Assignment 1: Economic Basics (24.0 points) 1. Describe two examples of important things that financial planning skills can help you do, and explain why these things are important to you personally. (4-6 sentences. 2.0 points) Create a budget because if I make a budget, then I can have extra money for myself. I will know how much to spend.
Running Head: HOW DOES AN OPERATING BUDGET WORK? 1 How Does an Operating Budget Work to Discipline a Firm’s Management? Primarily, the goal of any firm is to stay in business by accumulating more money than it is spending to manufacture the products and services it provides. An excellent blueprint created to ensure the achievement of this goal is an operating budget. The operating budget is a detailed projection of a firm’s income and the expenses it will incur to generate that income in a specified period of time which is usually a year.
A number of areas could be the reason for the decrease in sales in year 8 including the economy which could have led to outside sponsorships being decreased. However CBI is continuing to plan for growth in a 3.2 % increase that is greater than could be a reality and a concern for such percentage. There is no historical data to show that a plan is in place to achieve this additional sales increase and coming off a hard economic year, it is concerning that this achievable. The Selling, General and Administrative Budget is another area to review for concerns in the budget planning area. Advertising is budgeted at a flat percentage of 2% of gross profit or $28,412 for year 9 and this has remained consistent for each of the previous 3 years.
Capital improvement can save the company on unexpected cost and long-term shut down. Moreover, since Alliance’s customers are sensitive to delivery times, improvement on capital can save Alliance from losing loyal customers as well as their reputation. Other necessary solutions: Renegotiate with the bank In order for Alliance Concrete to finance the additional money for capital investment, they need to present these forecast data to the bank: • The forecast of 2006 leverage ratios: o Debt to prior year EBITDA of 2.67 which is less than the prior year of 2.80 shows that Alliance’s additional finance will not exceed three times the prior year’s EBITDA. o Interest coverage
The corporate tax reform proposed in this budget would eliminate loopholes. Other benefits include the reorganization of government processes to better serve economic goals and education reforms providing grants and job training. Some criticisms of the Democratic budget proposal are that the cuts are too “safe,” (CNN 2011) debt loads estimated growth under the Democratic budget is still viewed as too large. There is no mention of attempting to change policies on mandatory spending in order to decrease the funding to these programs. The proposed burden of Democratic programs is estimated to double the burden if the proposals for discretionary spending remain at such a low rate (CNN
Mantkelow (2014) explains lean manufacturing as based on "finding inefficiencies and removing wasteful steps that don't add value to the end product." Lean operations helps to reduce waste in production by using resources to only produce what the customer is demanding. A company that is using lean operations has measurable throughput. “Every minute that a product is not sold the cost accumulates and the competitive advantage is lost, this is the manufacturing cycle time” (Heizer and Render, 2010) this analysis could have been used to scale down production in the third and fourth quarter when it became obvious there was excess inventory. For starters, there is no value in holding 60 days' worth of inventory, to adopting lean principles would immediately help us to commit to inventory reduction and better alignment between production and demand.
You can save lots of money by becoming a wise spender, meaning you only buy necessities and buy those necessities at low, and or, reasonable prices. A retirement fund is very important. As you get older, your body doesn’t function as great, and so sooner or later the employer would either fire you, or you would have had to quit. So since you’re not receiving an income, you’d have to have a fund that could support you the rest of your life. That fund is called a retirement fund, and a financial plan could help you.
Accrual and Cash Basis Accounting Shayla Johnson ACC/290 April 25, 2012 Courtney Wilson Accrual and Cash Basis Accounting Accrual basis and cash basis accounting are two major methods of accounting that are used to keep track of a company’s financial status. The two methods are very different. One is more difficult and more expensive than the other, and only one is recognized and accepted by the generally accepted accounting principles (GAAP). Accrual accounting is a method that recognizes revenue when it is earned, and when it is realized. This means that it is reasonable to expect cash is to be received at a later date, though service has already been performed.
There are not always happy endings to fairy tales. The financial risk can either boost or hinder a company to succeed. No matter if the money is from one’s pocket, borrowed or funded; there is a huge risk in losing a lot of money. If the money is borrowed, one will end up having a lot of debts. To prevent this, one needs to create good budget plans for the company and manage his money wisely.
Deficit, surplus and debt have an effect on future Social Security and Medicare users. “In the long-run framework, surpluses are good because they provide additional saving for an economy and deficits are bad because they reduce saving, growth, and income. In the short-run framework, the view of deficits and surpluses depends on the state of the economy relative to its potential” (Colander, 2010, p. 247). As time passes, our national government has deployed, exceeded and goes unchecked, neglecting its core functions, operating far beyond their means and overwhelmingly beyond its constitutional limits. If nothing is done about it, the direction in which we are heading now will completely destroy the economy.