Once the strategic plan is implemented into the development of the organization, a financial plan can be developed to gain capital for organizational growth. A financial problem, which can be encountered by an organization when implementing a strategic plan, is the lack of capital to put the plans in motion. If the organization does not have the financial ability to back its strategic plan, both plans will not be successful. DQ#2: What information is needed to prepare a cash budget? What is the relationship between an operating and a cash budget?
Leslie Fay Companies 1.) Clearly Inventories was a big item to address along with Accounts Receivable. Sales and gross profit were stellar in a time of industry unease. Furthermore Accounts Payable decreases as a percentage of current liabilities while Inventories increase as a percentage of current assets. This is an implausible trend on the Balance sheet that BDO should have investigated further, especially with Leslie Fay’s outstanding Income Statement.
The balance sheet connects to income statements, in turn also connected to cash flow statement. Occurrences or a change to the net cash activities of the cash flow statement affects the balance sheet. The balance sheet is useful when estimating the potential of the organization in order for them to achieve there long-term mission. However, cash flow statement displays the exchange of currency among an organization and external agents. For example, the cash flow can be affected when the company purchases products, and if the costs of the products are an outstanding amount in turn it will affect the assets on the balance sheet.
M4–Analyse the reasons why costs need to be controlled to budget In this assignment I will analyse the reasons why costs need to be controlled to budge. If costs are not measured by Debenhams then their profits will be badly affected therefore budgeting is one process to regulate costs as it gives the organisation an approximation or a target on what their cost and revenue should be. A business has to budget and control expenditure in order to see what has been received and paid out, otherwise unrestrained spending could occur and decline could happen. One of the difficulties that could occur if costs are not controlled to budget is: high fixed cost per item which decreases businesses profit and ability to compete. Debenhams are very effective at controlling its costs to budget as the results were good for sales revenue throughout 2013.
A1. Discuss specific budgetary items that raise concern in the budget planning Budget serves two main purposes – planning and control. Budget is used to plan for sales, purchases, production, cash flow and profits. Long term capital budget allows business to plan for major expenses, like new plant development. Another purpose is controlling: controlling expenditures and evaluating performance.
The weaknesses that Kudler may face would be the financial burden of going public. Sometimes expenses pile up just from seeking help from outsiders to protect the investments. The economy has fluctuated over the years; therefore the company needs to ensure they have contingency plans in place when business may not be as stable. There are ample opportunities that can come about from selecting an IPO. A company's debt-to-equity ratio will usually improve after going public, which tends to result in more favorable financing arrangements (2014, Going Public, para 1).
Lucent Technologies’ equity position is considered a deficit; however, this seems to become lesser of an issue as years progress. Investors and creditors would certainly be worried about the actuality that when their cash and cash equivalents are decreasing, their assets are steadily accelerating. It is also important to be cognizant of the fact that Lucent Technologies is in an extremely competitive sector. When demand is in decline and inventory is elevated, the overall carrying costs for a company will be extremely high. This is the case for Lucent Technologies.
Businesses that take a substantial amount of time to make of sell a product will need a higher level of working capital. It is important for businesses to work out the right level of working capital you will need. If the working capital is too high, the business has surplus funds which are not earning a return; and low may indicate that the business is facing financial difficulties. From the scenario, analyze TFC’s cash budget to determine key methods in which the budget may be optimized (e.g., by renegotiating terms and conditions on some of its payables, etc.). If you believe that there is room for improvement, recommend key strategies for TFC to use in order to optimize its cash budget.
Adjustments to stock levels should be made if it is needed. Another threat could be in the process of forecasting. Forecasting which items to carry and how much to carry is always a challenge. Using historical data on which items have sold well in the past and what quantities have sold will provide a good indication of what items and what quantities to carry in the future. There is also a threat when it comes to Kudler’s competitors.
For 9/11 to affect the Gross National Product (GNP) and Gross Domestic Product (GDP) it would have affected the price of an important input, such as energy or had an adverse effect on aggregate demand by mechanisms such as consumer and business confidence; causing financial panic, a liquidity crisis or an international run on the dollar. Estimates for consequences of human-made and natural disasters are crucial for informed decision making by both public and private stake holders. Hostile disasters cause direct impacts including fatalities, injuries, and property and infrastructure destruction. Immediate economic disruptions are psychological, resulting from the inability of consumers and businesses to adapt to changed circumstances following a disaster. The ability to quantify these impacts through models or analysis