FINANCIAL ANALYSIS

Financial Analysis

Financial Analysis

Part A

 

Amount in million

 

 

October

November

December

 

Sales Revenue

0.3

0.45

0.675

 

Varaible Cost

0.06

0.09

0.135

1 Pounds= 100 Pence

Fixed Cost

0.12

0.12

0.18

 

Depreciation

0.03

0.03

0.045

 

Bank Balance

0.07

0.07

0.105

 

Net Income

0.02

0.14

0.21

 

Cash Budget plays a very vital role in the finance of the company as it helps the company to understand its position and the financial strength of the company. It helps the company to understand and plan the future projects, which will help the company to expand.

The cash budget gives managers the company's financial dependence, a broad perspective on the occurrence of inflows and outflows over a given period, helping you makes the right decisions about their use and handling.

The cash budget or cash forecast, allows the company to schedule your short-term needs, the financial department of the company in almost all cases pay attention to the planning of excess cash as the planning of their deficits, as to obtain these remnants can be reversed, but on the contrary if missing plan how to find short-term financing.

Key factors in the analysis of the cash budget are in the forecasts are made on sales, which are made with third parties and own the organization, all inputs and outputs of cash and net cash flow will be explained then their basic approaches.

The cash budget is a report which shows cash inflows and outflows which are plan by the company and used to calculate its cash requirements in the short term, and particular attention is given towards the planning in view of surpluses and shortages of cash. A company that expects cash surplus can plan investments in the short term, while a company missing cash waiting must have the funding in the short term. The necessary information for the process of short-term financial planning is the forecast of sales. This forecast is predicts sales of the company for a specified period, which provide the department of managing their finance. Based on this forecast, the finance manager calculates the monthly cash flows resulting from projected sales and the disposition of funds related to production, the inventory and sales.

The forecasts of sales should be based on an analysis of the data that is internally or externally available or a combination of both.

External Predictions: Based on the relationship between sales of the company and certain indicators important as external economic GDP among others.

Internal Predictions: Based on an accumulation of sales forecasts obtained from the own sales channels the company

Combined Forecasts: Generally, the companies use a combination of data on external and internal forecasts for sales forecasting final. Internal data provide insight into sales expectations and external data provide a means to adjust these expectations in accordance with the general economic factors.

Cash Income are all cash inflows of a company that occur in a given financial period.  Disbursements of cash are all the costs of cash made ??by the company during a specific financial period, the most common are:

Cash purchases

Settlement of accounts payable

Rental payments

Wages and salaries

Tax payments

provisions of funds for active fixed

Interest payments

Payments of cash dividends

Payments of principal

Repurchases or withdrawals of shares

Net cash flow: It is the mathematically difference between the income the ...