Financial Budgeting and Market Analysis: Sunny Days Company Project

This project provides a comprehensive financial analysis of Sunny Days Company, a manufacturer of swimwear and beach accessories. It encompasses various budgeting aspects, including sales revenue, production, cash purchases, and labor budgets, alongside the calculation of contribution margins for each product. The analysis also assesses the company's cash position, evaluating its liquidity and making recommendations for improvement. Furthermore, the project examines the current and future market conditions of the clothing industry, providing insights into industry trends, challenges, and opportunities. The conclusion highlights the importance of budgeting for effective fund allocation and summarizes the key findings related to Sunny Days Company's financial performance and market position. The analysis underscores the importance of strategic financial planning and market awareness for sustained business success. The report provides a detailed overview of the company's expected financial growth, challenges, and opportunities, offering recommendations for strategic improvements.

MAJOR PROJECT

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. An overview of expected result for year 2020........................................................................3
2. Contribution per margin for each product of company...........................................................4
3. Recommendations regarding to cash position of business......................................................4
4. Analysis of current market condition......................................................................................5
CONCLUSION ...............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
The management accounting is a field of accounting which prepares various kind of
quantitative and qualitative reports for effective decision making (Zeng, Veeravalli, 2015).
Under this different types of budgets are prepared. Eventually, budgets are very important for
management of financial resources of companies. This is so because under budgets estimation of
future income and expenses is done effectively. For better understanding Sunny days company is
selected which is involved in the manufacturing of swimwear and beach accessories for men and
women. Their major products are one piece swimsuits, board short, towel and beach umbrellas In
the project report different types of budgets are prepared of such as sales revenue budget,
production budget, cash purchase budget, labour budget, cost of sales budget etc. In addition,
under report contribution for each product is also calculated. Further, in the report current and
future market condition is analysed for above company.
MAIN BODY
1. An overview of expected result for year 2020.
The sunny days company is expecting good financial growth for upcoming year 2020.
This is so because of their forecasted budget for year 2020 which is presenting the future sales of
their major four products such as swimsuits, board short, towel and beach umbrella. Like their
product one piece's expected sales in year 2020 is of $992000 and for next year 2021 it is
estimated of $256000 for month of January and February. Apart from it, board short' estimated
sales is of $849000 for year 2020 and for year 2021 (Only for two months) is of $210000.
As well as expected amount of sales for Towel is of $ 77400 for year 2020 and for year
2021(Only for two months) , its of $ 25200 . Same as for product beach umbrella's estimated
sales is of $ 53900 in year 2020 and in year 2021(Only for two months) , this is of $ 14700.
Hence, among all these products it is noted that produce one piece's sales is expected to be higher
as compare to rest of three products. Apart from it, the total sales is of all the products is of $
1972300. To get this estimated target of sales, the above company should focus on keeping price
similar in all the 12 months as well as they should try to enhance the total sales in those seasons
in which sales can be higher. Like in the month of January expected sales is higher for all the
products so they should put more efforts on it.

2. Contribution per margin for each product of company.
One-piece Board Shorts Towels Beach
Umbrellas
Total sales 992000 849000 77400 53900
Less:
Variable
cost
783900 540090 117819 139552
Contributio
n Margin
208100 308910 -40419 -85652
So as per the above analysis of table of contribution per margin, this can be analysed that
their contribution per margin in different of all the products. Such as for product One piece suit,
their contribution margin is of $208100. As well as for product Board short, their contribution
margin is of $308910. Further, for rest of products the contribution margin is negative which is
not a good sign for company's performance. Like for Towels, the contribution margin is of
$(40419) and for Beach umbrella's it is of $ (85652). So overall company's contribution margin
is various for different products. So as per this analysis, it can be recommended to above
company's managers that they should focus on minimising the variable cost of those products
whose contribution is occurring in negative way. As well as they should try to reduce the indirect
labour cost which is too higher for both of towels and beach umbrella.
3. Recommendations regarding to cash position of business.
Cash position- The term cash position can be defined as an analysis of availability of cash and
expenditure to payment of a company (Chohan and Jacobs, 2017). There should be a balance in
the cash availability and cash position. This is so because if cash expenditure will be more then
availability of cash then many financial issues may arise.
On the basis of cash budget of above sunny day company's cash position, this can be
analysed that their opening balance of cash is of $4923903. As well as total cash receipt is of
$2091910 hence the total available cash amount is of $7015813. In comparison the payment of
cash which is being done by companies in various expenses is of $1523647. So overall,
companies cash position is in better condition. This is so because, they have enough amount of

cash in compare to cash payment. Along with, it is indicating that above company's liquidity
position is stronger because this is being measured on the basis of availability of cash. This
analysis of cash is done on the basis of cash budget for year 2020. Herein, it is important to know
this is an estimation of income an expenditure and on the basis of it cash position of above
company is assessed.
Though, their cash position is in better condition but they need some improvements as
per the budgeted information. They should focus in the decreasing amount of sales revenue
which can be getting lower during month of January to July. In these months, companies sales
revenues are projected to be decease. So it is important for company that they should improve
the effort for increasing the sell during these months. As well as due to this overall total
availability of cash is also impacting. Same as in the aspect of variable overheads, it is estimated
that during month of June to December, their expenditures will be increase so this is important
note by the manager of companies that they should focus on eliminating these expenses.
4. Analysis of current market condition.
In the context of achieving higher profitability, this is important to evaluate current
market position because this can impact to overall financial condition (Warrick, Bountry, 2015).
In the context of above company, this is essential for them to evaluate the clothing industry.
Current market condition- The above company is involved in aspect of beach accessories
and swimwear for men and women. As per the report of IBIS world, in current situation the
industry is facing tough challenges in last five years. This is so because of weak growth in
income and lower demand of these equipments. Basically, the demand of customer has moved
towards the more cost effective products. In current time period, the demand of these products
have decreased by 1.2% in compare to previous year (Ogunjuyigbe, Ayodele and Akinola,
2017). As per the reported information of IBIS world, this industry's revenue is of $789 million
that is 2% lower compare to last year. Hence, this important for above Sunny days company that
they should make budget as per the current market condition that is not in their favour. As well
as it is essential for company that they should estimate the future income quite lower.
Future market condition:
The industry is involved in selling of both above ground and in ground pools products.
Herein, below this industry's threats in future are mentioned below:
 Challenging trading condition as well as cut throat competition.

 Lack of loyal customers (Haeder and Yackee, 2015).
 Lower sells may lead to disclosure of companies.
Apart from these threats, this industry has some opportunities too that are as follows:
 Possibility of higher sells in summer season.
 Keeping prices effective can lead to higher sell to companies.
 Making of reusable products can be beneficial for organisations in attracting more
customers.
So these are some opportunities and threats for above industry in the aspect of future. The IBIS
world evaluated some important success factor for this industry such as:
 Determining that pricing strategy is suitable.
 Getting a better technical knowledge regarding to products.
 Proximity to higher demanded markets.
In the aspect of above Sunny days company, they should make their budget with consideration of
future opportunities.
CONCLUSION
On the basis of above project this has been concluded that budgets are too crucial for
companies because these guide to managers to allocate the funds in an effective manner. Under
project report, sunny limited company's estimated sales growth is analysed for year 2020 which
is impressive. As well as contribution per margin is also calculated in which two products: one
piece suit and broad shorts are beneficial for them while rest of other are presenting negative
results. Further in the report, cash position is also analysed on the basis of cash budget. In the
end part of report current and future trends of above company's industry is analysed.

REFERENCES
Books and journal:
Zeng, L., Veeravalli, B. and Li, X., 2015. SABA: A security-aware and budget-aware workflow
scheduling strategy in clouds. Journal of parallel and Distributed computing. 75.
pp.141-151.
Chohan, U. W. and Jacobs, K., 2017. The presidentialisation thesis and parliamentary budget
offices. Parliamentary Affairs. 70(2). pp.361-376.
Warrick, J. A., Bountry, J .A., East, A. E., Magirl, C. S., Randle, T .J., Gelfenbaum, G., Ritchie,
A. C., Pess, G.R ., Leung, V. and Duda, J. J., 2015. Large-scale dam removal on the
Elwha River, Washington, USA: Source-to-sink sediment budget and
synthesis. Geomorphology. 246. pp.729-750.
Ogunjuyigbe, A. S. O., Ayodele, T. R. and Akinola, O .A., 2017. User satisfaction-induced
demand side load management in residential buildings with user budget
constraint. Applied Energy. 187. pp.352-366.
Haeder, S. F. and Yackee, S .W., 2015. Influence and the administrative process: Lobbying the
US President's Office of Management and Budget. American Political Science Review.
109(3). pp.507-522.