Accounting for Managers Project Report: Financial Performance Analysis

This project report for Accounting for Managers analyzes a business's future financial performance and cash position. It includes a budgeted income statement projecting revenues and expenses over six months, demonstrating profitability and growth. A budgeted financial position statement outlines the assets, liabilities, and equity at the end of the period. Furthermore, a budgeted cash flow statement details cash inflows and outflows, highlighting the company's ability to manage its cash effectively. The report identifies a critical decision regarding cash flow management, specifically the timing of payments to creditors and receipts from debtors, and recommends adjusting payment terms to improve the company's cash position and working capital requirements. References to relevant accounting literature are also included.

Running Head: Accounting for managers
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Project Report: Accounting for managers

Accounting for managers
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Contents
Introduction.......................................................................................................................3
Budgeted income statement..............................................................................................3
Budgeted financial statement............................................................................................4
Budgeted cash flow...........................................................................................................4
Critical decision................................................................................................................5
Recommendation..............................................................................................................5
References.........................................................................................................................7

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Introduction:
The report focuses on the business’s future performance and cash position. It
evaluates all the revenues and overheads of the business to identify the overall performance
of the business.
Budgeted income statement:
Income statement represents the total revenue and expenses which has been occurred at
that particular month. In the business, the income statement of next 6 months of the business would
be as follows:
Budgeted income statement
Jan Feb Mar Apr May Jun
Sales revenue
$
50,400
$
55,440
$
55,944
$
55,994
$
55,999
$
56,000
Add: Opening
stock
$
4,000
$
4,400
$
4,440
$
4,444
$
4,444
Add: Purchase
$
40,000
$
40,000
$
40,000
$
40,000
$
40,000
$
40,000
Less: closing
stock
-$
4,000
-$
4,400
-$
4,440
-$
4,444
-$
4,444
-$
4,444
Gross profit
$
14,400
$
15,840
$
15,984
$
15,998
$
16,000
$
16,000
Less: Expenses
Wages
$
8,000
$
8,000
$
8,000
$
8,000
$
8,000
$
8,000
Other expenses
$
3,000
$
3,000
$
3,000
$
3,000
$
3,000
$
3,000
Interest amount
$
100
$
100
$
100
$
100
$
100
$
100
Total expenses
$
11,100
$
11,100
$
11,100
$
11,100
$
11,100
$
11,100
Net profit
$
3,300
$
4,740
$
4,884
$
4,898
$
4,900
$
4,900
It brief that the business would be able to make profits from the initial month and the
growth rate of profitability is also higher.

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Budgeted financial statement:
Financial statement represents the total assets, liabilities and equity position of a business at
a particular date. In the business, the financial position statement of next 6 months of the business
would be as follows:
Budgeted financial position statement
At the end of 6th month
June
Assets:
Current Assets:
Cash $ 21,978
Debtors $ 11,200
inventory $ 4,444
Total current assets $ 37,622
Non current assets:
Vehicle $ 50,000
Total assets $ 87,622
Liabilities and stockholders' equity
Liabilities
Loan $ 20,000
Total liabilities $ 20,000
Owner's equity $ 67,622
Total liabilities and stockholders'
equity $ 87,622
Assumption: It has been assumed that the bank loan would be repaid by the business
after 1 year. However, the interest amount is paid monthly.
Budgeted cash flow:

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Cash flow statement represents the total cash outflow and inflow which has been
occurred at that particular month1. In the business, the cash flow statement of next 6 months of
the business would be as follows:
Budgeted Cash flow
Jan Feb Mar Apr May Jun
Initial Capital 40000
-$
780
$
2,552
$
7,295
$
12,180
$
17,078
Add: Revenue
$
40,320
$
54,432
$
55,843
$
55,984
$
55,998
$
56,000
Total cash inflow
$
80,320
$
53,652
$
58,395
$
63,280
$
68,178
$
73,078
Less: cash outflow
Purcahse
$
40,000
$
40,000
$
40,000
$
40,000
$
40,000
$
40,000
Wages
$
8,000
$
8,000
$
8,000
$
8,000
$
8,000
$
8,000
Vehicle
$
30,000
Interest amount 100 100 100 100 100 100
Other expenses
$
3,000
$
3,000
$
3,000
$
3,000
$
3,000
$
3,000
Total cash
outflow\
$
81,100
$
51,100
$
51,100
$
51,100
$
51,100
$
51,100
Net cash flow
-$
780
$
2,552
$
7,295
$
12,180
$
17,078
$
21,978
It brief that the business would manage the cash position properly.
Critical decision:
On the basis of evaluation on the business plan and report, it has been found that the
cash position of the company was overdraft at initial stage but along with the time, it has been
improved and it lead to the business towards better performance. The cash level has been
1 K. Ward, Strategic management accounting, Routledge, 2012.

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improved because of the fact that an initial month, the company has invested huge amount in
the vehicle as well as the credit policies of the business are also not in the favor of the
business. The debtors are allowed to pay the amount after 30 days however the credit amount
is paid by the business instantly.
Recommendation:
Company is required to pay the entire amount to the creditors at the same time while
the debtors of the company pay the amount within 30 days due to which the business required
huge working capital to run the business. the business is suggested to take 30 days to pay the
credit amount to suppliers to manage the cash position of the company and the performance
of the business2. It would improve the cash position as well as it would reduce the
requirement of the working capital.
2 R. H., Garrison, W. N. Eric, C. B. Peter, and M. Annie, "Managerial accounting," Issues in
Accounting Education 25, no. 4 (2010): 792-793.

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References:
Garrison, R. H., Eric W. N., Peter C. B., and Annie M, "Managerial accounting," Issues in
Accounting Education 25, no. 4 (2010): 792-793.
Ward, K, Strategic management accounting, Routledge, 2012.