Financial Analysis and Budgeting Report: University Finance Module

This report provides a comprehensive analysis of financial management, focusing on budgeting, variance analysis, and risk management strategies. It begins with an assessment of key stakeholders to consult before creating an operational plan, emphasizing the importance of engineers, architects, and the finance department. The report then presents projected financial statements, including an income statement, balance sheet, and cash flow statement, along with detailed sales projections. A variance analysis compares budgeted and actual figures, highlighting favorable variances in sales and expenses but an adverse variance in purchase costs. The report recommends implementing standard costing methods and stock control processes. Finally, it outlines plans and policies for budget implementation, risk management, and contingency planning, offering valuable insights into effective financial practices. The report is designed to help in identifying financial loopholes and key strengths of an organization, in order to implement proper strategies to improve business operations.

Running head: MANAGE FINANCES
Manage Finances
Name of the Student:
Name of the University:
Author’s Note:

1MANAGE FINANCES
Table of Contents
TASK 1:...........................................................................................................................................2
Assessment 3...................................................................................................................................2
Task 2:.............................................................................................................................................3
Part 1:...........................................................................................................................................3
Annual Budget:-.......................................................................................................................3
Implementation and Management of Budget:.........................................................................9
Plan & Policy for Risk Management and Contingency:..........................................................9
Part 2:.........................................................................................................................................10
Introduction:..........................................................................................................................10
Variance Analysis:.................................................................................................................10
Recommendation:..................................................................................................................10
Reference & Bibliography:............................................................................................................12

2MANAGE FINANCES
TASK 1:
Assessment 3
Before the construction of an operational plan, there are few people who can be
considered to take advice from. This will help in understanding and formulation of the project
plan. The consultation helps us in understanding the key aspects of particular areas. Different
person working in a project holds a different key expertise in different areas. If we take their
consultation, it will help us in successful formulation of the operational plan.
The people who are to be consulted are all stakeholders of the organization or the project
but not all stakeholders are consulted. People who are in relation to the project are consulted to
have a fair idea about the working of the project (Zou et al, 2017).
The most important persons who are to be consulted by default before formulation of a
operational plan for a construction contracting project are as follows:
1. Engineers in relation to the project:
The engineers who are in relation to a particular construction project are considered very
important for the project, as they are the people who will guide the whole construction work.
They have the idea of the technicalities and the problems that may prevail during the
construction of the project. So they can give idea from a particular view point, which is not
possible by others (Gransberg, Douglas D and Eric Scheepbouwer, 2015).
2. Architect of the construction

3MANAGE FINANCES
An architect is considered the most important person when it comes to a construction project
as he generated the whole idea of the particular construction site. He has the three sixty-degree
idea of the project and can give diverse idea as being his own creation.
3. Finance Department
The personnel from the finance department of an organization should also be consulted to
understand the budgeting of the project and the proper budget allocation that is being done.
4. Suppliers
The suppliers will also play a very important role when it comes to a construction project.
The supplier is liable to provide proper supplies at a given particular time to carry out the
activities of the project. Without having proper idea of the supplies it will be very difficult to
formulate an operation plan (Young et al, 2016).
Task 2:
Part 1:
Annual Budget:-
Projected Income Statement
for the period ending 31st Dec'15
Particulars Amount
Sales revenue 1166561
Less: Cost of Goods Sold 518133

4MANAGE FINANCES
Gross Profit 648428
Expense:
Phone Service 876
Electricity 1785
Gas 674
Water 617
Insurance 1460
Payroll 475069
Cleaning 954
Finance Cost 1853
Advertising 629
Rent 28068
Petrol 629
Accountant Fees 415
Maintenance 1577
Bank Fees 236
Office Supplies 674
Total Expenses 515516
Net Profit for the year 132913
Projected Balance Sheet
as on 31st Dec'15
Particulars Amount
Current Assets:
Cash 427095
Receivables 10917
Inventory 115141
Total Current Assets
553152.
6
Non-Current Assets:
Computer equipment 16400
Delivery Van 26000
Phones 2300

5MANAGE FINANCES
Office Equipment 4500
Total Non-Current Assets 49200
TOTAL ASSETS 503953
Current Liabilities:
Creditors 75906
Non-Current Liabilities 0
TOTAL LIABILITIES 75906
Capital:
Owner's Contribution 295134
Add: Net profit for the year 132913
Total Owner's Capital 428047
Total Liabilities & Capital 503953
Projected Cash Flow Statement
as on 31st Dec'15
Particulars Amount
Receipt from Sales
115564
4
Collection from Debtors 12154
Cash Payment for Purchase -496679
Cash Payment to Creditors -72291
Phone Service -876
Electricity -1785
Gas -674
Water -617
Insurance -1460
Payroll -475069
Cleaning -954
Finance Cost -1853
Advertising -629

6MANAGE FINANCES
Rent -28068
Petrol -629
Accountant Fees -415
Maintenance -1577
Bank Fees -236
Office Supplies -674
Net Cash Flow from Operation 83313
Add: Opening Cash Balance 343782
Closing cash Balance 427095
Sales Projection:
October'12 November'12 December'12 Projected Sales
Particulars
U
ni
t
Unit
Price
Tot
al
U
ni
t
Unit
Price
Tot
al
U
ni
t
Unit
Price
Tot
al
Tota
l
U
ni
t
Unit
Price
Tota
l
Timber
Windows
1
2 1600
192
00 8 1600
128
00
1
6 1600
256
00
576
00
1
2
2 1728
211
507
Awnings
1
5 800
120
00
1
0 800
800
0
1
5 800
120
00
320
00
1
3
6 864
117
504
Arcs
1
3 470
611
0 6 470
282
0 6 470
282
0
117
50
8
5 507.6
431
46
Classic Lock
Sets
1
1 190
209
0
1
5 190
285
0 8 190
152
0
646
0
1
1
6 205.2
237
21
Security Doors 6 2100
126
00 5 2100
105
00 8 2100
168
00
399
00
6
5 2268
146
513
Security Mesh
1
6 560
896
0
1
8 560
100
80
1
4 560
784
0
268
80
1
6
3 604.8
987
03
Casement
Windows
1
8 990
178
20
1
8 990
178
20
1
4 990
138
60
495
00
1
7
0
1069.
2
181
764
Hinged Doors
2
2 390
858
0
2
6 390
101
40
2
9 390
113
10
300
30
2
6
2 421.2
110
270
French Doors 1
4
600 840
0
1
8
600 108
00
2
6
600 156
00
348
00
1
9
648 127
786

7MANAGE FINANCES
7
Able Handles
2
5 99
247
5
1
3 99
128
7
1
9 99
188
1
564
3
1
9
4
106.9
2
207
21
Classic Handles 5 156 780 156 156
1
7
168.4
8
286
4
Irons 0 156 0 7 156
109
2 9 156
140
4
249
6
5
4
168.4
8
916
5
Mixers
1
6 89
142
4
1
1 89 979
1
6 89
142
4
382
7
1
4
6 96.12
140
53
Classic Handles
XXL
1
3 99
128
7 9 99 891
1
3 99
128
7
346
5
1
1
9
106.9
2
127
23
Remote Handle
Release Set 4 350
140
0 6 350
210
0 8 350
280
0
630
0
6
1 378
231
34
Window Bolt
Locks 0 35 0 2 35 70 1 35 35 105
1
0 37.8 386
Window Catch
Locks
1
4 45 630
1
6 45 720
2
1 45 945
229
5
1
7
3 48.6
842
7
Scale Sets
1
4 24 336
1
8 24 432
2
2 24 528
129
6
1
8
4 25.92
475
9
Security Door
Arms
1
3 78
101
4
1
4 78
109
2
1
9 78
148
2
358
8
1
5
6 84.24
131
75
Small Security
Door Arms
1
5 40 600
1
4 40 560
3
1 40
124
0
240
0
2
0
4 43.2
881
3
Replacemnent
Mesh 7 60 420
1
7 60
102
0
1
6 60 960
240
0
1
3
6 64.8
881
3
Hinge Window
Removals 9 299
269
1
1
0 299
299
0
1
6 299
478
4
104
65
1
1
9
322.9
2
384
27
Awning
Window
Removals 5 340
170
0
1
0 340
340
0
1
5 340
510
0
102
00
1
0
2 367.2
374
54
Security Door
Installation 4 330
132
0 4 330
132
0 8 330
264
0
528
0
5
4 356.4
193
88
Total Sales
111
837
103
763
133
860
348
680
128
321
7
Add: Sales upto
Sep'12
108
000
0

8MANAGE FINANCES
0
142
868
0
128
321
7
Less: GST
Receivable
129
880
116
656
Total Sales
Revenue
129
880
0
116
656
1
Projection of Purchase Cost, COGS & Inventory:
Particulars 2013 2014 2015
Total Sales 1366000 1428680 1166561
% of COGS to Sales 42% 42% 42%
% of Purchase to Sales 47%
Total Purchase 643000 599850 572584
Less: Total COGS 577823 604337 518133
Add: Opening Inventory 0.00 65177 60689
Closing Inventory 65177 60689 115141
Projected Total Expenses:
Particulars Upto Sep'12 Oct'12 Nov'12 Dec'12 Total % to Sales Projected
Sales Revenue 1298800 100% 1166561
Expenses:
Phone Service 780 65 65 65 975 0.08% 876
Electricity 1590 132.5 132.5 132.5 1987.5 0.15% 1785
Gas 600 50 50 50 750 0.06% 674
Water 550 45.83 45.83 45.83 687.49 0.05% 617
Insurance 1300 108.33 108.33 108.33 1624.99 0.13% 1460
Payroll 465000 38750 38750 38750 581250 44.75% 475069
Cleaning 850 70.83 70.83 70.83 1062.49 0.08% 954
Finance Cost 1650 137.5 137.5 137.5 2062.5 0.16% 1853
Advertising 560 46.67 46.67 46.67 700.01 0.05% 629

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Rent 25000 2083.33 2083.33 2083.33 31249.99 2.41% 28068
Petrol 560 46.67 46.67 46.67 700.01 0.05% 629
Accountant Fees 370 30.83 30.83 30.83 462.49 0.04% 415
Maintenance 1405 117.08 117.08 117.08 1756.24 0.14% 1577
Bank Fees 210 17.5 17.5 17.5 262.5 0.02% 236
Office Supplies 600 50 50 50 750 0.06% 674
Total Expenses 501025 41752.07 41752.07 41752.07 626281.2 48.22% 515516
Implementation and Management of Budget:
The following procedures would be helpful to implement and manage the budget
successfully in all sections of the business:
- Incorporating the departmental managers into the budget preparation process
- Distributing the primary individual departmental budgets to the related departments
before preparation of the master budget for collecting feedbacks from the departmental
staffs
- Distributing the final budget to the concerned staffs and managers for implementation
- Introducing awards and recognition for motivating the staffs to maintain the budget
(Fullerton et al. 2013)
Plan & Policy for Risk Management and Contingency:
The plans and policies, stated below, would help to manage the risks and contingencies:
- Periodical reconciliation of budgeted figures with the actual output from the operation
- Periodical meeting to discuss the budget variances
- Implementation of proper management accounting system to identify the factors,
responsible for the variances

10MANAGE FINANCES
- Implementation of corrective measures with immediate effect to eliminate the negative
issues within the budgeted period
- Revision of final budgets in accordance to the variance analysis and introduction of new
plans to achieving the budgeted target as well as recovering the intermediate losses,
caused for the variances (Rogulenko et al. 2016)
Part 2:
Introduction:
The report is prepared to compare the actual operational inputs and outputs with the
budgeted figures. It would help the management to identify the loopholes and key strength of the
organization and implement proper strategies to improve the business operation.
Variance Analysis:
The variance analysis is exhibited below:
Variance
Particulars Actual
Budgete
d Amount % Remarks
Total Sales
162300
0 1166561 456439
28
% Favorable
Total Purchase 701400 518133 183267.1
26
% Adverse
Total expenses 402000 515516 -113516
-
28
% Favorable
Net Profit 519600 132912.6 386687.4
74
% Favorable

11MANAGE FINANCES
The table, shown above, implies that the company has earned 28% higher sales revenue
than the budgeted sales. The actual expenses are also 28% lower than the budgeted amount.
However, it is clear from the table that the purchase cost of the company was 26% higher than
the budgeted figure. Still the company has succeeded to increase its profit volume due to high
rise in sales and decrease in expenses.
Recommendation:
Though the company has been able to earn higher amount of profit than the budget, the
adverse variance in the purchase cost denotes that the company has either purchase higher
volume of inventories than required or purchase the required volume of materials at higher rate
(Otley 2015). Hence, it is recommended that the management should implement standard costing
method to identify the reasons for higher purchase cost and other stock controlling processes for
mainatian the stock at desired level.

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Reference & Bibliography:
DRURY, C.M., 2013. Management and cost accounting. Springer.
Fullerton, R.R., Kennedy, F.A. and Widener, S.K., 2013. Management accounting and control
practices in a lean manufacturing environment. Accounting, Organizations and Society, 38(1),
pp.50-71
Gransberg, D.D. and Scheepbouwer, E., 2015. US Partnering Programs and International
Partnering Contracts and Alliances: Comparative Analysis. Transportation Research Record:
Journal of the Transportation Research Board, (2504), pp.73-77
Klychova, G.S., Faskhutdinova, М.S. and Sadrieva, E.R., 2014. Budget efficiency for cost
control purposes in management accounting system. Mediterranean journal of social
sciences, 5(24), p.79
Otley, D., 2015. in Management Control. Critical Perspectives in Management Control, p.27
Robinson, M., 2014. Connecting Evaluation and Budgeting. World Bank Publications
Rogulenko, T., Ponomareva, S., Bodiaco, A., Mironenko, V. and Zelenov, V., 2016. Budgeting-
Based Organization of Internal Control. International Journal of Environmental and Science
Education, 11(11), pp.4104-4117.
Xia, N., Zhong, R., Wu, C., Wang, X. and Wang, S., 2017. Assessment of Stakeholder-Related
Risks in Construction Projects: Integrated Analyses of Risk Attributes and Stakeholder
Influences. Journal of Construction Engineering and Management, 143(8), p.04017030

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Young, B., Hosseini, A. and Lædre, O., 2016. The characteristics of Australian infrastructure
alliance projects. Energy Procedia, 96, pp.833-844