Budget Management and Operational Planning

This assignment delves into the crucial aspects of budget management within an organization. It highlights the process of allocating funds for expansion and operational changes, emphasizing effective communication with stakeholders through emails and meetings to gather feedback and ensure alignment. The importance of maintaining accurate records of fund allocation is also stressed for future reference and transparency.

Running head: PREPARE AND MONITOR BUDGETS
Prepare and Monitor Budgets
Name of the Student:
Name of the University:
Author’s Note:

1
PREPARE AND MONITOR BUDGETS
Assessment 1
The operational plans and the budget information plan has been made with respect to
the business has been expansion of the business and changes in the work processes and
practices.
The main objective and the scope has been to expand the business in order to increase
their sales and revenue of the organization. The company is in the mood for expansion in
order to increase their market share and to maintain the competitive edge. The other objective
has been to bring in transformations in the working practices and the procedures in order to
develop the process with respect to the changes in the market and the tastes and preferences
of the consumers. The changes in the working process would be useful for the development
of organization and would be useful for the rise in revenue and market share.
The internal and the external factors that could have an impact on the plan includes
the political, economic, governmental, society, technological and legal factors that affects the
operational activities of the company. These are the external factors and on the other hand,
the internal factors include the vision and mission statement of the firm along with the
relationship among the management and the employees.
During the development of the plan, it is seen that the management, along with the
stakeholders and the colleagues of the company are consulted with and the process of
consultation is done with the help providing a framework of the operational plan that can be
make the management and the stakeholders aware of the plan. After the approval of the plan,
a meeting is undertaken where the suggestions and the changes in the plan recommended by
the stakeholders can be incorporated within the operational plan. The timeline and the
responsibilities are laid down for the operational plan in order to establish a clear idea within
the time the plan would be completed and the responsibilities that are undertaken by the

2
PREPARE AND MONITOR BUDGETS
every members of the organization. An internal communication process has to be framed
effectively with the help of which all the information can be conveyed to the stakeholders.
The two operational plans are given as follows:
Changes in the work practices and procedures
Start-Up Costs
Particulars Amount
Residual
Value
Non-Current Assets:
Trademark 40000 0
Patent 65000 0
Property, Plant & Equipment 1400000 420000
Furniture & Fittings 10000 1500
Motor Vehicle 140000 56000
Computer Equipment 130000 0
Preliminary Expenses:
Business Registration 20000
License Fees 13000
Deposit for Electricity 20000 20000
Deposit for Telephone &
Internet 5000 5000
Recruitment Cost 4000
Share Issuance Cost 3500
Bond Issuance Cost 2500
Other Miscellaneous Expenses 6500
Working Capital:
Purchase of Raw Material 30000000
Wages & Salaries 20000000
Manufacturing Overhead 13000000
Selling & Marketing Expenses 608400
General Administrative
Expenses 92650 63701050
TOTAL START UP COST 65560550
Capital Funding:

3
PREPARE AND MONITOR BUDGETS
Equity Capital 29502248
5 yrs. Bond 21634982
Loan From Bank 14423321
TOTAL CAPITAL
EMPLOYED 65560550
Income Statement
Particulars Year 1 Year 2 Year 3 Year 4 Year 5
Inflation Rate 2.50% 2.50% 2.50% 2.50%
Sales Growth Rate 7% 7% 7% 7%
Sales Volume 40000 42800 45796 49002 52432
Selling Price Per Unit $3,500 $3,588 $3,677 $3,769 $3,863
Total Sales Revenue
$140,000,0
00
$153,545,0
00
$168,400,4
79
$184,693,2
25
$202,562,2
95
Cost of Good Sold
per unit:
Raw Material
Consumed ($1,500) ($1,538) ($1,576) ($1,615) ($1,656)
Direct Labor Cost ($1,000) ($1,025) ($1,051) ($1,077) ($1,104)
Total Cost of Goods
Sold p.u. ($2,500) ($2,563) ($2,627) ($2,692) ($2,760)
Total Cost of Goods
Sold
($100,000,
000)
($109,675,
000)
($120,286,
056)
($131,923,
732)
($144,687,
353)
GROSS PROFIT
$40,000,00
0
$43,870,00
0
$48,114,42
3
$52,769,49
3
$57,874,94
1
Variable
Manufacturing
Overhead p.u ($650) ($666) ($683) ($700) ($717)
Total Variable
Manufacturing
Overhead
($26,000,0
00)
($28,515,5
00)
($31,274,3
75)
($34,300,1
70)
($37,618,7
12)

4
PREPARE AND MONITOR BUDGETS
Depreciation on
Property, Plant &
Equipment ($196,000) ($196,000) ($196,000) ($196,000) ($196,000)
Total
Manufacturing
Overhead
($26,196,0
00)
($28,711,5
00)
($31,470,3
75)
($34,496,1
70)
($37,814,7
12)
General
Administrative
Expenses:
Depreciation on
Furniture & Fixtures ($1,000) ($900) ($810) ($729) ($656)
Depreciation on
Computer Equipment ($16,800) ($14,784) ($13,010) ($11,449) ($10,075)
Amortization of
Patent ($8,000) ($8,000) ($8,000) ($8,000) ($8,000)
Amortization of
Trademark ($13,000) ($13,000) ($13,000) ($13,000) ($13,000)
Insurance ($12,000) ($12,300) ($12,608) ($12,923) ($13,246)
Rates & Taxes ($6,500) ($6,663) ($6,829) ($7,000) ($7,175)
Salary of Office
Staffs ($100,000) ($102,500) ($105,063) ($107,689) ($110,381)
Cleaning Charges ($5,000) ($5,125) ($5,253) ($5,384) ($5,519)
Electricity for Office ($15,000) ($15,375) ($15,759) ($16,153) ($16,557)
Telephone & Internet ($8,000) ($8,200) ($8,405) ($8,615) ($8,831)
Total General
Administrative
Expenses ($185,300) ($186,847) ($188,736) ($190,942) ($193,440)
Selling & Marketing
Expenses:
Depreciation on
Motor Vehicle ($16,800) ($14,784) ($13,010) ($11,449) ($10,075)
Salary of Marketing
Staffs ($150,000) ($153,750) ($157,594) ($161,534) ($165,572)
Sales Commissions
@0.5% on Sales ($700,000) ($767,725) ($842,002) ($923,466)
($1,012,81
1)
Travelling charges
@0.25% on Sales ($350,000) ($383,863) ($421,001) ($461,733) ($506,406)
Total Selling &
Marketing Expenses
($1,216,80
0)
($1,320,12
2)
($1,433,60
7)
($1,558,18
2)
($1,694,86
4)
Net Operating
Profit/(Loss)
$12,401,90
0
$13,651,53
2
$15,021,70
4
$16,524,19
9
$18,171,92
6

5
PREPARE AND MONITOR BUDGETS
Interest Expenses:
Interest on Bond
($1,514,44
9)
($1,514,44
9)
($1,514,44
9)
($1,514,44
9)
($1,514,44
9)
Interest on Loan
From Bank
($1,370,21
5)
($1,370,21
5)
($1,370,21
5)
($1,370,21
5)
($1,370,21
5)
Total Interest
Expenses
($2,884,66
4)
($2,884,66
4)
($2,884,66
4)
($2,884,66
4)
($2,884,66
4)
Net Profit before
Tax $9,517,236
$10,766,86
8
$12,137,04
0
$13,639,53
5
$15,287,26
2
Income Tax
Expenses
($2,855,17
1)
($3,230,06
0)
($3,641,11
2)
($4,091,86
0)
($4,586,17
8)
Net Profit after Tax $6,662,065 $7,536,807 $8,495,928 $9,547,674
$10,701,08
3
Gross Profit Margin 28.57% 28.57% 28.57% 28.57% 28.57%
Net Profit Margin 4.76% 4.91% 5.05% 5.17% 5.28%
Return on Equity 22.58% 25.55% 28.80% 32.36% 36.27%
Cash Flow Statement
Particulars Year 1 Year 2 Year 3 Year 4 Year 5
Cash Flow from
Operating
Activities:
Cash Sales
$56,000,00
0
$61,418,00
0
$67,360,19
2
$73,877,29
0
$81,024,91
8
Collection from
Debtors
$77,000,00
0
$91,449,75
0
$100,297,5
13
$110,001,2
98
$120,643,9
23
Cash Purchase
($24,000,0
00)
($26,322,0
00)
($28,868,6
54)
($31,661,6
96)
($34,724,9
65)
Payment to
Suppliers
($30,000,0
00)
($38,902,5
00)
($42,666,3
17)
($46,794,2
83)
($51,321,6
30)
Direct Labor Cost
($36,666,6
67)
($43,547,5
00)
($47,760,7
21)
($52,381,5
70)
($57,449,4
87)
Manufacturing
Expenses
($26,000,0
00)
($28,515,5
00)
($31,274,3
75)
($34,300,1
70)
($37,618,7
12)
Insurance ($12,000) ($12,300) ($12,608) ($12,923) ($13,246)

6
PREPARE AND MONITOR BUDGETS
Rates & Taxes ($6,500) ($6,663) ($6,829) ($7,000) ($7,175)
Salary of Office
Staffs ($91,667) ($102,292) ($104,849) ($107,470) ($110,157)
Cleaning Charges ($5,000) ($5,125) ($5,253) ($5,384) ($5,519)
Electricity for
Office ($13,750) ($15,344) ($15,727) ($16,121) ($16,524)
Telephone &
Internet ($7,333) ($8,183) ($8,388) ($8,598) ($8,813)
Salary of
Marketing Staffs ($137,500) ($153,438) ($157,273) ($161,205) ($165,235)
Sales
Commissions
@1.5% on Sales ($700,000) ($767,725) ($842,002) ($923,466)
($1,012,81
1)
Travelling charges
@2% on Sales ($350,000) ($383,863) ($421,001) ($461,733) ($506,406)
Income Tax
Expenses
($2,855,17
1)
($3,230,06
0)
($3,641,11
2)
($4,091,86
0)
($4,586,17
8)
Cash
Inflow/(Outflow)
from Operating
Activities
$12,154,41
3
$10,895,25
8
$11,872,59
6
$12,945,10
8
$14,121,98
4
Cash Flow from
Investing
Activities:
Purchase of Non-
Current Assets
($1,785,00
0)
Preliminary
Expenses ($74,500)
Sale of Assets $477,500
Return on Deposits $25,000
Cash
Inflow/(Outflow)
from Investing
Activities
($1,859,50
0) $0 $0 $0 $502,500
Cash Flow from
Financing
Activities:
Share Issue
$29,502,24
8
Bonds Issue
$21,634,98
2
Loan From Bank $14,423,32

7
PREPARE AND MONITOR BUDGETS
1
Interest Payment
($2,884,66
4)
($2,884,66
4)
($2,884,66
4)
($2,884,66
4)
($2,884,66
4)
Dividend Payment
($2,331,72
3)
($2,637,88
3)
($2,973,57
5)
($3,341,68
6)
($3,745,37
9)
Repayment of
Bond
($21,634,9
82)
Repayment of
Loan from Bank
($14,423,3
21)
Cash
Inflow/(Outflow)
from Financing
Activities
$60,344,16
3
($5,522,54
7)
($5,858,23
9)
($6,226,35
0)
($42,688,3
46)
Net Cash
Increase/(Decreas
e) for the period
$70,639,07
6 $5,372,712 $6,014,357 $6,718,758
($28,063,8
62)
Add: Opening
Cash Balance $0
$70,639,07
6
$76,011,78
7
$82,026,14
5
$88,744,90
3
Closing Cash
Balance
$70,639,07
6
$76,011,78
7
$82,026,14
5
$88,744,90
3
$60,681,04
0
Capital Budgeting
Year
Particulars 0 1 2 3 4 5
Initial
Investment:
Purchase of Non-
Current Assets
-
178500
0
Preliminary
Expenses -74500
Working Capital
-
637010
50
Total Initial
Investment
-
655605
50 0 0 0 0 0
Net Operating 0 124019 1365153 1502170 1652419 1817192

8
PREPARE AND MONITOR BUDGETS
Profit before Tax 00 2 4.1 8.8 5.9
Less: Income Tax 0
372057
0
4095459
.6
4506511
.24
4957259
.64
5451577
.76
Net Operating
Profit after Tax 0
161224
70
1774699
1.6
1952821
5.4
2148145
8.4
2362350
3.6
Add: Depreciation
& Amortization 0 251600 247468
243829.
84
240626.
459
237805.
864
Net Operating
Cash Flow 0
163740
70
1799445
9.6
1977204
5.2
2172208
4.9
2386130
9.5
Terminal Value:
Sale of Non-
Current Assets 477500
Recovery of
Preliminary
Expenses 25000
Recovery of
Working Capital
6370105
0
Total Terminal
Value 0 0 0 0 0
6420355
0
Net Annual Cash
Flow
-
655605
50
163740
70
1799445
9.6
1977204
5.2
2172208
4.9
8806485
9.5
Discount Rate
(WACC) 8.50% 8.50% 8.50% 8.50% 8.50% 8.50%
Discounted Cash
Flow
-
655605
50
150913
09
1528548
8.8
1547969
4.3
1567409
7.9
5856713
1.8
Net Present
Value
545371
72
IRR
28.79
%
Average
Accounting Profit
858871
2
ARR
13.10
%
Profitability
Index
83.19
%

9
PREPARE AND MONITOR BUDGETS
Business Expansion
Start-Up Cost
Particulars Amount
Residual
Value
Non-Current Assets:
Trademark 50000 0
Patent 75000 0
Property, Plant & Equipment 1500000 450000
Furniture & Fittings 100000 15000
Motor Vehicle 150000 60000
Computer Equipment 150000 0
Preliminary Expenses:
Business Registration 10000
License Fees 15000
Deposit for Electricity 10000 10000
Deposit for Telephone &
Internet 5000 5000
Recruitment Cost 3000
Share Issuance Cost 3500
Bond Issuance Cost 2000
Other Miscellaneous Expenses 7500
Working Capital:
Purchase of Raw Material 30000000
Wages & Salaries 20000000
Manufacturing Overhead 13000000
Selling & Marketing Expenses 609000
General Administrative
Expenses 99750 63708750
TOTAL START UP COST 65789750
Capital Funding:
Equity Capital 29605388
5 yrs. Bond 21710618
Loan From Bank 14473745
TOTAL CAPITAL
EMPLOYED 65789750

10
PREPARE AND MONITOR BUDGETS
Income Statement
Particulars Year 1 Year 2 Year 3 Year 4 Year 5
Inflation Rate 2.50% 2.50% 2.50% 2.50%
Sales Growth Rate 7% 7% 7% 7%
Sales Volume 40000 42800 45796 49002 52432
Selling Price Per Unit $3,500 $3,588 $3,677 $3,769 $3,863
Total Sales Revenue
$140,000,0
00
$153,545,0
00
$168,400,4
79
$184,693,2
25
$202,562,2
95
Cost of Good Sold
per unit:
Raw Material
Consumed ($1,500) ($1,538) ($1,576) ($1,615) ($1,656)
Direct Labor Cost ($1,000) ($1,025) ($1,051) ($1,077) ($1,104)
Total Cost of Goods
Sold p.u. ($2,500) ($2,563) ($2,627) ($2,692) ($2,760)
Total Cost of Goods
Sold
($100,000,
000)
($109,675,
000)
($120,286,
056)
($131,923,
732)
($144,687,
353)
GROSS PROFIT
$40,000,00
0
$43,870,00
0
$48,114,42
3
$52,769,49
3
$57,874,94
1
Variable
Manufacturing
Overhead p.u ($650) ($666) ($683) ($700) ($717)
Total Variable
Manufacturing
Overhead
($26,000,0
00)
($28,515,5
00)
($31,274,3
75)
($34,300,1
70)
($37,618,7
12)
Depreciation on
Property,Plant &
Equipment ($210,000) ($210,000) ($210,000) ($210,000) ($210,000)
Total
Manufacturing
Overhead
($26,210,0
00)
($28,725,5
00)
($31,484,3
75)
($34,510,1
70)
($37,828,7
12)
General

11
PREPARE AND MONITOR BUDGETS
Administrative
Expenses:
Depreciation on
Furniture & Fixtures ($10,000) ($9,000) ($8,100) ($7,290) ($6,561)
Depreciation on
Computer Equipment ($18,000) ($15,840) ($13,939) ($12,266) ($10,795)
Amortization of
Patent ($10,000) ($10,000) ($10,000) ($10,000) ($10,000)
Amortization of
Trademark ($15,000) ($15,000) ($15,000) ($15,000) ($15,000)
Insurance ($12,000) ($12,300) ($12,608) ($12,923) ($13,246)
Rates & Taxes ($6,500) ($6,663) ($6,829) ($7,000) ($7,175)
Salary of Office
Staffs ($100,000) ($102,500) ($105,063) ($107,689) ($110,381)
Cleaning Charges ($5,000) ($5,125) ($5,253) ($5,384) ($5,519)
Electricity for Office ($15,000) ($15,375) ($15,759) ($16,153) ($16,557)
Telephone & Internet ($8,000) ($8,200) ($8,405) ($8,615) ($8,831)
Total General
Administrative
Expenses ($199,500) ($200,003) ($200,956) ($202,321) ($204,064)
Selling & Marketing
Expenses:
Depreciation on
Motor Vehicle ($18,000) ($15,840) ($13,939) ($12,266) ($10,795)
Salary of Marketing
Staffs ($150,000) ($153,750) ($157,594) ($161,534) ($165,572)
Sales Commissions
@0.5% on Sales ($700,000) ($767,725) ($842,002) ($923,466)
($1,012,81
1)
Travelling charges
@0.25% on Sales ($350,000) ($383,863) ($421,001) ($461,733) ($506,406)
Total Selling &
Marketing Expenses
($1,218,00
0)
($1,321,17
8)
($1,434,53
7)
($1,558,99
9)
($1,695,58
4)
Net Operating
Profit/(Loss)
$12,372,50
0
$13,623,32
0
$14,994,55
6
$16,498,00
2
$18,146,58
2
Interest Expenses:
Interest on Bond
($1,519,74
3)
($1,519,74
3)
($1,519,74
3)
($1,519,74
3)
($1,519,74
3)
Interest on Loan
From Bank
($1,375,00
6)
($1,375,00
6)
($1,375,00
6)
($1,375,00
6)
($1,375,00
6)
Total Interest
Expenses
($2,894,74
9)
($2,894,74
9)
($2,894,74
9)
($2,894,74
9)
($2,894,74
9)

12
PREPARE AND MONITOR BUDGETS
Net Profit before
Tax $9,477,751
$10,728,57
1
$12,099,80
7
$13,603,25
3
$15,251,83
3
Income Tax Expenses
($2,843,32
5)
($3,218,57
1)
($3,629,94
2)
($4,080,97
6)
($4,575,55
0)
Net Profit after Tax $6,634,426 $7,510,000 $8,469,865 $9,522,277
$10,676,28
3
Gross Profit Margin 28.57% 28.57% 28.57% 28.57% 28.57%
Net Profit Margin 4.74% 4.89% 5.03% 5.16% 5.27%
Return on Equity 22.41% 25.37% 28.61% 32.16% 36.06%
Cash Flow Statement
CASH FLOW STATEMENT:
Particulars Year 1 Year 2 Year 3 Year 4 Year 5
Cash Flow from
Operating
Activities:
Cash Sales
$56,000,0
00
$61,418,0
00
$67,360,1
92
$73,877,2
90
$81,024,9
18
Collection from
Debtors
$77,000,0
00
$91,449,7
50
$100,297,
513
$110,001,
298
$120,643,
923
Cash Purchase
($24,000,
000)
($26,322,
000)
($28,868,
654)
($31,661,
696)
($34,724,
965)
Payment to
Suppliers
($30,000,
000)
($38,902,
500)
($42,666,
317)
($46,794,
283)
($51,321,
630)
Direct Labor Cost
($36,666,
667)
($43,547,
500)
($47,760,
721)
($52,381,
570)
($57,449,
487)
Manufacturing
Expenses
($26,000,
000)
($28,515,
500)
($31,274,
375)
($34,300,
170)
($37,618,
712)
Insurance ($12,000) ($12,300) ($12,608) ($12,923) ($13,246)
Rates & Taxes ($6,500) ($6,663) ($6,829) ($7,000) ($7,175)
Salary of Office
Staffs ($91,667)
($102,292
)
($104,849
)
($107,470
)
($110,157
)
Cleaning Charges ($5,000) ($5,125) ($5,253) ($5,384) ($5,519)
Electricity for
Office ($13,750) ($15,344) ($15,727) ($16,121) ($16,524)
Telephone & ($7,333) ($8,183) ($8,388) ($8,598) ($8,813)

13
PREPARE AND MONITOR BUDGETS
Internet
Salary of
Marketing Staffs
($137,500
)
($153,438
)
($157,273
)
($161,205
)
($165,235
)
Sales
Commissions
@1.5% on Sales
($700,000
)
($767,725
)
($842,002
)
($923,466
)
($1,012,8
11)
Travelling charges
@2% on Sales
($350,000
)
($383,863
)
($421,001
)
($461,733
)
($506,406
)
Income Tax
Expenses
($2,843,3
25)
($3,218,5
71)
($3,629,9
42)
($4,080,9
76)
($4,575,5
50)
Cash
Inflow/(Outflow)
from Operating
Activities
$12,166,2
58
$10,906,7
47
$11,883,7
66
$12,955,9
93
$14,132,6
12
Cash Flow from
Investing
Activities:
Purchase of Non-
Current Assets
($2,025,0
00)
Preliminary
Expenses ($56,000)
Sale of Assets $525,000
Return on
Deposits $15,000
Cash
Inflow/(Outflow)
from Investing
Activities
($2,081,0
00) $0 $0 $0 $540,000
Cash Flow from
Financing
Activities:
Share Issue
$29,605,3
88
Bonds Issue
$21,710,6
18
Loan From Bank
$14,473,7
45
Interest Payment
($2,894,7
49)
($2,894,7
49)
($2,894,7
49)
($2,894,7
49)
($2,894,7
49)
Dividend Payment
($2,322,0
49)
($2,628,5
00)
($2,964,4
53)
($3,332,7
97)
($3,736,6
99)
Repayment of ($21,710,

14
PREPARE AND MONITOR BUDGETS
Bond 618)
Repayment of
Loan from Bank
($14,473,
745)
Cash
Inflow/(Outflow)
from Financing
Activities
$60,572,9
52
($5,523,2
49)
($5,859,2
02)
($6,227,5
46)
($42,815,
811)
Net Cash
Increase/(Decreas
e) for the period
$70,658,2
10
$5,383,49
9
$6,024,56
5
$6,728,44
7
($28,143,
198)
Add: Opening
Cash Balance $0
$70,658,2
10
$76,041,7
09
$82,066,2
73
$88,794,7
20
Closing Cash
Balance
$70,658,2
10
$76,041,7
09
$82,066,2
73
$88,794,7
20
$60,651,5
22
Capital Budgeting
Year
Particulars 0 1 2 3 4 5
Initial Investment:
Purchase of Non-
Current Assets
-
202500
0
Preliminary
Expenses -56000
Working Capital
-
637087
50
Total Initial
Investment
-
657897
50
0 0 0 0 0
Net Operating Profit
before Tax 0
123725
00
136233
20
1499455
5.6
1649800
2.3
1814658
1.7
Less: Income Tax 0
371175
0
408699
6
4498366.
67
4949400.
68
5443974.
51
Net Operating
Profit after Tax 0
160842
50
177103
16
1949292
2.2
2144740
2.9
2359055
6.2
Add: Depreciation & 0 281000 275680 270978.4 266822.9 263150.0

15
PREPARE AND MONITOR BUDGETS
Amortization 92 33
Net Operating Cash
Flow 0
163652
50
179859
96
1976390
0.6
2171422
5.9
2385370
6.2
Terminal Value:
Sale of Non-Current
Assets 525000
Recovery of
Preliminary
Expenses 15000
Recovery of
Working Capital
6370875
0
Total Terminal
Value 0 0 0 0 0
6424875
0
Net Annual Cash
Flow
-
657897
50
163652
50
179859
96
1976390
0.6
2171422
5.9
8810245
6.2
Discount Rate
(WACC) 8.50% 8.50% 8.50% 8.50% 8.50% 8.50%
Discounted Cash
Flow
-
657897
50
150831
80
152782
99
1547331
7.9
1566842
7
5859213
5.3
Net Present Value
543056
09
IRR 28.65%
Average Accounting
Profit
856257
0
ARR 13.02%
Profitability Index 82.54%
Assessment 2
Report
This report has been prepared in order to explain the budgets that has been framed in
order to understand the expansion of the business and the transitions in the working process

16
PREPARE AND MONITOR BUDGETS
and the procedures of an organization. The modifications in the budget has been undertaken
by looking at the external and the internal factors that have an impact on the functional
activities of the company. It has been observed that construction of the budget has to be
undertaken by looking at the rules and the taxation policies of the government along with the
current and the future trend of the economy. It is even seen that business objectives of the
mission statement of the firm has to be taken into consideration in order to construct the
budget in an effective manner. It is seen that the company constructs the budget with respect
to the sales that have been undertaken for the expansion of the business and the expenses that
the company incurs.
The funds in the respected budgets have been allocated by taking loan from the banks
and even with the help of equities. The equity has been gathered by taking help of the shares
that has been given out by the organizations in the market. Additional investments are even
undertaken by new investors and the existing investors who are available in the market in
order to undertake the expansion activities and the even bringing in changes in the working
procedures and the practices in the functional plans of the organizations. It is even seen that
cash funds are allotted within the budget so that liquid assets can be brought into the the
budget of the operational plan of the firm. The funds that are allocated are distributed in an
effective manner so that the expansion of the business and the transformations in the working
process can be incorporated effectively.
It has been essential for the organization to maintain an effective relationship with the
stakeholders and the colleagues who are associated with the company so that they may have
precise knowledge about the activities that are undertaken by the organization. The
stakeholders and the colleagues are informed about the changes in the operational plan and
construction of the budget with the help of a mail. The mail provides an effective plan that
would be undertaken by the organization. It is seen that once the plan has been communicated

17
PREPARE AND MONITOR BUDGETS
a meeting is planned where the stakeholders, management and the colleagues come together.
In this meeting, the plans and the policies that have been framed for the construction of the
budget and the operational plan are discussed in full details. The grievances as well as the
recommendations and the suggestions of the stakeholders are communicated in order to have
construct an effective budget and plan that would improve the functional activities of the
organization. The effective communication with the stakeholders with respect to the
construction of the budget leads a better communication style thereby establishing a sense of
togetherness among the management and the stakeholders.
The information with respect to the allocation of fund is recorded effectively. It is
essential to record the allocation of the funds in order to take assistance of it in the near future
during similar activities and to keep track of the how the funds from various resources have
been used by the firm in order to complete the business activities effectively. The information
regarding the allocation of funds needs to be recorded in order to take assistance of it during
any discrepancies and this would aid in improving the operational activities of the
organization.
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PREPARE AND MONITOR BUDGETS
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