Financial Analysis of St Brides Group: Cash and Zero-Based Budget

This report presents a financial analysis of the St Brides Group, a resort with 46 rooms and 26 sea views. The report is divided into two main tasks. The first task involves preparing a cash budget based on provided financial information, including cash sales and payments. The cash budget outlines the anticipated cash inflows and outflows over a specific period. The second task focuses on a detailed examination of zero-based budgeting (ZBB). The report explains the ZBB process, including identifying decision units, creating decision packages, ranking packages, allocating resources, and controlling and monitoring. It also highlights the advantages of ZBB over traditional budgeting, such as increased accuracy, improved coordination and communication, enhanced efficiency, and the reduction of redundant activities. Finally, the report discusses how an organization, like the St Brides Group, can introduce and implement ZBB in practical terms, emphasizing its application across various departments to align with corporate priorities and assess historical results and targets.

St Brides Group

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
TASK 1........................................................................................................................................3
TASK 2........................................................................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
The project report is based on St Brides group that owns and manages a huge resort. It
consists 46 rooms and 26 sea views. The report is divided in two tasks which consists different
types of information. In the first part of report a cash budget is prepared that is based on given
financial information about transactions. While in the second task of report a detailed analysis of
zero based budgeting has been done in an effective manner.
MAIN BODY
TASK 1
Preparation of cash budget.
Cash budget- A cash budget reflects a schedule or strategy for planned cash revenues and
payments throughout the year (Colquitt, 2019). Such cash flows include taxes earned,
investments charged and refunds and dividends from loans. It assumes that a forecast of cash is
an estimation of the potential financial condition of the business. Management generally
establishes the cash budget after expenditures have already produced for revenue, acquisitions
and capital expenditure. Such estimates ought to be rendered before the cash allocation, so that
the cash affects correctly over the time. For examples, until you can say how much money the
management wants to know a revenue number. Cash budget is utilized by executives to control a
company's cash flows. This ensures that the board will guarantee that the organization has
enough cash for paying of the bills. For starters, every two weeks the payroll must be charged
and every month the services must be charged. The financial expenditure helps managers to
foresee shortfalls in the cash flow of the business and fix the issues in anticipation of payments.
In other words, Cash budget is an estimation of the potential financial condition of a organization
in writing. In a hypothetical time, the fiscal schedule forecasts cash collections from various
outlets, monetary transfers in specific uses and the corresponding financial condition on a
monthly basis. This is also a systematic analysis of the planned periodic cash flow across the
business. The typical cash budget projection duration is one year, separated by monthly or
weekly intervals. This encourages regular variability in cash flow to be integrated. For situations

with reasonably consistency of cash flows, the finance planner should plan strategies for a full
year. If the expectations are quite unpredictable, he may just require a quarterly forecast.
The cash budget therefore helps government to estimate substantial cash quantities. This is not
desirable for businesses to have huge sums of cash unused in bank accounts. Such capital will at
least be saved in order to gain fair profit (Labrador and Olmo, 2019). Excess cash is also best
suited for growing and creating new purchases than lying unused in client accounts. The
financial allocation helps administrators to monitor and change financial rates appropriately. This
budget has some drawbacks and merits such as:
Advantages Disadvantages
A cash-only budget forces households and
corporations to make better choices. This kind
of spending does not include any "out in”
approach. Either companies reach ends and
survive comfortably, or they do not need to
struggle about management of cash if they use
it (Verme and Gigliarano, 2019). This is a
mechanism that needs a lot of attention to
information, a control of individual spending
and careful management such that adequate
money is given to meet any requirement.
Cash budgets can be manipulated. For
example, having an incredible payment one or
two days before the end of the month may be
misleading instead of one or two days after the
beginning of the current cycle (Churc, Kuang
and Liu, 2019). This reduces one cycle of cash
balance and pressurizes the other.

In accordance of given financial data, cash budget is prepared that is as follows:
Particulars
Jan
uar
y
Feb
ruar
y
Mar
ch
Apr
il
Ma
y
Jun
e July
Aug
ust
Sept
emb
er
Oct
obe
r
Nov
emb
er
Dec
emb
er
Cash sales
117
360
159
224.
4
171
344.
6
198
199.
9
205
331.
9
204
805
203
150.
8
367
975.
6
2258
94.7
266
610.
7
2082
32.1
176
127.
3
Cash balance
120
00
Total cash
received
129
360
159
224.
4
171
344.
6
198
199.
9
205
331.
9
204
805
203
150.
8
367
975.
6
2258
94.7
266
610.
7
2082
32.1
176
127.
3
Cash payments
Spent on new
hybrid motor
220
00
Laundry
service
600
0
600
0 6000
Printing and
stationary cost
180
0
150
0
150
0
150
0
180
0
150
0
150
0
180
0 1500
150
0 1800
150
0
Complimentar
y toiletries
116
6.67
116
6.67
116
6.67
116
6.67
116
6.67
116
6.6
7
116
6.67
116
6.67
1166
.67
116
6.67
1166
.67
116
6.67
New hot tubs
375
0
212
50

Bedding
bundles
purchase
414
0
New kettle
tray set
165
6
Cleaning
charges 6000
Salaried staff
150
00
150
00
150
00
150
00
150
00
150
00
150
00
150
00
1500
0
150
00
1500
0
150
00
Wages
125
00
125
00
125
00
125
00
125
00
125
00
125
00
125
00
1250
0
125
00
1250
0
125
00
Employees at
zero hour
contract 6000
Annual
business rates
833
3.33
833
3.33
833
3.3
3
833
3.33
833
3.33
8333
.33
833
3.33
8333
.33
833
3.33
Light and heat
cost
400
0
400
0 4000
New furniture
cost
500
0
500
0
500
0
Petrol and
diesel cost 250 250 250 250 250 250 250 250 250 250 250 250
Fixture and
fittings
200
00
200
00
2000
0
200
00
Building cost
350
00
350
00
3500
0
350
00
3500
0
350
00
Maintenance
cost 380 380 380 380 380 380 380 380 380 380 380 380
Marketing cost
375
0
375
0
375
0 3750

Complimentar
y beverages 2000
Total cash
payments
352
36.6
7
307
96.6
7
445
46.6
7
441
30
664
30
516
30
125
380
998
36
1001
30
941
30
9618
0
741
30
Net cash
surplus
941
23.3
3
128
427.
7
126
797.
9
154
069.
9
138
901.
9
153
175
777
70.8
268
139.
6
1257
64.7
172
480.
7
1120
52.1
101
997.
3
TASK 2
Zero based budget-Zero-based budgeting (ZBB) is the budgeting process by which all spending
during any new cycle must be explained. The "zero base" budgeting cycle starts from zero basis
and each task within an organization is assessed according to its specifications and costs.
(a) Process of zero based budgeting: Zero-based budgeting (ZBB) is a method for the control
of the company's expenses. That is a system where the expenditure for the fiscal year is
made up from the bottom, i.e. the base is taken as zero (Ibrahim, 2019). The company's
old and new operations rely on the value of them. The required services are assigned to
growing company on a preference basis without taking into consideration expenditures or
successes from the past. A step-by - step strategy is taken to establish zero expenditure.
Let us explain in depth the measures taken in zero budgeting. It consists a detailed
process that is as:
 Recognizing the decision units- Identification of a decision unit is the first and
foremost step in the zero-based budgeting phase. A decision-making structure
may be an independent and significant defining single occurrence or a cluster of
activities. The operation that is distinct that does not affect any behavior
individually. Therefore, any decision-making entity is different. A company has
several decision-making systems. As a unit of action, any cost center, such as

promotion, manufacturing, human resources, research and growth, etc. This step
is necessary to explain any element of budgetary expenditure. Decision unit’s
manager must explain spending and budget allocation for his decision unit.
Measures to Zero Based Budgeting (ZBB) The management's reasoning will not
be focused on the spending for the previous year or on the investment for the past
year of the decision entity. Because the budget from scratch is planned for zero-
based budgeting, it can also be freshly justified with the appropriate budget.
 Making decision packages- The decision units defined in the initial stage are
separated into smaller decision bundles. In this process. Such sets of actions will
be aligned with the organization's goals. Growing package of decisions serves as
an individual plan that calls for funding allocation. Each policy package specifies
the roles, tasks and operations of the project, the requirement for proposals, its
economic and intangible advantages, the lack of incentives if the project does not
obtain support, etc. A formal decision package must contain the following
information:
 The purpose for which the collection of decisions is taken.
 The goals and priorities of the broader decision-making structure.
 Decision Package Goals and Targets.
 Analysis of task needs.
 Assessment of the task's technological and organizational feasibility.
 Analysis of the alternative path.
 Ranking decision packages- This is the third stage of the budgeting cycle, which
is zero. Within this phase, all packages for decisions are categorized in the order
of significance and preference within the Decision Unit and between different
decision units (Rasugu, 2019). The rationale behind priority decision-making
systems is that finite capital can be distributed effectively. Decision packages are
graded based on an interpretation of cost-benefit. All solutions are analyzed
during this phase in order to choose the correct and most cost-effective choices.
Top leadership holds all the freedom to accept or deny the collection of decisions.

Only those packages of decision are accepted that help the company achieve its
established target.
 Allocating available resources- The zero-based budgeting phase may follow the
last phase. In this stage, the decision packages which are listed in the last phase
are provided funding. We may then assume that the decisions on finance are made
in this phase. The allocation of funds and other means is focused on the decision
package score. Thus, stronger support is given for the most successful decision
packages. This means that precious services are utilized optimally.
 Controlling and monitoring- It is the final move of planning the ZBB. Decision
packages for their efficiency and result are tracked and assessed in this phase.
Measuring the efficiency of decision packages allows administrators to realize if
the resources are distributed appropriately or not.
(a) Advantages of ZBB over traditional budgeting.
The zero based budgeting plays a key role for different types of business. In the case of
above hotel, they can apply this budget which can contribute in future in such manner:
 Accuracy- In comparison to traditional budgeting approaches involving unilateral
financial adjustments in the prior year, zero-based budgeting allows all
departments to take care of and measure of the cash flow activities. It aims in a
sense to reduce expenses as it offers a clear picture of expense towards the target
results.
 Coordination and communication- It also increases departmental teamwork and
collaboration and motivates staff to engage in decisions (Hijal-Moghrabi, 2019).
 Efficiency- It aims to maintain efficient resources allocation (departments-wise),
as it does not analyze the statistical statistics but discusses the current figures.
 Reduction in redundant activities- This helps find the potential and cost-effective
approaches to achieve things by removing any non-productive or disruptive
activities.

(b) How organization can introduce this budget in practical terms.
ZBB facilitates the execution of top-level corporate priorities in the budgeting phase by
connecting them to different operational areas of the business, where expenses can then be
grouped and assessed toward historical results and existing targets (Vadapalli, 2019). This
can be applied in companies in practical life by assessing its needs and nature of operations is
performed inside company. Such as in the aspect of above hotel, it can be applied for each
section whether it is finance or human resource department. By applying this budget, it will
become easier for above company’s manager to bring accuracy in financial data and they will
be able to make effective use of financial resources.
CONCLUSION
On the basis of above project report this can be concluded, budgets are too crucial in the
sense of better financial management. It is so because budgets provide an overview about how to
use financial resources for better purpose. The report articulates about cash budget and its role
for companies. As well as a budget is also prepared in accordance of given financial data. From
the second part of report this can be concluded that zero based budget is an effective budget
which can bring accuracy in financial transactions as well as it can be implemented in any kinds
of organization.

REFERENCES
Books and journal:
Colquitt, E.A., 2019. Integrated automated bill and budget reconciliation, cash flow allocation
and payment software system. U.S. Patent 10,210,583.
Labrador, M. and Olmo, J., 2019. Management accounting innovations for rationalizing the cost
of services: The reassessment of cash and accrual accounting. Public Money &
Management, 39(6), pp.401-408.
Verme, P. and Gigliarano, C., 2019. Optimal targeting under budget constraints in a
humanitarian context. World Development, 119, pp.224-233.
Church, B.K., Kuang, X.J. and Liu, Y.S., 2019. The effects of measurement basis and slack
benefits on honesty in budget reporting. Accounting, Organizations and Society, 72,
pp.74-84.
Ibrahim, M.M., 2019. Designing zero-based budgeting for public organizations. Problems and
Perspectives in Management, 17(2).
Rasugu, E.N., 2019. Factors Affecting Implementation of Zero-Based Budgeting In Chemical
Organizations: A Case of Diversey Eastern and Central Africa Limited (Doctoral
dissertation, United States International University-Africa).
Hijal-Moghrabi, I., 2019. Why Is it So Hard to Rationalize the Budgetary Process? A Behavioral
Analysis of Performance-Based Budgeting. Public Organization Review, 19(3), pp.387-
406.
Vadapalli, R., 2019. Relevance of Zero-Based Budgeting (ZBB) to Commercial Banks in Asia
under Present" Slow Economic Growth"-A Perspective on Cost Governance. The
Management Accountant Journal, 54(9), pp.36-39.