Financial Resource Management, Analysis, and Budgetary Control Report

This report provides a detailed analysis of financial resource management, exploring various aspects to ensure effective and efficient financial operations. The report begins by defining the benefits of treasury centralization, including streamlining cash flow, boosting negotiating power, optimizing liquidity, and increasing efficiency. It then addresses potential problems arising from treasury centralization and proposes solutions such as maintaining proper control, regulating financial positions, maintaining transparency, managing cash effectively, and setting appropriate protocols. The report then shifts to ratio analysis, using Toyota as a case study to interpret financial statements and assess performance through ROCE, ROE, operating profit margin, current ratio, liquid ratio, gearing, dividend coverage ratio, and interest coverage ratio. Finally, the report examines the benefits of stock exchange listing, such as access to more capital, enhanced visibility, increased liquidity, increased employee morale, and improved transparency and efficiency. A budgetary control analysis for Penny is also included, assessing whether actual costs aligned with expected costs and identifying reasons for any deviations.

Manage Financial
Resources

INTRODUCTION
Management of Financial Resources is a technique which helps the organizations in
ensuring that they the management of financial resources can be done by them effectively and
efficiently (Bondarenko, Prus and Нranovskaya, 2019). This can lead towards the deriving of
conclusions and recommendations which can be quite helpful in the future. If an organization
focuses on it then this can lead towards the attainment of goals and objectives in the future
effectively and efficiently. Thus it is important for the financial managers of an organization to
ensure this so that the management of work is done properly. This report will make detailed
focus on benefits of treasury centralisation, company's proposal to minimize potential problems,
analysis of the financial information, reasons for considering stock exchange listing.
Additionally, budgetary control analysis will also be done as a part of this particular assignment.
MAIN BODY
Part A
Treasury Centralization refers to a system which is used widely in the organizations so
that they are able to ensure that the important decisions like financial decisions, cash
management, investment and foreign exchange etc. is done in a proper manner (Drumm and
Zeiss, 2018). In this technique, a unique team can be assigned so that the decisions related to
Treasury Centralization can be taken quite effectively and efficiently in the right manner. Thus
the proposal of BHP to make its use can help in ensuring that the right management of the
different types of financial resources can be done effectively and efficiently.
There are potential benefits of Treasury Centralization. Some of these benefits can be
explained in the following manner-
 Streamlining cash flow- With the use of Treasury Centralization that the streamlining of
cash flow is done in a proper manner (Eliçin, 2019). This helps in regulating the inflows
as well as outflows of the cash. This can be helpful for a company like BHP so that the
management of various sorts of needs and requirements is done in a right manner which
will help a lot in meeting them.
 Boosting of negotiating power and eliminating overlapping- Treasury Centralization
can result in ensuring that the negotiating power can be boosted and the overlapping can
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be avoided. In the context of BHP, it is quite helpful in making sure that the management
of financial resources properly.
 Optimization of liquidity- When the Treasury Centralization is carried out it can result
in ensuring that optimization of liquidity is done properly (Filin and et.al., 2020). In BHP,
it can help a lot in ensuring that the management of a wide variety of funds can be done
effectively and efficiently.
 Increase in efficiency- The use of Treasury Centralization is quite important in the
organizations because it can result in an increase in the overall level of efficiency. In the
context of BHP, it can be said that the overall level of efficiency can be raised in the right
manner when its use is made.
The subsidiaries of BHP may face problems due to the implementation of Treasury
Centralization. The company can propose the following solutions so that the problems can be
solved-
 Maintaining Proper Control- In BHP, a problem of Control can be faced because of the
implementation of Treasury Centralization. Thus, it can be said that by maintaining a
proper control the company can make sure that the problem faced by subsidiaries in
relation to maintaining proper control can be solved in a highly effective manner.
 Regulation of Financial position- In BHP, the overall regulation of financial position
can be done in order to make sure that the financial situation of the company can be
managed effectively and efficiently which will help in providing a solution to the
problem of financial irregularities in a highly effective manner which can be faced due to
the Treasury Centralization. Thus in this way a solution to this problem can be provided.
 Maintaining of Transparency- In BHP, the financial managers can make sure that they
can maintain a desired level of transparency which can allow them to be able to manage
the funds in a right manner (Grundy, Mazzarello and Bero, 2020). This level of
transparency can be helpful in ensuring that the organizations are able to take the various
types of financial decisions properly. This can solve the problem of lack of transparency
which can arise due to the Treasury Centralization.
 Proper Management of Cash- In BHP, the financial managers can make sure that by
properly managing the cash they can solve the problem related to liquidity which can
result due to Treasury Centralization. Thus in this way the company can make sure that
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the financial performance of the company is good and it can increase its overall level of
profitability in the right manner.
 Setting of protocols- Different types of protocols can be set in the organization so that
the management of a wide range of funds can be done effectively and efficiently so that
the overall efficiency and effectiveness can be raised in the right manner. This will lead
towards solving the problem related to improper management of funds which can be
caused due to Treasury Centralization.
Thus, In this way it can be said that BHP is a company which can make sure that it is able
to take a lot of strategic decisions which will help it to be able to manage the treasury in the right
manner effectively and efficiently. Thus in this way the company will be able to effectively and
efficiently manage the various types of needs and requirements in such a manner so that the
financial efficiency and effectiveness can be raised properly.
Part B
Ratio Analysis is a method which can be used by the different types of organizations for
the purpose of ensuring that a proper analysis and interpretation of the overall financial situation
of the organization can be done in a right manner effectively and efficiently (Kmecova, 2018).
This can help in ensuring that the companies are able to take a lot of strategic decisions in a
proper manner. Toyota will make its use so that it is able to analyse and interpret its financial
statements in the right manner effectively and efficiently to derive the conclusions and
recommendations from them.
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Interpretation-
ROCE- The ROCE of Toyota is 29% which is more than the industry average of 24%.
Therefore it can be said that the company has been able to increase its overall level of
performance in the right manner which has resulted in the increase in ROCE of the company.
ROE- The ROE of Toyota is 31% which is more than the Industry Average of 16%
which thereby signifies that the overall level of performance of the company is quite good. It
means that the company is able to provide more returns to its shareholders as compared to the
Industry Average.
Operating Profit Margin- The Operating Profit Margin of Toyota is 13.42% which is
more than the Industry Average of 11% which therefore signifies that the profitability condition
of the company is quite good.
Current Ratio- The Current Ratio of Toyota is 1.12 which is less than the Industry
Average of 1.6 which signifies that the liquidity position of the company is not that good as
compared to the industrial standards.
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Liquid Ratio- The Liquid Ratio of Toyota is 0.63 which is less than the Industry
Average of 1 which thus signifies that the liquidity position of the company is not that strong as
compared to the other companies operating within the industry.
Gearing- The Gearing Ratio of Toyota is 31% which is more than the Industry Average
of 24% which thus signifies that the company's financial position is quite strong.
Dividend Coverage Ratio- The Dividend Coverage Ratio of Toyota is 3.1 which is less
than the Industry Average of 4 which thus creates an impact on the overall financial position of
the company.
Interest Coverage Ratio- The Interest Coverage Ratio of Toyota is 3.78 which is less
than the Industry Coverage of 4.5 which signifies that the company is behind its competitors
operating within the industry in this regard.
Thus from the analysis of the financial position of Toyota it can be said that the company
is in a strong financial position. In this way, it can be said that the company can attain its wide
range of goals and objectives in the short-term, medium-term and long-term in a highly effective
manner so that the conclusions and recommendations can be derived.
There are different types of benefits which are available for the companies when they
consider stock exchange listing. These benefits are explained as follows-
 Access to more capital- The companies can access more capital when they list their
shares on the stock exchange (Lower and Czekanski, 2019). This allows them to target
the raising of more funds when required by them which can thus help them to be able to
fulfil a wide range of needs and requirements effectively and efficiently. They will be
able to make sure that by accessing more capital they are able to take the different types
of decisions in the short-term, medium-term and long-term in a proper manner.
 Enhanced visibility- It is quite important for the companies that they are able to consider
their listing on the stock exchange which can lead towards enhanced visibility (Mahajan,
2020). Thus for the companies it becomes very important that they are able to ensure that
they can increase their visibility in the right manner so that the potential investors can be
attracted.
 Liquidity- When the companies list their shares on the stock exchange it can lead
towards an enhanced level of liquidity which will reflect in a right manner in the financial
statements of the companies. This can help them a lot in increasing their level of liquidity
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in a proper manner so that the organizations can manage their funds in a proper manner.
Thus in this way it can be said that it is quite crucial for the organizations that they are
able to increase their liquidity level because of inflow of funds due to the listing of shares
in the stock exchange.
 Increase in employee morale- The listing of shares by the employees in the stock
exchange can lead towards an increase in the employee morale. Thus in this way it can be
said that the organizations will be able to increase their employee morale in the right
manner effectively and efficiently which can be made possible when they list their shares
in the stock exchange.
 Transparency and Efficiency- In the organizations, the right level of transparency and
efficiency is required so that the investors are able to invest in a right manner in the
capital. Thus in this way it can be said that the companies will be able to increase their
transparency and efficiency in a proper manner when they are listing their shares on the
stock exchange.
Part C
Budgetary Control Analysis refers to a process in which the actual results are compared
with the set standards and the identification of the various types of deviations and variations can
be made effectively and efficiently (Perera, Samarakkody and Nandasena, 2020). Thus in this
way different sort of rectifying actions can be taken in a right manner. The Budgetary Control
Analysis for Penny is as follows-
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(a) Yes the actual costs which are incurred by Penny were higher then the expected costs
to sell 8200 Darcy's. It appears that the organization has not utilized its resources in the right
manner. This has created an impact on the level of profits of the company. Thus it can be said
that the increase in the costs and the level of overheads have resulted in lower than expected
profits for the company. The reasons due to which the costs have increased are that the various
elements in the budget had higher than expected expenses which has contributed in the increase
in the overall level of costs of the organization. This has thus created an impact on the level of
profits which are earned by the company. The overall increase in the costs can be identified
easily and thus it can be said that an increase in these particular costs is creating a lot of impact
on the company and the level of profits which it is earning.
(b) Yes the revenues which are generated from the sale of 8200 Darcy's has been quite
satisfactory for Penny because they were higher than expected. Therefore this can help a lot in
ensuring that the enhancement of the overall level of profitability can be done in the right manner
in the company (Wei, 2018). Thus it can be said that the company has been able to perform in
the right manner in order to be able to increase its level of profits in a right manner.
(c) The reason for the difference between the actual profit and budgeted profit is that
more units were produced by the organization which thus resulted in this deviation (Wise,
Stutchbury and Cooke, 2016). Thus in this way it can be said that this type of deviation has
resulted in the creation of deviation within the organization. There has been a wrong estimation
on the part of the organizations in the overall profits which has created such a deviation in the
overall level of profits. Thus it can be said that the wrong estimation on the part of the
organization has resulted in such a difference in the profitability. Also the actual costs were on
the higher side which has created this particular difference in the profits.
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CONCLUSION
From the above report, it can be concluded that management of financial resources is
quite important for the different types of organizations. It is important for them because by using
its different types of techniques and methods the companies can make sure that they can manage
their resources in a proper manner and thus are able to achieve their goals and objectives. Thus
the Financial Managers of the organization are required to make sure that they can take the right
approach for it. By ensuring it the organizations can make sure that they are able to effectively
and efficiently manage the wide range of needs and requirements in a proper manner. Thus when
the managers of the firms can make use of the right techniques and methods so that they are able
to make sure that they can attain the short-term, medium-term and long-term goals and
objectives in the future in the right manner. This will help in ensuring that the enhancement of
the overall level of profits can be made in the organization.
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REFERENCES
Books and Journals:
Bondarenko, O. S., Prus, N. V. and Нranovskaya, I. V., 2019. Modern approaches to managing
financial resources in Ukraine’s health protection bodies. Financial and credit activity:
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Drumm, K. and Zeiss, T., 2018. Essential CEO skills for raising and managing financial
resources. Community College Journal. 89(2). pp.8-9.
Eliçin, Y., 2019. The Role and Capacity of Local Government in Managing Migration in
Istanbul. Hrvatska i komparativna javna uprava: časopis za teoriju i praksu javne
uprave. 19(3). pp.431-454.
Filin, M. A. and et.al., 2020. The Model of Managing Financial Resources of a State on the
Basis of New Information and Communication Technologies. In Growth Poles of the
Global Economy: Emergence, Changes and Future Perspectives (pp. 969-975).
Springer, Cham.
Grundy, Q., Mazzarello, S. and Bero, L., 2020. A comparison of policy provisions for managing
“financial” and “non-financial” interests across health-related research organizations: A
qualitative content analysis. Accountability in research. 27(4). pp.212-237.
Kmecova, I., 2018. The processes of managing human resources and using management
methods and techniques in management practice. Ekonomicko-manazerske spektrum.
12(1). pp.44-54.
Lower, L. M. and Czekanski, W. A., 2019. Effective management of scarce resources: a case
study of American collegiate sport clubs. Managing Sport and Leisure. 24(1-3). pp.119-
140.
Mahajan, S., 2020. Impact of COVID-19 on Financial Health in India: Managing Financial
Health in Challenging Times. Available at SSRN 3595351.
Perera, B. A. K. S., Samarakkody, A. L. and Nandasena, S. R., 2020. Managing financial and
economic risks associated with high-rise apartment building construction in Sri Lanka.
Journal of Financial Management of Property and Construction.
Wei, S. J., 2018. Managing financial globalization: Insights from the recent literature (No.
w24330). National Bureau of Economic Research.
Wise, C., Stutchbury, K. and Cooke, C., 2016. Transforming Teaching-Learning Process:
Managing Resources for Effective Student Learning.
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