University Financial Budget Analysis and Performance Evaluation Report

This report presents a comprehensive financial budget analysis for ACA Travel Agency, examining the business's financial performance based on a provided budget. It includes an evaluation of revenue and cost variances, highlighting areas where the business met or missed its budgetary targets. The analysis delves into the income statement, identifying key revenue sources and cost control measures. The report also provides a revised budget considering seasonal travel trends and market sales, and a detailed cash budget for the months of October, November, and December. Furthermore, it discusses the implications of net 30-day payment terms, potential financing methods for employee training, and the calculation of the break-even point. Finally, the report includes an analysis of on-costs of labor and a cash flow forecast for an event management company, providing a holistic view of financial planning and management.

Running head: FINANCIAL BUDGET
Financial Budget
Name of the Student:
Name of the University:
Author’s Note

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FINANCIAL BUDGET
Table of Contents
Task A..............................................................................................................................................2
Budget Analysis...........................................................................................................................2
Evaluation of the Performance of the Business...........................................................................3
Revised Budget............................................................................................................................5
Task B..............................................................................................................................................6
Revised Budget............................................................................................................................8
Task C..............................................................................................................................................9
Task D............................................................................................................................................10
Breakeven Point.........................................................................................................................10
On-Costs of Labour...................................................................................................................10
Task E............................................................................................................................................11
Reference.......................................................................................................................................13

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FINANCIAL BUDGET
Task A
Budget Analysis
The budget which is prepared is based on a quarter and the budget shows both actual and
budgeted results of ACA Travel Agency. The main source of revenue of the business is through
international package, domestic packages, international air travel and domestic air travel. The

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FINANCIAL BUDGET
budgeted estimate which is made by the business in case of revenues of the business is shown to
be $ 2,508,000 and the actual result which is achieved by the business is shown to be $
2,236,000. Therefore, this creates a variance of $ 10.84% which is unfavourable in nature and the
management needs to check the operational structure of the business and identify the reasons for
such variances (Gorgotskaya and Selyutina 2013). However, on the other hand the business has
been able to meet with the budget in terms of the costs and the same has resulted in significant
increase in the profitability of the business in comparison to Budgeted estimates and the overall
increase is shown to be 72%. The actual results which is achieved by the business in terms of
profitability of the business is shown to be favourable when compared to budgeted estimates of
the business.
Evaluation of the Performance of the Business
The analysis of the income statement which is prepared by the business shows that the
main source of revenue of the business is from transport services for both passengers and goods
which is provided for both international and domestic travel (Needles, Powers and Crosson
2013). The budget shows that the management of the company has effectively controlled the
costs of the business.
In case a variance has taken place between the actual results and budgeted results due to
excess of departmental salaries over the budget, the manager can apply the following steps to
rectify the variance
 The labour force of the business needs to be trained effectively so that they can develop
the necessary skills and also efficiency in operations which would allow the business to
keep a minimum labour force thereby also control the costs of the business.

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FINANCIAL BUDGET
 The salary rates of employee can be reduced in order to meet up with the budgeted
estimates.
In case the where the variance occurs due to lower income earned by the business than the
figure which was portrayed in the Budget, the manager can take the following steps:
 The management can follow aggressive sales strategy which would be involving
significant focus on the promotion of services by the business and thereby attract
customers.
 The business can also rectify the variance by incorporating new strategy which can attract
new clients and also contribute to the revenue of the business.

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FINANCIAL BUDGET
Revised Budget
There has been an increase in the international travel of the business which is shown in
the budget which is presented above as there is a trend of seasonal travel to South East Asia
which increases the number of passenger to the route and thereby also increase the revenue of the
business.

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FINANCIAL BUDGET
The company has an established a system which advises the passengers to take counter
terrorism measures and also can report any suspicious activity to the officials in such a case
through a helpline website. The company would also incorporate through checking at airport to
prevent such an issue.
The market sales of the business is shown to have increased in the budget above which is
due to the reason of increase in sales of the business which is due to higher demand for the
business. The competition level in the market has also increased which is a result for the increase
in sales and further growth of the business.
The domestic bookings has increased which is shown in the budget above. The company
in order to further provide more incentives to the customers also offers hotel bookings along with
travel services which are provided at discounted rate and therefore has a positive impact on the
revenue which is generated by the business.
The business also provided packages travel services which can be done through
consolidators website. This is also an important activity which earns revenue for the business and
the same is also shown in the revised budget for the period.
Task B
ACATravel Agency
Cash budget for the three months ending 31/12/2018
October November December TOTAL
Quarter
Cash receipts
Cash sales 35,000 35,000 35,000 105,000
Debtors 35,000 35,000 35,000 105,000
Scrap 3,000 3,000
Total cash receipts 70,000 70,000 73,000 213,000
Cash payments
Purchases 17,500 17,500 17,500 52,500

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FINANCIAL BUDGET
Labour cost 20,000 20,000 20,000 60,000
Superannuation 3,000 3,000 3,000 9,000
Rent 3,000 3,000 3,000 9,000
Energy bills 2,000 2,000 2,000 6,000
Miscellaneous 2,500 2,500 2,500 7,500
Transport and couriers 1,000 1,000 1,000 3,000
Rates 5,000 - - 5,000
New equipment 65,000 65,000
Total cash payments 54,000 49,000 114,000 217,000
Surplus / Deficit 16,000 21,000 - 41,000 - 4,000
Cash balance at start 50,000 66,000 87,000 50,000
Cash balance at end 66,000 87,000 46,000 46,000
The above table shows cash budget which is prepared on monthly basis for ACA Travel
Agency for the month of October, November and December. The cash budget shows that the
business is able to generate positive cash flows in the month of October and November,
however, there is a deficit which is shown in month of December of $ 41,000 which is due to the
increase in the cash payments of the business. The cash payments have increased because of the
purchase of the new equipment which is to be purchased by the business and the same is shown
to be $ 65,000. The budget shows that there is a deficit of $ 4,000 as shown in the table above
(Klychova, Faskhutdinova and Sadrieva 2014). Therefore, from the above budget, it can be said
that the business would be able to pay for new equipment effectively and also maintain a positive
cash balance as shown in the closing cash balance shown above.
The deficit in the budget can be rectified by the business by incorporating effective
control over the expenses of the business which have resulted in cash outflows of the business.
The management can cut off certain expenses which are unproductive in nature and therefore
reduce the total cash payments which the business needs to pay and improve the deficit which is
shown in the budget. The business can slightly reduce the costs of labour in the business which

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FINANCIAL BUDGET
can also reduce the cash out flows of the business which can deal with the deficits of the
business.
Revised Budget
The cash budget which is shown above is revised considering certain changes in the sales
and purchase which is achieved by the business. The revised cash budget of the business shows
that there has been increase in the cash payments for the business and therefore the same has
resulted in the increase in cash outflows of the business. The cash inflows of the business is
shown to be $ 212,000 during the quarter and the total cash payments of the business is shown to
be $ 227,500 for the quarter. The result for the same shows that there is a deficit of $ 44500 and
there is also negative cash balance in the business. The cash balance which is shown at the end of

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FINANCIAL BUDGET
the quarter is shown to be $ 11,500. The balance is shown to be negative and therefore the
business needs to improve the situation.
The revised cash flow needs to be confirmed by the operational managers and finance
manager of the business and the same also needs to be approved by the top level management of
the business.
Task C
The net 30 days refers to the period of 30 days which is allowed by AAI training to the
business for paying the account receivable balance of the business. This basically represent the
credit period which is allowed to ACA Travel Agency. The credit period policy which is allowed
for the business is appropriate as this allows the business to effectively (Warren, Reeve and
Duchac 2013). The due date for the payment if the invoice has been issued on 10/7/201X would
be on 9/8/201X. The payment method which is applied is appropriate as this would allow the
business not only to maintain its liquidity but also manage the debtors of the business more
efficiently.
The methods which can be applied by the business for the purpose of financing the
training of a business are shown given below:

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FINANCIAL BUDGET
 Debt capital: The business can take debts from banks in order to finance training
program of the employees of the business. The debt can help the business to maintain a
stable liquidity position in the business.
 Government Grants: In certain cases, the travel agency receives grants from the
government to carry out such training process.
 Retained Earnings: The business has the option of using retained earnings which would
allow the business to maintain stability in the business.
 Borrowings from Directors: The business can also make internal borrowings from the
management of the business in order to finance the training of the business.
Task D
Breakeven Point
The breakeven point of the business refers to a situation where is the business makes no
profit or loss and the business only able to cover the costs of the business. The BEP of a business
represent the minimum services which the business must provide to stay (Kotas 2014). The
calculation of BEP requires consideration of the fixed costs of the business and the sales of the
business.
Fixed Costs Variable Costs
Full time staff $1,000 per week Casual Staff 160
Rent $1,000 per week Coffee 20
Insurance $300 per week Cake 20
Utilities $200 per week Entry fee 10
Total $2500 Total 210
On-Costs of Labour
The on-costs of the labour which are related to the business are listed below:

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FINANCIAL BUDGET
 Supervisor Salary
 Accountant Salary
 Salesmen Salary
 Maintenance expenses
 Assistance Salary
 Labour medication and supplies
The academic tours of the business can further improve the business by increasing the
number of customers per slot by 5 people and include another guide for effective maintenance of
the service (Bogsnes 2016). The business can include proper café provisions within the tour and
also provide additional services.
Task E
APPENDI
X 1
THE EVENT MANAGEMENT COMPANY (TEMC) 2018 SCULPTURES BY THE SEA EVENT CASH FLOW
FORECAST
Tota
l Jan Feb Mar Apr May Jun Jul Aug Sep
Oc
t Nov Dec
Opening
10,0
00
-
8,000
-
26,00
0
-
1,00
0
-
21,0
00
-
5,90
0
-
23,9
00
-
1,90
0
33,4
00
15,
400
45,5
00
25,5
00
Income
Ticket
265,
000 - -
65,00
0 -
55,0
00 - -
75,0
00 -
70,
000 - -
Gov
Grantt - - - - - - -
4,00
0 - - - - -
Merchan
dising
6,50
0 1,500
1,60
0
1,80
0
1,6
00
Total
income
271,
500 - -
665,0
00 -
56,6
00 -
4,00
0
76,8
00 -
71,
600 - -
Exp
Casual
wages 12,0 - - 2,500 1,00 2,50 - - 2,50 - 2,5 1,00 -