Hamble Ltd Budget Report: Sources of Finance and Cash Flow

This report provides a comprehensive analysis of the budget for Hamble Ltd, a food packaging and distribution business. It begins with an introduction to budgeting and its importance in managing business expenses and income. The main body of the report identifies and discusses five key sources of finance available to the company, including long-term, medium-term, and short-term financing, as well as owned and borrowed capital, along with their respective advantages and disadvantages. The report also examines the advantages and disadvantages of raising finance through the issue of shares. Furthermore, the report delves into the examination of the cash budget, including sales, production, and production cost budgets. It presents a detailed cash budget table for several months. The conclusion summarizes the key findings, emphasizing the role of budgeting in managing business activities. The report references several academic sources to support its analysis.

Budget Report- Hamble Ltd

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Identifying the five sources of finance available for organisation...............................................3
Advantages and disadvantages of raising finance from issue of shares......................................4
Examining the cash budget..........................................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Budget is about generating information for business expense & income. Budget helps
businesses for knowing its expenses which helps it for managing its profitability. Budgeting is
about managing company's information which helps it for managing how much funds it needs
for running its activities (Altenburger, 2021). This report is about budget for Hamble Ltd.
Humble Ltd is an established food packaging and distribution business operating across London
and the south east of England. The Directors of Humble Ltd are considering expanding the
business over the next 12 months by purchasing an existing established business which operates
in the east of England and the Midlands. This report includes topics which are cash budget. Apart
from this it includes topics which are evaluate budget for businesses which helps for better
performance which helps for higher profitability for businesses.
MAIN BODY
Identifying the five sources of finance available for organisation
In an organisation there are some finance sources that is needed by the company to
expand the business and will impact the firm in positive manner. In the context of Humble Ltd
following sources are as follows-
 Long-term source of finance- This types of financing means capital of more than 5
years to 20 years depending on the factors. Example are Share capital, Preference capital
and Retaining earning. This helps the company Hamble Ltd for longer period of time and
stayed for permanent. The disadvantages is that is kind of risk associated with this
sources in term of loss in the organisation.
 Medium Term sources of Finance- This financing for period 3 to 5 years and used to
medium purposes. Example are Lease Financing, Hire Purchase Finance and Bonds. For
the Hamble Ltd, this sources will help in the expenditure of deferred expenditure in
sufficient time period. Disadvantages is that it quite risky in terms of operating the
finance.
 Short term finance- This type of finance means financing for the period of less than 1
year and it is arises to finance finished goods, debtors and raw material. In the context of
Hamble Ltd the benefit is to get the finance when needed by the company and at the same

time the disadvantages is that it is not feasible at the time of emergency when huge
amount id required.
 Owned capital- This refers to the equity and it finance through promoters of company
and general public. In the context of Hamble Ltd, this source of finance stayed for longer
period of time and there is no burden of paying the interest (Downes, Moretti and Nicol,
2017). The disadvantages is that it sometime hamper the decision making of the
organisation.
 Borrowed capital- Borrowed or debt capital is refers to the finance arranged from
outside sources and sources are Financing institution, commercial banks. In the context of
company this sources is most suitable one to get the finance as the cost of borrowed funds
is low and gives benefits of leverage. The disadvantages can be that it put restrictions and
obligation in terms of loans.
Advantages and disadvantages of raising finance from issue of shares
In the company there are ways to raise the finance through issue of share and some of the
advantages are as follows-
 To issue the share the selected organisation provides the flexibility and they have full
control over the share of distribution.
 Share are like investment in the company and its like win win situations for the company.
Disadvantages are as follows-
 In the context of Hamble Ltd, it is risky option for the company when it face major loss
in the organisation.
 Shareholder need to keep up-to-date as this will become difficult for the company to do
so.
Examining the cash budget
Sales budget
Sales budget is simply expected or forecasted sales revenue for a specific time period
such as for a quarter or for the year. This is calculated by multiplying the expected sales unit
with the price of the unit. Sales budget is a financial planning for the maximum use of the
available resources and achieve the forecasted sale revenue. This budget determines the volume
of the sales and expenditure that will occur to achieve the expected sales revenue for
predetermined period of the time.

Production budget
Production budget is use to calculate the expected number of units to be produced of the
product in a specific time period. This budget is made after the preparation of the sales budget
because sales budget impacts the production budget. Production budget presents the maximum
use of plant and machineries for the production of a specific time period (Nauels and et.al.,
2019). Making this budget can help the company to have a control over the cost of production.
Effective and efficient use of available resources is also determined by this budget because it
provides the units to be produced in the available time period.
Production cost budget
This budget is made to estimate the cost which is going to be used in the production of
the product. Production cost budget helps in meeting the needs of keeping inventory/stock handy
for the company. Cost that will occur to produce the forecasted sales units is calculated with the
help of production cost budget. This budget is also called the manufacturing budget. Sales units
to be produced in the specific time period are also estimated with the help of production cost
budget. Demand of the product can rise in the market at any time and this budget keeps the
production in the check.
Cash
Budget
Particula
rs Jan Feb Mar Apr May Jun Jul Aug Sep
Credit
sales 9500 8000 6000 11000 13250 4500 12500
Cash
sales 250 350 800 600 620 900 500 350 800
Total 250 350 10300 8600 6620 11900 13750 4850 13300
Credit
purchase 6000 5200 5800 8000 8700 6300 5200 5000
Borrowi
ngs 100000
Tax 100000

Delivery
Vehicle 310000
Other
overhead 220000 220000 220000 220000 220000 220000 220000 220000
Cash 90000
Total 250 -225650 -214900 -307200 -321380
-
1526800 -212550 -220350 -211700
CONCLUSION
From the above report it has been concluded that budget is about which includes
expenses & income for businesses. Businesses using budget for managing its activities. It helps
businesses for managing its expenses which helps for generating income. It has been discussed
about the advantages and disadvantage of the different source of finance for the company.

REFERENCES
Books and Journal
Altenburger, M., 2021. Mood and honesty in budget reporting. Management Accounting
Research. 50. p.100707.
Downes, R., Moretti, D. and Nicol, S., 2017. Budgeting and performance in the European Union:
A review by the OECD in the context of EU budget focused on results. OECD Journal
on Budgeting. 17(1). pp.1-60.
Nauels, A. and et.al., 2019. ZERO IN ON the remaining carbon budget and decadal warming
rates. The CONSTRAIN Project Annual Report 2019.