Financial Analysis, Planning, and Budgeting for Donut Restaurant

This report presents a comprehensive financial analysis of the Donut Restaurant, examining its strategic opportunities, tactical and operational objectives, and financial trends. It details the transformation of opportunities into special projects, analyzes financial statements, and outlines financial planning objectives, timeframes, and resource allocation. The report includes an investment target rate, performance measures, and tactics for monitoring and controlling proposals. It also covers negotiation strategies, budget outcomes, and accountability measures for implementation and management. The report utilizes project evaluation methods like cost-benefit analysis, payback period, NPV and IRR calculations, and market research results to assess project viability. Furthermore, it delves into risk management, change management techniques, and the role of the entity in organizational development. The report concludes with a focus on budget accountability, recording systems, and contingency planning for the Donut Restaurant's financial success.

MANAGE FINANCE & CONTRIBUTE TO
ORGANISATIONAL DEVELOPMENT

TABLE OF CONTENTS
Assignment 1...............................................................................................................................................................................................3
Strategic opportunity in terms of tactical and operational objectives......................................................................................................3
Transformation of opportunity in special projects...................................................................................................................................3
Analyzing financial trends and interpreting them in context of objectives.............................................................................................3
It can be seen that financial trends during a year in different months are excellent. As sales in the month of February is £14760
which increased to £49206. This reflects that huge plunge comes in the sales value during the relevant time period. The operational
objective of earning profit by controlling cost is reduced by maintaining stability in cost of core business operations........................4
Financial planning objectives and process timeframes as well as resources...........................................................................................6
Consulting with relevant people..............................................................................................................................................................7
Past experience, present trends and future expectations..........................................................................................................................7
Linkage of proposal to strategic objectives.............................................................................................................................................7
Cost benefit and risk analysis..................................................................................................................................................................7
Investment target rates and capital expenditure proposals......................................................................................................................8
Performance measures and tactics for monitoring and control processes for proposal...........................................................................8
Proposal and its relationship to organization values, policies and code of conduct................................................................................8
Use of software’s.....................................................................................................................................................................................8
Project evaluation method, cost benefit analysis and market research results........................................................................................9
Part B.........................................................................................................................................................................................................11

Negotiation............................................................................................................................................................................................11
Identifying and agreeing on the links to the achievement of organization strategies............................................................................11
Outcomes of budget in terms of objectives and timeframes..................................................................................................................11
Written confirmation of delegation, accountability and responsibility.................................................................................................12
Communication plan..............................................................................................................................................................................12
Part C.........................................................................................................................................................................................................12
Details about budget accountability for implementation and management of package........................................................................12
Recording system and documentation process for monitoring and control of activities.......................................................................13
Risk management and contingency plan...............................................................................................................................................13
Development of plan..................................................................................................................................................................................13
Analysis of organization strategic plans to determine firm needs and objectives.................................................................................13
Consulting with relevant groups............................................................................................................................................................13
Role of entity in organization development process..............................................................................................................................13
Collection and analysis of data on areas where business experiencing a problem................................................................................14
Objectives and strategies for organization development.......................................................................................................................14
Change management techniques............................................................................................................................................................14
Observation................................................................................................................................................................................................14
Undertaking regular surveys..................................................................................................................................................................14
Copies of surveys...................................................................................................................................................................................14
Minutes of meetings..............................................................................................................................................................................16
Evidence of championing the program..................................................................................................................................................16
Final evaluation.....................................................................................................................................................................................16

Assignment 1
Strategic opportunity in terms of tactical and operational objectives
Operational objective of the Donut restaurant is to increased business profit by reducing its overall cost of production. In this
regard it planned to expand its operations. Under this new products will be launched in the market. Raw material will be purchased
from single supplier in large quantity which will generate economies of scale in business. Thus, in this way new product development
will help firm in achieving its operational objective.
Transformation of opportunity in special projects
There are ample opportunity in the restaurant industry as number of people visiting restaurant is increasing consistently. This
opportunity is tapped in the specific project under which many new dishes like Indian, Mexican, Chinese and Intercontinental will be
served to the customers under single roof.
Analyzing financial trends and interpreting them in context of objectives
Table 1Projected revenue from varied products
Revenue per
person
Februa
ry
Marc
h
Apri
l May June July August
Sept
emb
er
Octob
er
Novem
ber
Decem
ber January Total
British 1800 2250 2925
3217
.5
4343.6
25
4777.98
75
4790.13
75
5269
.151
25
5796.0
6638
7245.08
297
7259.0
3297
10888.54
95 60562.133
Indian 3150
3174.
15
3198
.3
3223
.5
4351.7
25
4379.02
5
4407.37
5
4436
.775
4467.2
25
6254.11
5
6286.6
65
9429.997
5 56758.8525
Mexican 2090
2102.
65
2115
.3
2128
.5
2873.4
75
2887.77
5
2902.62
5
2918
.025
2933.9
75
4107.56
5
4124.6
15
6186.922
5 37371.4275
Chinese 5000 5023 5046 5070 6844.5 6870.5 6897.5
6925
.5 6954.5 9736.3 9767.3 14650.95 88786.05

Intercontinental 2720
2738.
4
2756
.8
2775
.2
3746.5
2 3764.92 3783.32
3801
.72
3820.1
2
5348.16
8
5366.5
68 8049.852 48671.588
Revenue 14760 15288
1604
1
1641
5 22160 22680 22781
2335
1 23972 32691 32804 49206 292150
Figure 1Sales projection
It can be seen that financial trends during a year in different months are excellent. As sales in the month of February is £14760 which
increased to £49206. This reflects that huge plunge comes in the sales value during the relevant time period. The operational
objective of earning profit by controlling cost is reduced by maintaining stability in cost of core business operations.
British 5
Indian 8
Mexican 6
Chinese 6

Intercontinental 7
Cost of producing each unit of specific dish remain stable for 12 month time period at value stated in the above table.
Figure 2Percentage change in sales and cost
It can be seen from the chart that sales revenue and cost are strictly changing in alignment to each almost by same percentage. This
proved that Donut restaurant maintain stiff control on its cost and achieve operational objective.
Table 2Income statement
2017-18
Revenue 292150
Less: Cost of goods sold 123582
Gross profit 168568
Expenses
Marketing expenses 1200
Administration expenses 6000
Finance cost 8000
Insurance 2400

Rent 1800
Salary and wages 120000
Depreciation 14958
Other operating expenses 12000
Sum of expenses 166358
PBIT 2210
Tax 0
Net profit 2210
Financial planning objectives and process timeframes as well as resources
The main objective of financial planning is to make investment in the business in structured way so that in single month huge
amount of capital investment cannot be made. Thus, by doing so stiff control will be maintained on the capital expenditure that will be
made in the business. Financial planning is prepared for one year and under this budget is prepared.
Table 3Cash budget
Februar
y March April May June July August
Septembe
r October
Novembe
r
Opening balance 20000 19675.1 19877.3 20831.8 22158.6 29229.5 36819.8 44509.8 52769 61648
Sales 14760 15288.2 16041.4 16414.7 22159.8 22680.2 22781 23351.2 23971.9 32691.2
Total 34760 34963.3 35918.7 37246.5 44318.4 51909.7 59600.7 67860.9 76740.9 94339.2
Expense
Marketing expenses 80 80 80 80 80 80 80 80 80 80
Administration expenses 400 400 400 400 400 400 400 400 400 400
Finance cost 533.333 533.333 533.333 533.333 533.333 533.333 533.333 533.333 533.333 533.333
Insurance 160 160 160 160 160 160 160 160 160 160
Rent 120 120 120 120 120 120 120 120 120 120
Salary and wages 10000 10001 10002 10003 10004 10005 10006 10007 10008 10009

Depreciation 997.2 997.2 997.2 997.2 997.2 997.2 997.2 997.2 997.2 997.2
Preliminary expenses written
off 1994.4 1994.4 1994.4 1994.4 1994.4 1994.4 1994.4 1994.4 1994.4 1994.4
Other operating expenses 800 800 800 800 800 800 800 800 800 800
Sum of expenses 15084.93
15085.9
3
15086.9
3
15087.9
3
15088.9
3
15089.9
3
15090.9
3 15091.93
15092.9
3 15093.93
Net balance 19675.07
19877.3
3 20831.8
22158.5
7
29229.4
8
36819.7
5
44509.7
8 52769.01
61647.9
7 79245.27
December January
79245.3 96954.5
32804.2 49206.3
112049 146161
80 80
400 400
533.333 533.333
160 160
120 120
10010 10011
997.2 997.2
1994.4 1994.4
800 800
15094.93 15095.93
96954.51 131064.9
Table 4Budget for business firm
Capital expenditure budget

Capital expenditure
Februar
y March April May June July August
Septembe
r October
Novembe
r
Decembe
r January
Exterior signs and
decorations 26080
Equipment and machine 20000 20000 20000 20000 20000 20000
Furniture’s 500 500 500 500 500 500 500
Total capital expenditure 46580 500 20000 500 20000 500 20000 500 20000 500 20000 500
Cash inflow from project
Sales revenue 14760 15288
16041.
4
16414.
7
22159.8
5
22680.2
1
22780.9
6 23351.17
23971.8
9 32691.23 32804.18
49206.2
7
Net cash inflow -31820
14788.
2 -3958.6
15914.
7
2159.84
5
22180.2
1
2780.95
8 22851.17
3971.88
6 32191.23 12804.18
48706.2
7
Consulting with relevant people
For developing good business proposal contact will be established with the friends that have experience in the restaurant
industry for long time period. By taking necessary guidance from them business proposal will be prepared in better way.
Past experience, present trends and future expectations
Firm is in restaurant business since last 3 years. During this time period tourism in the UK increased at rapid pace. On this basis,
it is expected that in upcoming time period also tourism will increased by higher growth rate which will lead to increase in revenue of
the restaurants. Current trend is that restaurant industry is increasing by 2% and tourism industry is growing at 14% CAGR. Thus,
with further elevation in growth rate of tourism industry revenue of restaurants will surely get elevate.
Linkage of proposal to strategic objectives
Proposal is linked to the strategic objective. This is because main objective is to increase profit and controlling cost. This
proposal help firm in elevating its business profit and cost control as proved above by results depicted by Figure 1. Hence, proposal
and strategic objectives are interlinked to each other.

Cost benefit and risk analysis
Cost Benefit
Material purchase cost: Material purchase cost is associated with
restaurant business. In large quantity raw items will be purchased
from suppliers.
Capitalizing opportunity: There is a huge growth potential of
tourism industry. By increasing product line this opportunity can
be grabbed and huge amount of profit can be earned in business.
Capital expenditures on machines: Huge amount of expenditure
will be made on machines and furniture’s as well as fixtures up to
certain amount so that customers feel well in the restaurant.
Employee cost: There will be 5 Chefs which will be intern
students. Each will be paid £2000 for a month.
Exterior and painting cost: Exterior and painting cost will be
£26080.
Investment target rates and capital expenditure proposals
Investment target rate is earning of 9% IRR on capital expenditure proposals.
Performance measures and tactics for monitoring and control processes for proposal
As part of performance measures for each and every stage of the project start and completion time will be determined along with
cost. If all business idea implementation stages will be completed on time and at determined cost then it means that project is
effectively controlled. As part of tactics there will be senior manager who will keep an eye on project progress. On half day and
completion of working hours subordinates will communicate all necessary progress related details to the project manager. In this way
project will be monitored in best way.

Proposal and its relationship to organization values, policies and code of conduct
There is a relationship between proposal and organizational values. As making available dishes at affordable price to the people
is target of the firm. This can be done only by controlling expenditures and reducing same. Through this proposal cost will be
controlled strictly which will lead to achievement of organization values. Firm code of conduct state that customers must not be
exploited and as per relevant proposal at right price dishes will be made available to the customers. Thus, in this way through proposal
code of conduct is strictly implemented in the organization.
Use of software’s
Excel is the software that could be used in project for financial management purpose.
Project evaluation method, cost benefit analysis and market research results
Table 5 Calculation of payback period
-149580
1 14760 -134820
2 15288 30048
3 16041 31330
4 16415 32456
5 22160 38575
6 22680 44840
7 22781 45461
8 23351 46132
9 23972 47323
10 32691 56663
11 32804 65495
12 49206 82010