Manage Budgets and Financial Plans

This document provides information on managing budgets and financial plans. It includes topics such as cash flow statements, financial activities reporting, creating action plans, and more. The content offers insights and recommendations for effective budget management. Subject: Finance, Course Code: N/A, Course Name: N/A, College/University: N/A

Manage Budgets
&
Financial Plans

Table of Contents
Task 1: Cash Flow Statement for Metropolitan Furniture...............................................................3
Answer (1):.............................................................................................................................3
Answer (2):.............................................................................................................................3
Answer (3):.............................................................................................................................5
Answer (4):.............................................................................................................................5
Answer (5):.............................................................................................................................5
Task 2: Report Financial Activities................................................................................................6
Task 3: Create Action Plan ...................................................................6
Task 4: Preparation of Cash Flow Statement ..................................................................................8
Task 5: Change Analysis and Decision Making..............................................................................8
Task 6: GST and Cash Flow Statement...........................................................................................9
Task 7: Cash Flow Outcome Analysis:............................................................................................9
Task 8: Petty Cash.........................................................................................................................10

Task 1: Cash Flow Statement for Metropolitan Furniture
Answer (1):
Profit and Loss calculations
April May June
$ $ $
Sales 290000 250000 280000
Less Cost of Goods
Sold (COGS) 130500 112500 126000
Gross Profit 159500 137500 154000
Sales Salaries 65000 65000 65000
Commission 1500 0 1000
Other expenses 35000 35000 35000
Total expenses 101500 100000 101000
Net Profit 58000 37500 53000
Answer (2):
Cash flow projections
April May June
$ $ $
Opening Cash 40000 109250 131750
Plus cash in:
This month 232000 200000 224000
From last month 25500 29000 25000
From two months ago 26500 25500 29000

Total Cash available 284000 254500 278000
Less cash out:
salaries 65000 65000 65000
Commission 1500
Other expenses 35000 35000 35000
COGS 114750 130500 112500
Total cash out 214750 232000 212500
Closing cash balance 109250 131750 197250

Answer (3):
Overall net profits' figure of corporation are less than closing or year ended cash balances. Thus,
company can pay-off taxes on profit out of its available cash balance.
Answer (4):
For implementing a new-business plan, Peter should communicate with following people:
 Investors or Shareholders
 Other Departmental/divisional Heads
 Owners
 Suppliers
Only business plan not assure that reported outcomes are attainable, precise and
comprehensible, for this Peter should provide any analysis report, expert's view and other factual
data which act as evidence that figures stated in business plan are attainable.
Answer (5):
Financial performance may be effectively monitored by following below processes, as below on
continuous basis:
 Financial Statement Analysis
 Ratio Analysis
 Cash Flow Analysis
 Market Performance Analysis
Any business entity's owner spends capital in business to earn profits by doing business.
They use to provide financing for business expansion. Also this is quite important to warn
owners of modifications in financial-plan, so that they can examine changes effect on
profitability. However, if plan requires extra capital, owners can manage capital funds through
personal source or, if needed, collect them through loans from outsiders.

Task 2: Report Financial Activities
Email Communication
Metropolitan furniture
xx/xx/2020
Subject: Reporting of Daily Financial Position.
To: Owner of Metropolitan Furniture
Dear Director/Owner,
At First, from three-month review – April, May and June, I would like to tell you that
organization should strengthen existing credit collection mechanism and seek to raise the
sum of credit selling faster than existing scenario. Secondly, overall net profits of
organisation are below the level of losing cash-balances. Thus, it is able to pay-off taxes
on profits though utilisation of current cash availability. So this is essential to
communicate you, for making changes in existing financial plan, such that business-owner
can assess modifications with respect to profitability. Further, in case plan needs any
additional capital-funds, you may need to effectively arrange capital-funding from your
individualised-personal sources or can raise it via loan-funding from outsiders/lenders.
Thanks!
With Regards,
Peter
Account Manager
Task 3: Create Action Plan
Job Title Suggested Support for
achieving goals (e.g give
access to resources and
systems, disseminate
relevant details of the
agreed budget/plans, sales
Time frame Key Performance
Indicators (e.g.
monitor expected and
actual sales and
expenditure, identify
cost variation and

coach, contingency plan)
Determine and access
resources and systems to
manage financial
management processes
within the work team
expenditure overruns
etc)
Jenny (Sales Officer) Sales officer has access to
sales register and also
provide any
recommendations. Create
strategy for achieving
budgeted sales.
1 month  Sales and cost
of sales
variations.
 Gross profit
margin
 Net profit
margin
John (Accounts
receivable officer)
Access to account
receivable register. Ensure
timely collection of all the
receivables. Coordinate
with sales officer.
1.5 month  Receivable
turnover period
 Average
collection
period
Adam (Accounts
payable officer)
Access to accounts
payable register and
coordinate with sales
officer. Ensure timely
payments of all payables
and bills, further recognise
possible settlements for
business benefits.
1.5 month  Average
payable period
 Accounts
payable
turnover ratio

George (Payroll
officer)
Access to all employees
data including payment
details, attendance and
relevant pay-roll details.
2 months  Employee
turnover ratio
 Employee
feedbacks
Recommendation: From analysis of facts and data on above presented processes with reference
to Task 1, it has been recommended that organisation should implement action plan strictly to
improve their existing processes. Also to improve cash collections, organisation should provide
offers on early payment and discounts. Further by effective funds and inventory management as
well as focusing on cash generating activities can improve cash-balances.
Task 4: Preparation of Cash Flow Statement
Operating activities: $
Net Cash flow
$
Cash receipts from customers 245000
Cash paid to suppliers and employees 101570
143430
Interest paid 24120
119310
Income tax paid 25910 93400
Investment activities:
Purchase of Subsidiary X, net of cash acquired -450000
Purchase of property, plant and equipment -350100
Proceeds from sale of equipment 120000
Payment of finance lease liabilities -50000
Dividends paid 25700 -704400

Financing activities:
Interest received 22550
Dividends received 25654
Proceeds from issue of share capital 250000
Proceeds from long-term borrowings 250000 548204
Total Cash surplus/deficit -62796
Cash and cash equivalent at the beginning of the year 530750
Cash and cash equivalent at the end of the year 467954
Task 5: Change Analysis and Decision Making
From above presented cash flow statement it has been analysed that cash from operating
activities is $93400, cash outflow from investment activities is $704400 and cash flow generated
from financing activities are $548204. From all the activities net cash flow is negative $62796
which indicates that company is not efficient to generate cash flows from its business operations.
After considering opening cash balance, net cash flow for year ended is $467954. It is advisable
for company that it should optimise their capital expenditures to maintain a positive cash-flow.
Task 6: GST and Cash Flow Statement
Cash Receipts: $ $
Cash sales 90000
GST receipts on cash sales 9000
Credit sales - budget year 186000
Credit sales - previous year 150000
Total Cash receipts 435000
Cash Payments:
Purchases 80000

GST payments on cash purchases 8000
Wages 110000
Net GST payable to ATO 10000
Other payments 44000
Total Cash Payments: 252000
Cash surplus/(deficit) 183000
Opening bank balance 30200
Closing bank balance 213200
Task 7: Cash Flow Outcome Analysis:
 Through analysis of above table it has been evaluated that closing balance of bank
balance is positive also there is cash surplus thus there is no need to worry.
 Preparation of contingency plan: In case there is any circumstances or events exists
which require change in original contingency plan, then concerned person should
evaluate the effect of such event on contingency plan and find out the ways through
which contingency plan can be modified with least modifications. For effective revised
contingency plan, all the feedbacks of management and owners should be considered.
After preparation of revised contingency plan, it should be circulated among responsible
individuals.
 In order to implement and monitor contingency plan, responsibilities of personnel should
be fixed. Time to time review and internal check can act as effective monitoring systems
on contingency plan as per financial targets and objectives. Any further modifications
should be done only if it is not as per the predetermined financial objectives.
 For reporting budgets and expenditures according to organisational protocol,
management should consider the organisation's current business scenario, environment
and business policies. Also management should take into account any historical data
which is relevant for compliance with organisational protocols.

Task 8: Petty Cash
Petty Cash Book
Income Expenditure
Date Descrip
tion
Amou
nt
Date Descr
iption
Ref Tot
al
Mil
k
Clean
ing
Suppl
ies
Off
ice
Su
ppl
ies
Ta
xi
Far
e
Stati
onar
y
Expe
nses
News
pape
r
Notes
01/10/2
017
Balance
B/F
0.00 03/0
1/20
20
Office
Suppl
ies
1 22.
00
22.
00
02/01/2
0
Cheque
111 400.00
04/0
1/20
20
Milk 2 105
.00
30.
00
09/0
1/20
20
Clean
ing
Suppl
ies
3 135
.30
135.3
0
10/0
1/20
20
Taxi
Fare 4 52.
80
52.
80
13/0
1/20
20
Taxi
Fare 5 66.
00
66.
00
16/0
1/20
20
Statio
nary
Expen
6 33.
00
33.00

ses
17/0
1/20
20
Milk 7 82.
00
82
19/0
1/20
20
Statio
nary
Expen
ses
8 10.
00
61.6 Calcu
lator
23/0
1/20
20
Taxi
Fare 9 44.
00
44
30/0
1/20
20
News
paper 10 105
.60
105.6
0
Total
Total
655
.70
112
.00
135.3
0
22.
00
162
.80
94.60 105.6
0
Balan
ce
c/fBal
ance
c/f
255
.70
400.00 400
.00
10/10/2
017
Balance
B/F 255.70
Recommendation: As per analysis of petty cash and other related facts it has been recommended
to define the maximum limit for expenses and authorities for approval of each petty transaction.
Also organisation should for controlling over processes form a system for petty-cash

disbursement policy for making it necessary with respect to petty-cash claims through specific
receipts.