Introduction to Organizations and Finance

This report provides an introduction to the role of finance in organizations and the importance of managing it effectively. It discusses the concept of cost reports and cash flow projections, and their significance in evaluating the profitability and growth of a company. The report also highlights the advantages of cost reports and cash flow forecasting. Overall, it emphasizes the crucial role of finance in running a successful business.

Introduction to
Organizations and
Finance

Contents
INTRODUCTION...........................................................................................................................................3
MAIN BODY.................................................................................................................................................3
Cost report-.............................................................................................................................................3
Cash flow projection................................................................................................................................5
CONCLUSION...............................................................................................................................................8
REFERENCES................................................................................................................................................9

INTRODUCTION
This report is based on use of finance in the organization. Finance is very crucial for
company. It means available cash within the company so that it is used by company when
needed. In order to make the organization fully functional it is very important for company to
manage the finance in right manner. It is most important aspect of business as without proper
financial management business is not able to run efficiently. Cost report and cash flow report is
discussed in this report. Company is organizing launch party and aim of company is to attract the
100 customers. So, estimation of cost and cash flow should be managed in such a way so that it
helps in attracting the customers as well as manage the budget of company.
MAIN BODY
Cost report-
Particulars Cost per unit Original Flexed Actual Variances
Units 100 20 80
Selling price 25 20000
Revenues 20000
Variable costs
:
Entertainment 2.50 250 30 280 (300)
Venue hire 4 400 40 440 (400)
Decoration 1.50 150 30 120 300
Stationary 5 500 200 300 2000
Transport 2 200 100 300 (1000)
Contribution 17 1700 340 1360 340
Fixed
Staffing 20 2000 400 1600 4000
Profit 17040

In the above cost report all the potential costs are considered to evaluate the success of the event.
cost must be under control. In the launch party there are total 100 attendees and out of them 80
has attended the event.
Cost report is very important for the organization in order to know all the production cost. It is
formal summary of the four steps which is performed to assign cost. Cost accounting is
important for the organization in order to identify the spending of money, how much it is earning
and how much it is lost during the event. Main objective of cost accounting is to report and
analyze the cost of production or cost spend in the event in order to meet the objective. By
utilizing the cost report cost of the event can be evaluated. There are four parts of cost report
which includes summarize flow of physical units, output should be computed, cost per
equivalent should be computed and After that cost must be assigned. Main objective of cost
accounting is to record and present the cost data to management. Selling price is fixed,
ascertainment of cost in order to manage the efficiency of the organization. It helps in cost
control and cost reduction in future. Profitability of the company can be increased by using the
cost report. It also helps management in making decisions. Decision taken by management is
related to control of cost by analyzing the cost report.
All the potential costs include decoration, venue hire, entertainment , stationary, transport and
staffing. Out of which staffing cost is fixed for company and all others are fixed cost. Cost report
is made by company in order to know the profitability of the company. In the above cost report it
is analyzed that all the costs per unit is calculated and made the budget accordingly.
This cost report has both favorable or positive variances and negative or unfavorable variances.
Favorable variances means actual profit is greater than predetermined one and negative variances
means actual results are less than predetermined one. Company must try to keep all the variance
positive in order to maintain the growth of the company. Entertainment cost of the company has
negative variance means actual cost is 280 and predetermined is 250. There is extra spending
done by company in order to maintain the entertainment part of the event. It is considered as
unfavorable variances. Venue hire also considered as variable cost and it is also seen that it has
negative variances. On the other hand decoration and stationary has favorable variances. It
means company performed good in these two sections. Actual profit is more than predetermined
one.

From the above cost report it is analyzed that company is investing more in entertainment and
venue hire. Company can reduce this cost by making appropriate changes. Company also needs
to focus upon the transportation cost so that company can improve its profitability.
Main purpose of the cost report here is to manage the cost so that company can grow its business
by proper control over the cost. Company has better control over decoration and stationary cost.
It is showing positive variances. It is good sign for company as it will be helpful in increasing the
profitability. Actual profit from decorations and stationary is greater than predetermined one. It
is important for company to spend appropriately.
Advantages of cost report are as follows-
 It is very simple to make and communication can be done appropriately by using this
report.
 It provides the cost information about all levels of management.
 It is in simple and lucid form.
 Various cost can be calculated and compared in order to know the profit generation
capacity.
 Company can fix its selling price appropriately through cost report.
There is difference between the cost report and cost accounting. Cost report is document which
tells about all the cost used in organizing the event and in cost accounting cost report is used for
measurement of cost. Income tax and legal expenses are not considered in the cost report.
Interest and dividends also not considered in the cost report. Rent received is also not considered.
Cost of abnormal idle time is also not undertaken in the cost report.
Total profit earned by company is 17040. It is good sign for the company. Hence, it is observed
from the above cost report that company is earning good profit from its cost. It helps company in
increasing its net profit margin. Thus it is said that event is organized properly.
Cash flow projection
Cash Flow Forecasting is a basic development element of government planning that
enables generating an approximation or prediction of an organization's strategic financial status.
The major result or delivery of a project management planning method is a cash flow prediction,

which may seem self-evident. A cash flow analysis is an assessment of a company's future
financial status based on expected sales and collections. Cash flow planning is the method of
calculating a cash flow projection. The fundamental purpose of cash flow forecasting is to aid in
the administration of flexibility inside an organization, assuring that the company is able to pay
to satisfy its responsibilities and prevent financing concerns, effectively improved financial
performance.
The balance sheet and income statement may be used to create a cash flow prediction.
We start with cash flows from operational operations and work our way up to retained earnings
from investment and borrowing. Operating operations comprise revenue and expenditure,
whereas investment activities comprise asset sales and purchases, as well as funding operations
such as stock issue and equity investments. There will arrive at the projected total cash transfer
after predicting all 3 objectives. The best definition of a forecast cash flow statement is a list of
forecasted revenues and expenses for a future time (usually a year). Cash transactions that are
projected to occur are recorded for the step of the model in which they are scheduled to occur.
How well a monthly or weekly profit and loss account is employed represents the size of the
regulatory period. All currency transactions should be included in a statement of cash flows,
hence the term cash is key in this concept. Cash inflows include nonfarm and farming revenue,
and also capital operational and investment payments. Farm operational and capital expenditures,
household living costs, and mortgage repayments are all examples of income statement.
Accommodation expenses, on the other hand, shouldn't be included in the statement of
cash flows for the agricultural business if the agricultural activity is wholly distinct from the
household.
Pre-
Startup
EST
Jan-
2021
Feb-
2021
Mar-
2021
Apr-
2021
May-
2021
Jun-
2021
Cash on Hand
(beginning of
month)
15,000 15,000 16,000 20,000 25,000 21000 10000
CASH
RECEIPTS
Cash Sales 10,000 10000 15000 7000 9000 2100 22500
Collections fm nil nil nil nil nil nil nil

CR accounts
Loan/ other
cash inj. nil nil nil nil nil nil nil
TOTAL CASH
RECEIPTS 10,000 10000 15000 7000 9000 2100 22500
Total Cash
Available
(before cash
out)
15,000 15,000 16,000 20,000 25,000 21000 10000
CASH PAID
OUT
Purchases
(merchandise) 20,000 22,000 24,200 26,620 29,282 32,210 35,431
Purchases
(specify) 15,000 16,500 18,150 19,965 21,962 24,158 26,573
Purchases
(specify) 5,000 5,500 6,050 6,655 7,321 8,053 8,858
Gross wages
(exact
withdrawal)
1,500 1,650 1,815 1,997 2,196 2,416 2,657
Payroll
expenses (taxes,
etc.)
2,100 2,310 2,541 2,795 3,075 3,382 3,720
Outside services 900 990 1,089 1,198 1,318 1,449 1,594
Supplies (office
& oper.) 1,000 1,100 1,210 1,331 1,464 1,611 1,772
Repairs &
maintenance 1,500 1,650 1,815 1,997 2,196 2,416 2,657
Advertising 2,000 2,200 2,420 2,662 2,928 3,221 3,543
Car, delivery &
travel 500 550 605 666 732 805 886
Accounting &
legal 700 770 847 932 1,025 1,127 1,240
Rent 800 880 968 1,065 1,171 1,288 1,417
Telephone 1,000 1,100 1,210 1,331 1,464 1,611 1,772
Utilities 1,500 1,650 1,815 1,997 2,196 2,416 2,657
Insurance 1,500 1,650 1,815 1,997 2,196 2,416 2,657
Taxes (real
estate, etc.) 9,000 9,900 10,890 11,979 13,177 14,495 15,944
Interest 1,200 1,320 1,452 1,597 1,757 1,933 2,126
Other expenses
(specify) 1,500 1,650 1,815 1,997 2,196 2,416 2,657

Other (specify) 1,600 1,760 1,936 2,130 2,343 2,577 2,834
Other (specify) 2,100 2,310 2,541 2,795 3,075 3,382 3,720
Miscellaneous 2,500 2,750 3,025 3,328 3,660 4,026 4,429
SUBTOTAL 72,900 80,190 88,209 97,030 106,733 117,40
6 129,147
The direct approach or the indirect approach can be used to complete this stage. So the indirect
technique is used by upwards of 98 percent of the organizations polled. All through this section,
they will employ the indirect technique. To get at consumers who spend by operations
management, the indirect approach starts with gross profit from the balance sheet and system
gives modifications response to emerging in liquid liability, retained earnings, and other things
(or used by operating activities if the result is a cash outflow). On a monetary basis, cash
supplied by operating operations indicates net income. It informs readers of the amount of
money earned from the company's daily activities.
There are several benefits to forecasting financial flows. Creating a cash flow estimate has a
number of advantages, including the ability to:
 Cash shortfalls and surplus can be predicted.
 Compare and contrast business expenditure and revenues over time.
 Calculate the impact of an organization changes (e.g., hiring an employee)
 Demonstrate to lenders your capacity to make timely payments.
 Check to see if any changes are required (e.g., cutting expenses)
 Cash flow forecasting isn't appropriate for every organisation. If done incorrectly, your
anticipated cash flow statement can be moment and expensive.
CONCLUSION
As per the above report it has been concluded that finance is back bone of any organisation
that help to operate their business activities in proper manner. There are launch a party so for this
require to how to manage finance in party. For this prepare cash flow and cost report in which
mention all the income as well as expenses.

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