Budgeting Methods for Future Cost Management

Project

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
1. Explanation of different terms.................................................................................................1
2. Application of concepts within the company...........................................................................3
3. Analysis and recommendation regarding the steps which should be taken to improve cash
flow through better working capital management.......................................................................3
PART 2............................................................................................................................................4
1. Purpose of preparing of budget and explanation of traditional and alternative budgeting
approaches....................................................................................................................................4
2. Demonstration of application of budgeting methods showing the way in which they might
be used to plan future cost management......................................................................................6
3. Analysing of whether traditional or alternative budgetary system is appropriate to all of the
parts of the business in its planned future form...........................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business finance is the set of different monetary resources which are required to be
maintained and managed properly by all the companies for the purpose of operating business in
systematic manner. If an organisation is not having sufficient funds then it may create difficulties
for it to attain all the business goals because it is not possible to carry operations without proper
funding (Bakar, Rosbi and Uzaki, 2017). This report is based upon two different organisations
which are Bright Lawns Ltd operates in London, Birmingham and Manchester and BoatWorld
Plc a leisure company that rents boats to holiday makers and operates in United Kingdom and
France. This assignment covers various topics which are explanation of profit, cash flow,
working capital, receivables, inventory and payables, application of all of them and steps to be
taken to improve cash flow. Along with this, purpose of preparing a budget, explanation of
tradition and alternative budgeting methods, their application to show the way in which they
might be used to plan future cost management and appropriateness of one of the processes are
also covered in this project.
PART 1
1. Explanation of different terms
Profit: All the incomes which are gained by an organisation by selling all its products
and service to clients is known as profit. For the purpose of calculating it cost is deducted from
the selling price of the items which are sold to customers. It is a type of financial gain which is
used by organisations to carry out business for long term.
Cash flow: The monetary resources which are flowing inward and outward of an
organisation are known as cash flow. In order to calculate it managers have to deducted all the
outflow from inflow. In other words, it can be defined as the money which is transferred in or out
of a business.
Difference between profit and cash flow: There are various differences between cash
flow and profit. All of them could be analysed with the help of following table:
Cash flow Profit
It is calculated through cash flow
statement.
Profit and loss or income statement
is used for the purpose of
1