Financial Project: Analyzing Budget Management and Financial Plans

This project report provides a comprehensive analysis of budget management and financial planning. It begins with an efficiency analysis, evaluating key metrics such as average receivable days, average payable days, and stock turnover ratio to assess the company's current financial position and cash conversion cycle. The report then delves into cost analysis, calculating the sales units required to achieve a desired profit, determining break-even points, and analyzing variable costs. Furthermore, it explores the impact of shifting manufacturing plants to India to enhance production and sales. The report concludes with a business activity statement, detailing budgeted cash receipts and payments, including GST calculations, providing a clear overview of the company's financial activities across three months. References from financial management literature are also included to support the analysis.

Running Head: Manage Budgets and Financial Plan
1
Project Report: Manage Budgets and Financial Plan

Manage Budgets and Financial Plan 2
Activity 1:
Through the analysis, it has been found that the various changes have taken place into
the efficiency of the company. The current efficiency position of the company is as follows:
Average
debtors
day
Receivables/
Cost of
sales*365 3,62,500.00 8,00,000.00 165.39
(100000+1000000-
300000)
Average
Creditors
day
Payables/
Purchase*365 80,000.00 10,00,000.00 29.20
Stock
turnover
ratio
average
inventory /
cost of goods
sold *365 2,00,000.00 8,00,000.00 91.25
(100000+30000)/2
This efficiency position of the company depict that the average receivable days of the
company has been enhanced and depict that the cash conversion cycle of the company has
also been improved. Further, it has been found that the company must make a control over
extra expenditure and fir reducing the level of the fixed cost per unit, company should
enhance the production and sales as well (Borio, 2014).
Company is also suggested to reduce the level of the cash conversion to enhance the
operations and the production of the company. Further, it has also been found that the current
position would also affect the financial position of the company (Gali, 2015). The ledger
accounts balance of the company would be altered and thus the financial performance and the
position of the company have also been affected due to current changes.
Activity 2: Cost analysis
Q 1)
A) Calculation of sales unit on the basis of desired profit
Selling price
$
500
$
40,00,000
Variable cost $ $

Manage Budgets and Financial Plan 3
250 20,00,000
Contribution (Sales -
variable cost)
$
250
$
20,00,000
Fixed cost
$
12,80,000
$
12,80,000
BEP 5120 2560000
Desired Profit
$
10,00,000
Sales units to achieve the
desired profit (Desired
profit / contribution + sales
units) 9120
$
45,60,000
W.N.
Calculation of breakeven point
Per unit Total
Selling price $ 500 $ 40,00,000
Less:
Variable cost $ 250 $ 20,00,000
Contribution
(Sales - variable
cost) $ 250 $ 20,00,000
Fixed cost $ 12,80,000
Breakeven point
(Fixed cost /
contribution) 5120 $ 25,60,000
Units
(Brigham and Ehrhardt, 2013)
Q 2)
Calculation of variable cost
Total sales
$
40,00,000

Manage Budgets and Financial Plan 4
Less: Profit
$
10,00,000
Less: Fixed cost
$
12,80,000
Variable cost
$
17,20,000
Divided: number of sales units 8000
Variable cost per unit
$
215
Q 3)
According to the calculations and the evaluation over the company, it has been found
that the company must manufacture and sell 9120 units to reach over the desired profit. And
if the company would shift its plant to the India than the production of the company would be
enhanced and the sales of the company would also be in favour of the company. thus the
company is suggested to shift its manufacturing plant into India to reach over the desired
profit (Gambacorta and Signoretti, 2014).
Activity 3: Business activity statement
July August September
Budgeted cash
receipts incurring
GST:
Cash sales 20,000 10,000 10,000
Cash revenue (besides
sales)
0 0 0
Cash receipts from sale
of assets (not stock)
0 0 0
Total receipts for GST 20,000 10,000 10,000
Budgeted non-cash
receipts incurring
GST:
Debtors sales 1,80,000 2,30,000 1,50,000
Total non-cash
receipts:
1,80,000 2,30,000 1,50,000
Total budgeted
receipts incurring GST
2,00,000 2,40,000 1,60,000
Budgeted cash
payments incurring
GST
Cash purchases of 0 0 0

Manage Budgets and Financial Plan 5
stock
Cash expenses 4,300 5,200 5,250
Total cash receipts
incurring GST
4,300 5,200 5,250
Budgeted credit
payments incurring
GST
Credit purchases of
stock incurring GST
25,000 30,000 25,000
Credit purchases of
assets (besides stock)
4,300 5,200 5,250
Total cash payments
incurring GST
29,300 35,200 30,250
Total budgeted cash
payments incurring
GST
33,600 40,400 35,500
GST cash budget
calculations
a) Cash
receipts
2000 1000 1000
b) Cash
payments
430 520 525
c) GST
liability
16640 19960 12450

Manage Budgets and Financial Plan 6
References:
Borio, C., 2014. The financial cycle and macroeconomics: What have we learnt?. Journal of
Banking & Finance, 45, pp.182-198.
Brigham, E.F. and Ehrhardt, M.C., 2013. Financial management: Theory & practice.
Cengage Learning.
Galí, J., 2015. Monetary policy, inflation, and the business cycle: an introduction to the new
Keynesian framework and its applications. Princeton University Press.
Gambacorta, L. and Signoretti, F.M., 2014. Should monetary policy lean against the wind?:
An analysis based on a DSGE model with banking. Journal of Economic Dynamics and
Control, 43, pp.146-174.