Purposes of Business Finance
Added on 2020-10-23
11 Pages3123 Words163 Views
BUSINESS FINANCE
Table of ContentsINTRODUCTION...........................................................................................................................1MAIN BODY...................................................................................................................................1PART 1............................................................................................................................................11) The purposes of preparing a budget and what processes the company needs to follow. .......12) The application of traditional budgeting approaches to plan future cost management..........33) Analysis whether the traditional budgetary system is appropriate in the business or not......4PART 2........................................................................................................................................54) Alternative budget methods and each method attempts to improve on the traditionalapproach......................................................................................................................................55) Potential application of these methods to the company..........................................................56) The Zero base budgeting method is more appropriate for the Company...............................6CONCLUSION................................................................................................................................8REFERENCES ...............................................................................................................................9
INTRODUCTIONBusiness finance refers to money and funds that is needed to run a business. The firmneeds finance to carry out its Business operations effectively and efficiently. Business financealso involves arrangement of funds through taking credit and loans. Business finance refers tothe smooth utilization of funds. The project report is based on Snappy Drinks plc. The Projectreport will outline the purposes of preparing a budget and will suggest what processes theSnappy drinks plc needs to follow. The project report will explain how the Budget process helpsin development of business model. The project report will showcase the application of traditionalbudgeting approaches in order to plan future cost management. The project report will illustratethe examples how products and processes for this business will be budgeted for in a traditionaland incremental approach. The report will analysis whether traditional budgetary system isappropriate to all parts of the business or not. The project report will explain the alternativebudget methods like rolling budgets, zero based budgets and activity based budgets. The projectreport will explain how each method attempts to improve on Traditional approach and will alsoreflect its respective drawbacks. The project report will explain potential application of thesemethods. Lastly the report will analysis which method would be best for the Company.MAIN BODYSnappy Drinks plcSnappy drink plc is an international manufacturer of energy drinks. The Company is establishedabout 15 years ago. Snappy drink is located in Nottingham. The founder of the Company isDonna. The Snappy drink is listed on London Stock Exchange. PART 11) The purposes of preparing a budget and what processes the company needs to follow. Purposes of preparing a budgetThe budget helps to put business strategy into operations. The budget describesCompany's Mission, Vision and values.The Budget helps in allocation of Business resources. The Budget also facilitates thereallocation of the business resources.1
The Budget assigns control in the business. The Budget centralised the control formaking business decisions at the institutional level. The Budget describes institutional plans. The Budget helps in forecasting. The budget ishelpful in minimising the business losses. The Budget decide the composition of capitalization in order to insure availability of thefunds at reasonable cost (Iwasaki and et.al, 2018).The Budget helps in accelerating the efficiency of Business operations. It facilitates thecoordination with various business departments.The budget is helpful in predicting the Company's future sales, production cost and otherexpenses.The Budget is helpful in inventory management. It ensures effective control over it.Processes the company needs to followThe Snappy drinks plc firstly need to update budget assumptions. The Company shouldreview to assumptions about its business environment. As the company is planning tochange their budgeting system.The Snappy drinks plc needs to determine the capacity level of primary bottleneck thatconstrain the Snappy plc from the future revenue growth and sales.The Snappy drinks plc should determine the amount of funding that will be availableduring the budget period.The Snappy drinks plc should determine the step costing points and should defines theamount of these costs that will be incurring.The Snappy drinks plc should issue budget package. The company needs to obtain therevenue forecast from the sales manager and need to formalize with the company's CEODonna. The Company also needs to obtain the department budgets (Ylhäinen, 2017). The snappy drinks plc should update the budget model with the master budget model.Lastly the Snappy drinks plc needs to review the budget plan they have made whether itis implementing in the company properly or not and if not they need to maker furtherimprovements in it.2
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