Financial Resource Management Report: CVP Analysis and Cash Budgeting

This report provides a comprehensive overview of managing financial resources. It begins by defining financial resources and their significance in business operations. The report then delves into Cost-Volume-Profit (CVP) analysis, including its definition, graphical representation, and calculations such as break-even point determination. A detailed cash budget is presented, explaining its preparation and importance in managing a company's cash flow. Furthermore, the report examines credit sales and credit purchases, discussing their impacts on a company's financial statements. The content includes calculations, tables and charts to illustrate the concepts. The report concludes by summarizing the key findings and provides a list of references.

Managing Financial
Resources

Table of content
 Introduction
 CVP definition and CVP graph
 CVP Calculations
 Cash Budget
 Credit Sales and Credit Purchases
 Conclusion
 References

Introduction
Financial resources are funds which are procured from the
internal and external sources for the smooth functioning of
the business operations. The main aim of this presentation, is
to determine the significance of these sources along with the
concepts of break even analyses and CVP.

CVP definition and CVP graph
CVP chart is also known as Break-even point chart. It
shows a graphical presentation of sales, costs and volume of
units produced and profit generated. CVP graph interpreted
the relationship between cost-volume-profit using total sales,
variable costs and fixed costs.

Table of CVP
units Fixed
20000 600000
22000 660000
22666.6667 680000
23333.3333 700000

CVP Chart

CVP Calculations
BEP in units= Fixed cost / contribution per unit
where, fixed cost= Rent+ marketing + salaries
= 160000+300000+140000
= £600000
and Contribution per unit= Selling price per blouse- variable expenses per blouse
= 80 – 50
= 30 per unit
Therefore, BEP in units = £600000 / 30
= 20000 units
BEP in pound = Fixed cost * S. P per unit / Contribution per unit
= 600000 * 80 /30
= £ 1600000

Cash budget
Cash budget is the computation of approximation of cash
of the company in future. Management of the enterprise use
cash budget to manage the cash because when it comes to
make payments business should have sufficient finance to
pay.

Ways to prepare cash budget
Cash budgets are basically used to estimate, whether company is
have sufficient amount of cash to uphold their operations. It
can be used to determine too much of companies cash is being
invested in unproductive manner. There are certain ways:
 The receipts and payment method
 The adjusted profit and loss statement and
 The balance sheet approach

Credit Sales
It is a type of sales in which the payment will be made in
future date in lump sum amount or instalments. Credit sales
is the sale that has been made by the seller but not required
the payment to made at the time of sales.

Impact
Credit sales can increase or decrease the profit but it
depends on the profitability of the good or service which
have been sold by the seller. Credit sales will increase the
debtor of the company.

Credit Purchase
It is the purchase which have been made by the company
without paying the amount of the goods or services at the
time of purchase but liable to pay the amount in future. The
payment can be made in one time payment or in instalments.

Impact
Credit purchase will increase the payable of the
company and decrease the profit of the company.

Calculation
Particulars January February March
Opening Balance 25000 98000 44000
Receipts
Cash sales 75000 80000 90000
Received from debtors 300000 285000 282000
Total A 400000 463000 416000
Payments
Payment to suppliers 180000 196000 200000
Other expenses 122000 123000 123000
Commercial vehicle purchased 100000
Total B 302000 419000 323000
Closing balance of cash (A-B) 98000 44000 93000

Conclusion
From the above presentation, it can be concluded that
financial resources can be collected from internal and
external sources. These funds are needed to be controlled by
the methods such as cash budget and break even analysis.

References
• Renz, D. O., 2016. The Jossey-Bass handbook of nonprofit
leadership and management. John Wiley & Sons.
• Simonovic, S. P., 2012. Managing water resources: methods
and tools for a systems approach. Routledge.
• Singer, S. J., and et. al., 2011. Defining and measuring
integrated patient care: promoting the next frontier in health
care delivery. Medical Care Research and Review. 68(1).
pp.112-127.

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