015).
 Mispricing of the product – It is apparent that the sales of the product are strong but
still the performance is lacklustre which may be attributed to the product being priced
lower than the appropriate price. Pricing the product higher would result in better
margins and would improve profitability (Damodaran, 2015).
Question 2
a) Customers would be interested in the performance of the company since they want to be
associated with a company which is performing well and has a healthy market share. If a
company is not performing well and has a dismal market share, it implies that there are other
products which offer better quality at same price or a lower price point (Brealey, Myers &
Allen, 2014).
b) Employees would be interests in the performance of the company as their future career
prospects are also linked to the growth of the company. It is unlikely for the employees to get
promotion and salary hike in a company which is performing poorly in terms of financial
performance. Also, there could be risk of firing owing to which employees tend to look for
alternative job avenues (Parrino and Kidwell, 2014).
Question 3
It is imperative to motivate the employee in order to improve their productivity. This can be
done through intrinsic or extrinsic motivation. Intrinsic motivation refers to a situation where
the employees want to do a particular task for personal satisfaction, learning and

development. External motivation refers to a situation which employees want to engage in a
particular task for gaining rewards or avoiding punishment. Employees driven by intrinsic
motivation should be given challenging assignments and more responsibility thereby enabling
them to grow both personally and professionally. On the other hand, employees driven by
extrinsic motivation should be given financial rewards along with non-financial rewards such
as recognition, awards, accolades along with lucrative postings.
Question 4
The key difference between static and flexible budget is the fact that the former does not alter
even when the actual volumes tend to deviate from the estimated or budgeted volumes. On
the contrary, the flexible budget tends to alter with the changing volume of the activity level
based on the budgeted unit costs. As a result, flexible budget tends to reflect the various costs
and revenues if the activity level at the time of budgeting was assumed to be the same as the
actual volume eventually realised (Parrino & Kidwell, 2014).. It would be preferable to use
the flexible budget instead of the static budget since the former would provide a more
accurate comparison as compared to the static budget. When comparing the flexible budget
with the actual budget, the impact primarily on account of deviation in per unit costs and
revenues are considered which is useful for variance analysis (Damodaran, 2014).
Question 5
The requisite cash budget is indicated as shown below.
Working