Analysis of Cash Budget and Zero-Based Budgeting for St Brides Group

This report provides a financial analysis of the St Brides Group, a hotel and accommodation provider. It begins with an introduction to the company and then delves into two key tasks. The first task focuses on preparing a cash budget, outlining the advantages and disadvantages of this budgeting method and presenting a detailed cash budget for the group. The second task explores zero-based budgeting (ZBB), including its process, decision units, decision packages, and the advantages of ZBB over traditional budgeting, alongside a discussion on how an organization can implement ZBB practically. The report concludes with a summary of the key findings and provides references to the sources used.

St Brides Group

Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Preparing the budget in cash...................................................................................................3
TASK 2............................................................................................................................................6
Details of Zero based Budgeting............................................................................................6
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
The analysis of the project is dependent on the group of hotel and accommodation provided
company "St Brides group" which controls and operates a massive resort in UK. This is
comprised of 46 spaces with 26 views to the harbour (Pinheiro, 2014). The work is split into two
assignments that consist of knowledge of various kinds. A cash budget is basically dependent on
provided financial details regarding financial transactions which are covered in first section of
report. Although a thorough review of zero-based budgeting was conducted in an appropriate
way in second part.
TASK 1
Preparing the budget in cash.
A cash budget represents a timeline or policy for expected year-round cash sales and
payments. These flows of cash include imposed income, paid savings and debt returns and
distributions. It presumes that even a cash prediction is an assessment of the businesses' future
financial position. Management usually determines the financial statement because after sales,
investments and capital spending expenses have been already made. These calculations will be
made before the distribution of the currency, such that the currency has a reasonable effect over
time. For instance, until manager can tell how often cash an income amount the mangers gets to
understand. Executives use the financial budget to manage cash flows for a business. It means
the board can ensure the company has ample cash to cover the bills. For example, the payroll has
to be paid every two weeks and the utilities have to be paid every month. The financial spending
allows administrators to anticipate deficiencies in the operating cash flow as well as to address
issues in advance of payments. In some other words, the Money Budget is a calculation in
writing about an organization's future financial situation.
It is also a detailed study of the enterprise's expected annual cash flow. The average estimation
time for cash budgets is one year, divided by monthly or annual intervals. This facilitates
convergence of the daily fluctuations of cash flow. For circumstances where cash balances are
fairly stable, the financial planner will prepare plans for just a complete year. If perceptions are
fairly volatile, he would only need a quarterly forecast. Thus the currency allocation lets the
government predict large monetary amounts. For companies it is not ideal to have large amounts
of cash left in bank accounts (Mariana, 2018). At least some money will be retained for equal

benefit. Excessive money is indeed suitable to increasing and making new transactions, rather
than remaining untouched in customer accounts. The financial distribution allows management
to properly track and adjust the economic rates. There are certain disadvantages and merits to
this budget such as:
Advantages Disadvantages
A cash-only strategy enforces smart decisions
for families and businesses. Either businesses
hit ends and live easily, or they don't have to
work to handle cash if they really needed. This
is a process that needs a great deal of
commitment to detail, monitoring of individual
expenditure and diligent handling even as
enough money is provided to satisfy any
necessity.
Manager of company should manage the Cash
Budgets properly otherwise figures may be
changed. For instance, making an impressive
transaction between 1 or 2 days even before
closing of the month which may be confusing
rather than after the start of the monthly period.
This eliminates one cash flow period and
places pressure on another activities.
The accompanying cash budget is prepared and presented below in compliance with the
provided financial data relating to the St Brids Group:
Particulars
Jan
uar
y
Feb
ruar
y
Mar
ch
Apr
il
Ma
y
Jun
e July
Aug
ust
Sept
emb
er
Oct
obe
r
Nov
emb
er
Dec
emb
er
Cash sales
117
360
159
224.
4
171
344.
6
198
199.
9
205
331.
9
204
805
203
150.
8
367
975.
6
2258
94.7
266
610.
7
2082
32.1
176
127.
3
Cash balance
120
00
Total cash
received
129
360
159
224.
4
171
344.
6
198
199.
9
205
331.
9
204
805
203
150.
8
367
975.
6
2258
94.7
266
610.
7
2082
32.1
176
127.
3
Cash payments
Spent on new
hybrid motor
220
00

Laundry
service
600
0
600
0 6000
Printing and
stationary cost
180
0
150
0
150
0
150
0
180
0
150
0
150
0
180
0 1500
150
0 1800
150
0
Complimentar
y toiletries
116
6.67
116
6.67
116
6.67
116
6.67
116
6.67
116
6.6
7
116
6.67
116
6.67
1166
.67
116
6.67
1166
.67
116
6.67
New hot tubs
375
0
212
50
Bedding
bundles
purchase
414
0
New kettle
tray set
165
6
Cleaning
charges 6000
Salaried staff
150
00
150
00
150
00
150
00
150
00
150
00
150
00
150
00
1500
0
150
00
1500
0
150
00
Wages
125
00
125
00
125
00
125
00
125
00
125
00
125
00
125
00
1250
0
125
00
1250
0
125
00
Employees at
zero hour
contract 6000
Annual
business rates
833
3.33
833
3.33
833
3.3
3
833
3.33
833
3.33
8333
.33
833
3.33
8333
.33
833
3.33
Light and heat
cost
400
0
400
0 4000
New furniture
cost
500
0
500
0
500
0
Petrol and 250 250 250 250 250 250 250 250 250 250 250 250

diesel cost
Fixture and
fittings
200
00
200
00
2000
0
200
00
Building cost
350
00
350
00
3500
0
350
00
3500
0
350
00
Maintenance
cost 380 380 380 380 380 380 380 380 380 380 380 380
Marketing cost
375
0
375
0
375
0 3750
Complimentar
y beverages 2000
Total cash
payments
352
36.6
7
307
96.6
7
445
46.6
7
441
30
664
30
516
30
125
380
998
36
1001
30
941
30
9618
0
741
30
Net cash
surplus
941
23.3
3
128
427.
7
126
797.
9
154
069.
9
138
901.
9
153
175
777
70.8
268
139.
6
1257
64.7
172
480.
7
1120
52.1
101
997.
3
TASK 2
Details of Zero based Budgeting
Zero-based budgeting (ZBB) is really an effective budgeting mechanism by which all costs
are to be clarified during each new period. The budgeting process of "zero base" begins from
ground or initial level and each role inside an organisation is measured as per its requirements
and costs.
A). Process of zero based budgeting
It is a strategy for monitoring the costs of the company in which the bottom-up budget for the
financial year is composed, i.e. the foundation is chosen to take as nil (Ibrahim, 2019). Past and
present activities at the corporation depend on their value. The facilities needed are allocated to
successful industry on a growth track, without considering past expenses or achievements. A
step-by - step plan for achieving zero spending is being taken (Keramati, Esmaeilian and Rabieh,

2015). Manager of company clarify the efforts made in zero budgeting in greater details as
it consists of a mechanism which is as described underneath:
 Identifying decision units: The very first and primary phase throughout the zero-based
budgeting process is the definition of a decision unit. A mechanism for decision-making
might have been an isolated and important distinguishing single event or chain of
operation. The process is separate and does not personally influence any actions. Every
individual that makes decisions is also special. A corporation has many mechanisms for
taking decisions. Any absorption costing, such as marketing, distribution, human
resources, research and development, is a unit of operation. This move is important to
clarify every aspect of spending for the budget. The manager of the decision unit needs to
justify the cost and the distribution of the budget to his decision unit. Steps of Zero
Dependent Budgeting (ZBB) rely on management's justification and on the prior year’s
expenditure or the policy entity’s contribution for the past year. Since zero-based
financial planning is designed for the program from start, it can even be newly explained
for the correct year.
Decision packages: Determination units specified at the early phase are broken up into smaller
packages of decisions. In the method. These collections of acts must comply with the priorities
of the organization. Increasing decision bundle acts as an independent program requiring
distribution of funds (Hernandez, Jonker and Kosse, 2017). Every policy package outlines the
project's functions, responsibilities, and activities, the criteria for suggestions, its financial and
quantitative benefits, the absence of opportunities when the project gets funding, etc. A
structured set of decisions has to include the necessary statement:
1. The reason where the actions are made.
2. The wider decision-making tower's objectives and goals.
3. Decision Package Objectives and Priorities.
4. Role requires review.
5. Evaluation of the technical and operational viability of the mission.
6. Alternative route review.
 Items for rating choices: This really is the 3 stage of budgeting process, in which all
judgment packs are grouped in the priority order and choice inside the judgement unit as
well as between specific units of judgment (Abioro, 2013). The reason around focus

decision-making processes is for the efficient allocation of finite resources. Decision
services are evaluated according to a cost-benefit analysis. Throughout that step all
options are evaluated to pick the easiest and most cost-effective choices and the higher
authority retains the right to support or reject decision-making. Only certain judgment
bundle which allows the team meet its defined goal is approved.
 Distribution of existing resources: The final step will implement the zero-based
budgeting process. Financial support is issued at this point for the decision packages that
are mentioned during the last process. So we should conclude that the financing
judgments are being taken in this process. The distribution of funds and other factors is
directed towards the ranking of the judgment kit. Strengthened assistance is therefore
provided for the most effective packages of decisions. This ensures the important
resources are optimally used to make better results (Cox, 2014).
 Managing and reporting: This is the final planning step for the ZBB as it
includes decision packages that are monitored and analysed for their efficacy and
performance. Assessing the efficacy of action packages helps administrators to know that
the services are correctly allocated or not.
Advantages of ZBB over traditional budgeting.
The ZBB plays a vital role in different company in different forms that help to make better
results. Throughout the situation of the above-mentioned hotel, they should extend this
expenditure plan which in future will participate in a really way and give various advantages
(Cotter and Fritzsche, 2014). Some of these are discussed below:
 Contrary to conventional budgeting methods requiring discretionary budgetary changes
in the intervening year, zero-based budgeting requires all agencies to control and
calculate cash flow operations. It helps to reduce spending in a way that it gives a
straightforward picture of spending against the goal goals.
 It also improves departmental trust and collaboration as well as encourages workers to
provide their opinion which ease the decision making process.
 The goal is to ensure an optimal distribution of capital (departments-wise), since it does
not evaluate numbers nor addresses existing figures.
 It allows finding possible and cost-effective solutions to doing issues by eliminating any
unproductive or destructive activity.

How organization can introduce this budget in practical terms.
ZBB promotes the implementation of top-level organizational goals during the budgeting
process by linking them to specific company operating zones, where investments can then be
clustered and measured against historical performance and current objectives (Cox, 2014). These
can be incorporated in the operational life of businesses by determining their needs and
conducting the essence of the activities within the company. In each segment, this can be
extended, as in the instance from the above hotel, if it is division of financing or human resource.
Through applying this strategy, having consistency of financial details would become simpler for
the above-mentioned business management and they will be likely to find better and effective
use of financial capital.
CONCLUSION
In the end of report, it has been founded that hotel must prepare detailed cash budged for
each and every activity so that task can be managed in a way to giver higher results to increase
the productivity of entire company. Budgets are Very much important in terms of effective
financial performance. Budgets offer an outline about the process to make much better use of
financial capital. The study expresses on the financial plan as well as its importance for
companies. In keeping with the financial data provided, an expenditure plan is also planned. It
can be inferred from the 2 part of the study that zero-based budget is really an efficient budget
and can offer consistency in money transfers and also be applied in any company. This help to
save time and cost which can further be used in other term that increase the profitability of St
Brids group.

REFERENCES
Books and Journals
Abioro, M., 2013. The impact of cash management on the performance of manufacturing
companies in Nigeria. Uncertain Supply chain management, 1(3), pp.177-192.
Cotter, R. V. and Fritzsche, D. J., 2014, March. The business policy game. In Developments in
Business Simulation and Experiential Learning: Proceedings of the Annual ABSEL
conference (Vol. 21).
Cox, P., 2014. Master budget project: Analysis of cash budget report. Strategic Finance, 95(9),
p.52.
Cox, P., 2014. Master budget project: cash budget macro. Strategic Finance, 96(4), pp.54-56.
Hernandez, L., Jonker, N. and Kosse, A., 2017. Cash versus debit card: The role of budget
control. Journal of Consumer Affairs, 51(1), pp.91-112.
Keramati, A., Esmaeilian, M. and Rabieh, M., 2015. Developing a Model for Project Scheduling
with Limited resources and Budget with Considering Discounted Cash Flows through
Fixed Prioritization Method. Asian Journal of Research in Business Economics and
Management, 5(1), pp.212-220.
Mariana, Z., 2018. THE CASH BUDGET–A SHORT-TERM FORECAST TOOL FOR THE
FINANCIAL STATEMENTS OF ECONOMIC ENTITIES. Ecoforum Journal, 7(2).
Pinheiro, J. D. O. G., 2014. Cash budget versus financial budget: advantages and disadvantages:
a case study (Doctoral dissertation).