Categories for Balance sheet

Financial Terms Worksheet Essay

Financial Terms Worksheet Essay

Understanding health care financial terms is a prerequisite for both academic and professional success. This assignment is intended to ensure you understand some of the basic terms used in this course.

Complete the worksheet below according to the following guidelines:

In the space provided, write each term’s definition as used in health care management. You must define the term in your own words. In the space provided after each term’s definition, summarize a health care management scenario that illustrates the importance of the skill, concept, procedure, or tool to which the term refers.

In the scenario, you may wish to consider the following:

Why the skill, concept, procedure, or tool is necessary for accurate record keeping, operational efficiency, excellent patient services, employee management, regulatory compliance, reducing costs, forecasting, and so forth Successes enabled by an adequate understanding or appropriate application of the skill, concept, procedure, or tool Risks or failures associated with an inadequate understanding or inappropriate application of the skill, concept, procedure, or tool

Save the completed worksheet as a Microsoft® Word document with your name in the file name.

Submit the file to your instructor.

Worksheet

Submitted By: Keila Quintanila

[Type your name here.]

Term
Definition
Scenario
Balance sheet
A fiscal statement that summarizes a company’s assets, liabilities, shareholders’ equity at a specific point in time and net worth. This statement will display if the organization is in good fiscal standing or not and if they can meet their long-term fiscal responsibilities.

The director asked for the titles of the four financial statements that included in an audited financial report, which are the following: Balance Sheet statement, Income Statement, Statement of Cash Flows, Statement of Fund Balance or Net Worth or Equity statement. Statement of revenue and expense

A statement summarizes amount of profit earned minus the amount of operating expense. The statement will indicate the difference as profit or loss. The health care manager purchased some medical equipment, in which he will enter in the statement of revenue and expense; the document will show the amount of profit earned and the minus amount of operating expenses. This will clearly shows the difference as profit or loss.

Revenue cycle

The revenue cycle starts with meeting of customers, following any transactions during the period of transactions and continues with a company/customer association.

The salesman has brought revenue into the company. Furthermore, the salesman describe that, the Revenue Cycle beings with meeting with customers, presenting the product and closing the sale during specific time; but more important is to have a continues business relationship with company and customers. Payer mix

Medical practice: Medicaid, Medicare, indemnity insurance, managed care–of monies received by a medical practice Medical organizations predict third party payer mixes so that they can precisely predict their profits for the coming term.

Revenue
The amount of currency that a company essentially receives during a specific period, including discounts and deductions for returned products. It is the “top line” or “gross income” figure from which costs are subtracted to define net income. The medical organization, revenue is the money received from insurance companies, payer mix that brings in from the rendered services. The medical organization usually calculates and report revenue for a quarter or a year.

References

Baker, J. J., & Baker, R. W. (2011). Health care finance: Basic tools for nonfinancial managers (3rd ed.). Sudbury, MA: Jones & Bartlett Publishers.

Week Five Exercise Assignment Essay

Week Five Exercise Assignment Essay

Liquidity ratios. Edison, Stagg, and Thornton have the following financial information at the close of business on July 10:

Edison
Stagg
Thornton
Cash
$6,000
$5,000
$4,000
Short-term investments
3,000
2,500
2,000
Accounts receivable
2,000
2,500
3,000
Inventory
1,000
2,500
4,000
Prepaid expenses
800
800
800
Accounts payable
200
200
200
Notes payable: short-term
3,100
3,100
3,100
Accrued payables
300
300
300
Long-term liabilities
3,800
3,800
3,800
a. Compute the current and quick ratios for each of the three companies. (Round calculations to two decimal places.) Which firm is the most liquid? Why? Account
Edison
Stagg
Thornton
Cash
6,000.00
5,000.00
4,000.00
Short term investments
3,000.00
2,500.00
2,000.00
Accounts receivable
2,000.00
2,500.00
3,000.00
Inventory
1,000.00
2,500.00
4,000.00
Prepaid Expense
800.00
800.00
800.00
Total Current Assets:
12,800.00
13,300.00
13,800.00

Account
Edison
Stagg
Thornton
Accounts payable
200.00
200.00
200.00
Notes payable
3,100.00
3,100.00
3,100.00
Accrued payables
300.00
300.00
300.00
Total Current Liabilities:
3,600.00
3,600.00
3,600.00

Edison:

Current ratio – 12,800.00 / 3,600.00 = 3.56

Quick ratio – (6,000 + 3,000 + 2,000) =3.06

Stagg:

Current ratio – 13,300.00 / 3,600.00 =3.69

Quick ratio – (5,000.00 + 2,500.00 + 2,500.00)/ 3,600.00 = 2.78

Thornton:

Current ratio – 13,800.00 / 3,600.00 = 3.83

Quick ratio – (4,000.00 + 2,000.00 + 3,000.00) / 3,600 =2.5

The most liquid company is Edison because they have the most access if necessary.

2. Computation and evaluation of activity ratios. The following data relate to Alaska Products, Inc:

20X5
20X4
Net credit sales
$832,000
$760,000

Cost of goods sold
530,000
400,000

Cash, Dec. 31
125,000
110,000

Average Accounts receivable
205,000
156,000

Average Inventory
70,000
50,000

Accounts payable, Dec. 31
115,000
108,000

Instructions
a. Compute the accounts receivable and inventory turnover ratios for 20X5.

Alaska rounds all calculations to two decimal places.

Accounts Receivable Ratio = Net Credit Sales / Average Accounts Receivable $832,000 / 205,000 = 4.10 Inventory Turnover Ratio = Net Credit Sales / Average Accounts Receivable $530,000 / 70,000 =7.60 (205,000 + 156,000) / 2 = 180,500

(70,000 + 50,000) / 2 =60,000
3. Profitability ratios, trading on the equity. Digital Relay has both preferred and common stock outstanding. The com­pany reported the following information for 20X7:

Net sales
$1,750,000
Interest expense
120,000
Income tax expense
80,000
Preferred dividends
25,000
Net income
130,000
Average assets
1,200,000
Average common stockholders’ equity
500,000

a. Compute the profit margin on sales ratio, the return on equity and the return on assets, rounding calculations to two decimal places. b. Does the firm have positive or negative financial leverage? Briefly ex­plain. Profit Margin = 130,000/1,7500,00 =7.43%

Return on equity = 130,000/5,000=26%

Return on assets = 130,000/1,200,000=10.83%

(120,000 + 80,000 + 130,000) / (80,000 + 130,000) =1.57

It has a positive financial leverage of around 1.57 times.
The net profit ratio states Digital Relay made a 9% profit off its sales.

4. Horizontal analysis. Mary Lynn Corporation has been operating for several years. Selected data from the 20X1 and 20X2 financial statements follow.

20X2
20X1
Current Assets
$86,000
$80,000
Property, Plant, and Equipment (net)
99,000
90,000
Intangibles
25,000
50,000
Current Liabilities
40,800
48,000
Long-Term Liabilities
153,000
160,000
Stockholders’ Equity
16,200
12,000
Net Sales
500,000
500,000
Cost of Goods Sold
322,500
350,000
Operating Expenses
93,500
85,000

a. Prepare a horizontal analysis for 20X1 and 20X2. Briefly comment on the results of your work.

Horizontal Analysis
20×2
20×1
Difference
%Change
Current Assets
86,000.00
80,000.00
-4,000.00
-5.00%
Property, Plant, and Equipment (net)
99,000.00
90,000.00
9,000.00
10.00%
Intangiables
25,000.00
50,000.00
-25,000.00
-50.00%
Total Assets
200,000.00
220,000.00
20,000.00
-9.09%
Current Liabilities
40,800.00
48,000.00
-7,200.00
-15.00%
Long Term Liabilities
143,000.00
160,000.00
-17,000.00
-10.63%
Total Liabilities
183,800.00
208,000.00
-24,200.00
-11.63%
Stockholders’ Equity
16,200.00
12,000.00
4,200.00
35.00%
Total Liabilities and Stockholders’ Equity
200,000.00
220,000.00
-20,000.00
-9.09%

Net Sales
500,000.00
500,000.00
0.00
0.00%
Cost of Goods Sold
332,500.00
350,000.00
-17,500.00
-5.00%
Gross Profit
167,500.00
150,000.00
17,500.00
11.67%
Operating Expense
935,000.00
85,000.00
8,500.00
10.00%
Net Income
74,000.00
65,000.00
9,000.00
13.85%

(4,000) / 80,000 =-5%
The company decreased its liabilities which is good but also decreased its assets and costs of goods sold. The operating expenses increased and kept the same amount of net sales. Their Stockholders’ Equity increased so they
were able to purchase additional equipment, property, and plant.

5.Vertical analysis. Mary Lynn Corporation has been operating for several years. Selected data from the 20X1 and 20X2 financial statements follow.

20X2
20X1
Current Assets
$86,000
$80,000
Property, Plant, and Equipment (net)
99,000
80,000
Intangibles
25,000
50,000
Current Liabilities
40,800
48,000
Long-Term Liabilities
153,000
150,000
Stockholders’ Equity
16,200
12,000
Net Sales
500,000
500,000
Cost of Goods Sold
322,500
350,000
Operating Expenses
93,500
85,000

a. Prepare a vertical analysis for 20X1 and 20X2. Briefly comment on the results of your work.

Current Assets
15.20%
16.00%
Property, Plant, and Equipment
19.80%
18.00%
Intangibles
5.00%
10.00%
Current Liabilities
8.16%
9.60%
Long term Liabilities
28.60%
32.00%
Stockholders’ Equity
3.24%
2.40%
Net Sales
100.00%
100.00%
Cost of Goods Sold
66.50%
70.00%
Operating Expenses
18.70%
17.00%

It seems as if the findings were the same as in the horizontal analysis. There is a difference, which is, seeing the sections changed based upon the previous. There is a 35% increase in the Stockholders’ Equity which is great for the company. 6. Ratio computation. The financial statements of the Lone
Pine Company follow.

LONE PINE COMPANY
Comparative Balance Sheets
December 31, 20X2 and 20X1 ($000 Omitted)
20X2
20X1
Assets
Current Assets
Cash and Short-Term Investments
$400

$600
Accounts Receivable (net)
3,000

2,400
Inventories
3,000

2,300
Total Current Assets
$6,400

$5,300
Property, Plant, and Equipment
Land
$1,700

$500
Buildings and Equipment (net)
1,500

1,000
Total Property, Plant, and Equipment
$3,200

$1,500
Total Assets
$9,600

$6,800
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts Payable
$2,800

$1,700
Notes Payable
1,100

1,900
Total Current Liabilities
$3,900

$3,600
Long-Term Liabilities
Bonds Payable
4,100

2,100
Total Liabilities
$8,000

$5,700
Stockholders’ Equity
Common Stock
$200

$200
Retained Earnings
1,400

900
Total Stockholders’ Equity
$1,600

$1,100
Total Liabilities and Stockholders’ Equity
$9,600

$6,800

LONE PINE COMPANY
Statement of Income and Retained Earnings
For the Year Ending December 31,20X2 ($000 Omitted)
Net Sales*

$36,000

Less: Cost of Goods Sold
$20,000

Selling Expense
6,000

Administrative Expense
4,000

Interest Expense
400

Income Tax Expense
2,000
32,400

Net Income

$3,600

Retained Earnings, Jan. 1

900

Ending Retained Earnings

$4,500

Cash Dividends Declared and Paid

3,100

Retained Earnings, Dec. 31

$1,400

*All sales are on account.

Instructions
Compute the following items for Lone Pine Company for 20X2, rounding all calcu­lations to two decimal places when necessary: a. Quick ratio 1.17
b. Current ratio 1.86
c. Inventory-turnover ratio 10
d. Accounts-receivable-turnover ratio 13.33
e. Return-on-assets ratio 0.51
f. Net-profit-margin ratio 0.1
g. Return-on-common-stockholders’ equity 2.67
h. Debt-to-total assets 0.81
i. Number of times that interest is earned 15

Financial Statement Analysis of Square Pharmaceuticals Essay

Financial Statement Analysis of Square Pharmaceuticals Essay

I hope and elieve that you will be kind enough to consider any types of mistakes that occurred at the time of preparing this proposal. Thank you. Yours sincerely, Roll : 24040 Executive Summary A few comments on the organization and content of the report may be helpful to reader. In doing so, we realize that some topics may be more important to some reader then to other. For that reason we some advanced material (e. g. questionnaires) appears in appendices.

Our goal is to help the reader who must compare financial position of these two companies.

First we focused on the essential element of this report.

We have included here the introduction of this report, objectives of the report, findings, methodology, so that the reader can get ideas easily. The second part is very important from the sense of this report. Here we have given our recommendation of the report. We have tried out level best to give the commendation neutrally. It also contains the conclusion of this report.

Contents: Topic Page Introduction Objective of the Report Limitation of the Study Literature 2 Analysis 4 Summary and Conclusion 11 Introduction: Financial Statement includes the Balance Sheet, Income statement and other tatement which determine the company’s performance. Financial ratio analysis is the calculation and comparison of ratios which are derived from information in company’s financial statements. Financial ratios are the analyst’s microscope. It allowed them to get a better view of the firm’s financial health than Just looking at the raw financial statements.

Objective of the Report This term paper is prepared under submitted as a major requirement of the Financial Accounting Course. Financial Accounting provides the facts needed to make informed economic as well as operational control. Limitation of the study is about: ) Based on only secondary source of data b) Time bound restrict me for further research on the topic c) possible to analyze every ratio of the financial statement There is not Literature: Financial Ratio: Financial ratios are useful indicators of a firm’s performance and financial situation.

Financial ratios can be used to analyze trends and to compare the firm’s financials to those of other firms. Current Ratio Current ratio is the ratio of current assets of a business to its current liabilities. It is the most widely used test of liquidity of a business and measures the ability of a usiness to repay its debts over the period of next 12 months.

Current ratio is calculated using the following formula: Current Ratio = Current Assets Current Liabilities Receivables Turnover Ratio An accounting measure used to quantify a firm’s effectiveness in extending credit as well as collecting debts. The receivables turnover ratio is an activity ratio, measuring how efficiently a firm uses its assets. Receivables turnover ratio = Net receivable sales/ Average accounts receivables Inventory Turnover A ratio showing how many times a company’s inventory is sold and replaced over a period.

The days in the period can then be divided by the inventory turnover formula to calculate the days it takes to sell the inventory on hand or “inventory turnover days. ” Inventory Turnover = Cost of Goods Sold Average Inventory Asset Turnover : The amount of sales generated for every dollar’s worth of assets. It is calculated by dividing sales in dollars by assets in dollars. Asset Turnover Ratio = Net Sales Average Total Assets Return On Asset: An indicator of how profitable a company is relative to its total assets.

Patton-Fuller Hospital Essay

Patton-Fuller Hospital Essay

Patton-Fuller Hospital is a community hospital that has remained aiding the community since the year 1975. Yearly examinations have been conducted by self-governing audits to review this year’s financial performance in comparison to preceding years. The financial statement review highpoints the alteration between the audited and unaudited reports classifies the association amongst revenue resources and expenses, despite the fact defining the assets of revenue sources on recording. Financial statement assessments subsidize an excessive level accounting of the statistics controlled in the audit.

Financial statements of audited and unaudited statements contain the same type of statistics. Patton-Fuller Community hospital conducts audits agreement with auditing ethics in the United States. Self-governing Auditors ensure audited the balance sheet of Patton-Fuller Community Hospital as of December 31 of 2009 and 2008. The audited balance sheet reports the assets for 2009 which a sum of $587,767. The audited balance sheet reports the whole assets for 2008 of a total $548,535. The upsurge from 2008 to 2009 is 39,232. Liability total for 2009 is $ 462,153. The liability volume for the year 2008 is 3,450.

This was a rise from 2008 to 2009 and the amount of the growth is $248,703. The entire equity and liabilities for 2009 is $587,767 and 2008 $548,535. This is an upturn from 2008 to 2009 with $ 39,232.

In 2009 the total revenues show for $ 462,982 and then for 2008 $ 42,314. This total increase from 20o8 and 2009 is $41,668 according to the audited revenue and expenses annual report. The increase of $25,869 from 2008 to 2009 is shown from the audited revenue and expenses annual report. The year 2009 had $463,293 and 2008 had $437,424. The effects of revenue can be seen on the financial reporting by the fluctuations versus the expenses. From year to year you can see the fluctuation in revenue for the hospital. The revenues and expenses are grouped together by total revenues, total expenses, and net income. The total revenues include net patient revenues and other revenues. The total expenses include salaries and benefits, supplies, utilities, and depreciation. The net income shows the non-operating income (loss) as well as the investment income. By grouping the revenues and expenses it will help with separation and looking at the reports.

The Patton – Fuller Community Hospital’s revenue comes from a variety of sources, this includes net patient revenue and other different types of revenue. The revenue has definitely increased from 2008. When comparing the revenue received by the hospital to its operating expenses the difference lies in what revenue items are included in each ratio formula. In 2008 the total operating revenue is less than the total operating expenses therefore; the hospital operated at a loss and gave them a negative operating margin. In 2009 the total operating revenue exceeds the total operating expenses therefore; the hospital had a profit that year. As a result there was a positive operating margin. The way in which a hospital’s revenues and expenses are grouped for planning and control varies from hospital to hospital. At Patton-Fuller Community Hospital, the expenses are grouped by salaries and benefits, supplies, interest, and a lot more.

During salaries, the staff of the hospital must be paid for the work they do. Members of the staff (therapist or surgeons) have a highly qualified job in which they have spent more time in education which causes them to have higher wages. During benefits, there are hospitals who offer benefits for the employee and their family with a discount. This can be very expensive for the hospital. The hospital needs supplies in order to fulfill their duty and many of the supplies are expensive as well as cheap. Because the hospital has to order the supplies in large quantities, it becomes very expensive. Interest is another expensive thing that the owners of the hospital have to deal with. With the hospital building costing so much, it leads to the owners taking a big mortgage out to pay for the building. When a mortgage is being taking out, interest develops. Another reason for an interest to develop is a loan to buy high price technology or machinery. There are many ways that Patton- Fuller Community Hospital grouped for planning and control for revenues and expenses.

Inclusive the analysis of the financial statement originate many constructive results and the audited information and unaudited information enclosed the equivalent data. The revenue sources ensured a confident influence on the hospital and will lead to forthcoming development. Patton-Fuller Hospital Revenue review did not disclose any concealed problems. Financial managers need to carry on making assessments of the daily actions.

Reference

Patton-Fuller Community Hospital. Retrieved July 14, 2014 from https://ecampus.phoenix.edu/secure/aapd/cist/vop/Healthcare/PFCH/isoverview.asp?subgroup=hr

The Annual Report Project Essay

The Annual Report Project Essay

General Electric, short as GE, is a leading multi-industrial company involving in energy, appliance, finance and transportation businesses. It has more than 100 years of history, and generally be viewed as one of the most successful product and service providers across continents. GE has gross revenue of more than 147 billion dollars, and is currently ranking No.6 in Fortune 500 U.S. by revenue.

A. Introduction

General Electric Company (GE) is a multinational conglomerate corporation headquartered in Fairfield, Connecticut, United States. Its core business contains four segments, including Energy, Finance, Technology infrastructure, and Consumer and Industrial.

GE was founded initially by Thomas Edison, and then merged with Thomson-Houston Electronic Company in 1892. It was one the original 12 companies that were included for Dow Jones Industrial Average calculation in 1896, and is the only one that still being listed as of today.

* Name of the Chief Executive Officer: Jeffrey R. Immelt
* Corporate Headquarters: 3135 Easton Turnpike, Fairfield, CT 06828
* Ending of last fiscal year: Dec 31, 2011
* Description of the company’s principle products or services: General Electronic contains four major business sectors.

GE Energy is constructed by two major departments. The Oil &Gas department is a drill solution and refinery service provider, and the power department is one of the leading manufactures in designing and producing innovative, reliable, efficient, and high-performance jet engines. GE Technology Infrastructure is a business group dealing with machine production for healthcare and transportation. GE Capital is the financial service provider primarily focuses on loans and leases that it underwrites to hold on its own balance sheet rather than on generating fee by originating loans and leases.

GE Home & Business Solutions is another GE major business unit composed of intelligent platforms department and lighting department. The intelligent platforms are involving in producing next generation hardware and software for industrial control, and lighting department mainly engaged in home appliance production and maintenance. * Main geographic area of activity (in order of revenue significance): United States, Canada, Europe, Asia, Australia, Africa. * Name of Company’s independent accountants (KPMG LLP). Base on the analysis of independent auditor, the GE consolidated financial statements released to the public presented fairly, in a whole, the financial position of GE as the date of Dec 31, 2011 and 2010.

Also, the statements of operations and cash flows for the three consecutive years from 2009 to 2011 are conformed to U.S. generally accepted accounting principles (GAAP). The independent accountants also declared that the GE maintained effective internal control over financial reporting as of Dec 31 2011, according to the criteria established in Internal Control-Integrated Framework issued by COSO. * The most recent price of company’s stock and its dividend per share The current price of GE stock is $20.62 as of Nov 20, 2012. The most recent dividend payment date was Oct 25, 2012 (record date was Sep 24, 2012) with amount per share of $0.17.

B. Industry Situation and Company Plans

GE Energy unit is a product and service provider across different energy industries, including coal, oil, natural gas, nuclear power and renewable energy like wind or solar energy. In general, global energy business experienced a boosting period in the past twenty years due to the economic rapid growth in Asia. Coal, Oil and natural gas are top 3 widely used fossil fuels in energy industry, accounting for 55% of total energy demands. GE Energy has the advantage of applying advanced technology from drilling and production, liquefied natural gas pipelines and storage to industrial power generation and it is the largest natural gas provider in U.S. Based on GE’s patents on renewable energy, it greatly expands its business cooperation in Asia in the past three years within the countries that have great environmental issues, like China. In 2009~20011, GE acquired two wind turbine companies, Scan Wind and Wind Tower System, and became one of the largest engine manufactures, second only to well-known British company, Rolls-Royce plc.

Healthcare in GE Technology Infrastructure business unit takes the dominant position in the field of diagnostic imaging service and integrated clinical system providers. While it has offices around the globe, the Healthcare department has major regional operation in Europe and Asia. Transportation in GE Technology Infrastructure business unit basically produces locomotive and its accompanied equipment, large electric motors and propulsion systems for mining, oil drilling and engine industries. Because of its comparative advantage of research and development, the GE Transportation unit experienced a fast expansion in the past several years, and in 2011 they announced plans to build another locomotive factory in Texas to meet the increasing demand.

GE Capital has two major parts of services, aviation services, and energy financial services. The aviation service is responsible for the leasing of aircraft and associate equipment to airlines. According to 2005 Airfinance Journal Operating Lessor Survey, GE aviation service department is the largest aircraft lessor in the world by the fleet size. The success of this business is primarily due to the heavily competition between the airlines, and each airline company intends to lease cheap aircraft to reduce their cost. The capital intensive companies, like GE, has the advantage to meet their needs. Energy financial services department is primarily responsible for auxiliary role such as providing financial and technological investment in energy infrastructure projects around the world, and their major investments are the projects across the different business segment of the General Electric.

GE Home & Business Solutions is composed of GE Lighting and GE Intelligent Platforms. GE Lighting is well known for its household appliance traced back from Thomas Edison’s work on lighting. Because of its dominant position in the business, lighting department generates descent amount of the revenues for the whole group. In 2011 the gross revenue for GE Lighting is about 3 billion. Intelligent Platforms departments designs, manufactures, and supplies hardware and software products for industrial control and automation. Their hardware products including programmable logic controllers (PLCs), programmable automation controllers (PACs), as well as software products including supervisory control and data acquisition (SCADA) has good reputation in the market, its major role is to provide research and development support for other GE business units to evolve their products. The revenue in Intelligent Platforms is about 135 million, and is not a huge profit resource for the whole group.

Inventory Control System Essay

Inventory Control System Essay

This study is established towards gathering and developing strategies that could solve the inappropriate inventory system of 7-eleven Sto. Rosario, Angeles City Outlet. The researchers established Trend analysis (regress over time) and Basic Economic Order Quantity (EOQ) to solve problem of inappropriate inventory management. The findings of this study revealed the problem on the current inventory management system that is evident in the product overstocking and under stocking problem of 7-eleven. Forecasting demand may improve the ordering quantity every time they place an order and EOQ may result in the significant savings for the company.

The Story of Convenience Shopping 7-eleven pioneered the convenience store concept way back in `1927 at the Southland Ice Company in Dallas, Texas. In addition to selling blocks of ice to refrigerated food, an enterprising ice dock employee began offering milk, bread and eggs on Sundays and evenings when grocery stores were closed. This new business idea produced ideas that satisfied customers and increased sales, and convenience retailing was born.

The company’s first convenience outlets were known as Tote’m stores since customers “Toted” away their purchases and some even sported genuine Alaskan totem poles in front. In 1946, Tote’m became 7-Eleven to reflect the stores’ new, extended hours 7 a.m until 11 p.m., seven days a week. The companu’s corporate name was changed from the Southland Corporation to 7-Eleven, inc, in 1999.

Each Store focuses on meeting the needs of busy shoppers by providing a broad selection of fresh, high quality products and services at everyday fair prices, along with speedy transactions and a clean,safe and friendly shopping environment. In year 2004, 7-Eleven located at Sto. Rosario Street Angeles City was established under the management of Edgar Nucum who was the first manager under corporate group of the Philippine Seven Corporation. However, on May 2, 2005, the said business was turnover To Mevin Teopaco because of the conversion of the establishments from corporate to franchisee Mr. Teopaco who took the business through formal application and training on how to run the business. He is responsible for ordering, buying and maintaining inventory, hiring and training employees, as well on payroll, cash variation, supplies, certain repairs, maintenance and other controllable in store expenses.

The company’s mission is t offer time-conscious customers a full range of products and services that meet their ever-changing daily needs through quality, speed, selection and value in a safe, friendly and pleasant environment. And their vision is to “become a recognized leader in providing time-conscious consumers with a full-range of products and services that meet their ever-changing daily needs. We will be the customer-preffered convenience store by exceeding customer expectations through quality, speed, selection, and value in a safe and pleasant environment, treating our employees with dignity and respect, recognizing our franchisees and suppliers as business partners, being a good corporate citizen. Achieving our vision and continued growth will provide our shareholders with a beter than competitive return on their investments”.

Inventories are ordered on a daily basis and delivered through central distribution located in Pasig City. Inventories are individually monitored thorugh monitoring sheet report, sales and ordering are incorporated at SAS System that link to POS (Point of Sales). Although Mr. Teopaco had special training in managing the said business, still sometimes he experienced and encountered different problems related to operation such as inventory losses. Such problem is caused by different factors. This problem arises when the management encounters discrepancy in the delivery of the products. However, there are products, which the store provides but not salable. Such products sty longer in the store and become spoiled.

Which are referred to as bad merchandise or BM. In effect, the company experience losses on inventories because such scenario usually happens in the store. Since the store is open 24 hours a day and the security system of the store is not that fully implemented, there are customers who shop lift from the store especially “out-of-sight” and small products. Sometimes the management could not trace those products until they make an inventory count. Another thing is that some employees do unnecessary things in the store like eating some of the products or keeping them. In such case, inventory losses happen. The occurrence of these different factors led to the existence of a current problem, which need to be monitored and evaluated by the management in order to achieve the desired objectives of the said company.

The Current Situation on the Inventory Management of 7Eleven
The main problem 7Eleven is currently facing is the inventory losses as shown on Figure 1. This problem exists because of different factors that the management should eliminate or if not, at least minimize. Such factors are the theft and shoplifiting that result to lesser sales or profit, and obsolescence of the products that result to high inventory sales. Unavailability of the prodcuts results to stock-outs and lower sales because customers tend to patronize competitor’s products.

The second factor that led to the afordeimentioned problem is inefficient employees. Inefficient employees can occur just like not performing their duties well and sometimes by concealing merchandise in a purse, pocket, or bag and removing it from the store. It can also occur by stealing cash, allowing others to steal merchandise, eating the goods and sometimes some employees do not punch other products sold. Employee theft can sometimes be charges as embezzlement due to be trusted fiduciary status of the employee. Being inefficient employee can also result dissatisfied customer. All of these methods lead to loss of inventory(shrinkage) and/or profit for the merchant. Preventing employee theft and being irresponsible is a constant challenge for the store. The store knows that it must put systems in place to prevent or deter internal theft.

To be effective, loss prevention systems must be designed to reduce the opportunity,desire, and motivation for employee theft. Basic loss prevention steps involve good procedures for hiring, training and supervision of employees and managers. Procedures that are clearly defined, articulated, and fully implemented will reduce opportunity, desire, and motivation for employees to steal. For others, the only barrier to dishonesty is the fear of being caught. The employee thief risks being fired, arrested, jailed, and paying restitution. The other cause of the said problem is the inefficient inventory control system.With this, inventories are not properly controlled which results to a high percentage of spoilage or expiration of some products. When an inefficient valuation is assigned to the inventory, it may end up having higher inventory expense.

Moreover, it will be costly on the part of the store. To determine the cost to be associated with the inventory, a physical inventory must be taken in order to determing the number of units present. Then, the costs are attached to each item in the inventory. When dealing with the inventories, cost should be interpreted to mean the sum of all direct or indirect charges incurred in bringing an item of inventory to its existing condition and/or location. The store have a price tag or a universal product code, it is acommon practice to take the physical inventory at the store from these price tags and codes it can determine their inventory. Maintenance of inventory losses may result in lost sales and disgruntled customers.

The last factor is the lack of security control system because of limited employees that wil oversee the inventories specially those that are not visible. In effect, shoplifting and theft arises. Technology alone will not eliminate retail theft. Store who wants to reduce losses should also Strive to provide good customer service and promote high job satisfactions levels among its retail sales associates. Stores that utilize security technologies generally have lower overall inventory shrinkage than those retailers who do not. Technology also allows employees to focus more time on assisting customers and less on patrolling the aisles.

Inventory is considered the current asset to the store because it will normally be sold within the store’s operating cycle.  All of the said causes result in inventory losses and lead to different effects, such as, lesser profits/sales, dissatisfied customers, and stock-outs. These are not beneficial to the company so the management need to find ways on how to overcome the causes that lead to the above effects.

Ratio Analysis Memo Essay

Ratio Analysis Memo Essay

The following memo will explain the findings of the financial statement analysis for 2008 for Berry’s Bug Blasters as well as offer advice significant decreases in profits or increases in liabilities if they apply.

Some quick facts: Liquidity is up for 2008

Current ratio shows we pay assets 5.99 times for every current liability, an increase of 62% from 2007 Significant liquidity ratio decrease in 2008 was in inventory turnover Inventory tuning over 6.67 times per year, down 42% from 2007 Berry’s Bug Blasters inventory turnover is affecting the profits.

The profitability ratios decreased with the stockholders’ equity decreasing the most by 56%. The interest expense for 2007 and 2008 has been eliminated. Berry’s Bug Blasters total debt was decreased to assets by 24% in 2007 to 16%, the company’s number now shows solvency. In order to determine if a company will meet short term debt obligations liquid ratios are used by businesses and investors. Berry’s Bug Blasters has proven short term obligations 5.99 times to 1 liability. At the point when an owner or investor evaluates an organization’s liquidity ratios, they are utilizing data from the Balance Sheet to evaluate if an organization has the assets and the ability to pay off short term liabilities.

Berry’s Bug Blasters have met the mark. Stakeholders use profitability ratios to pick up understanding on the adequacy or sufficiency of an organization’s profits.

Loaning organizations and investors will utilize profitability ratios to help focus the conceivable financial related profits for the investment into that particular organization. Administration inside of an organization can use profitability ratios to issue territories inside of the organization and make any vital enhancements to enhance execution in those areas. The accompanying attachments will demonstrate that we have decreased in the amount of profit margin. This decrease demonstrates that business has hindered in 2008. Berry’s Bug Blaster may need to look over marketing methodologies to produce more business in the impending year. Solvency ratios are for the most part utilized by long term lenders and stakeholders. Both clients are utilizing solvency ratios to focus the long term quality and survival of an organization.

Long term monetary quality of an organization is essential to these clients to demonstrate that an organization will have the capacity to pay off debt and accrued interest of a mature debt. Berry’s Bug Blasters has made a decent showing of decreasing the measure of amount of total debt to assets. Generally speaking, Berry’s Bug Blasters is in great financial health in correlation to others in the business. An intercompany near analysis was performed utilizing our organizations nearest traded on an open market contender, Rollins Inc. Like Berry’s Bug Blasters, Rollins Inc. provides pest and termite control services to business and private customers.

The Rollins Inc. SEC filed 10-K for the period ending 12/31/08, the attached ratio, horizontal and vertical analysis are the source documents for the data below. The profit margin is by far the most valuable accounting aspect for any company. Berry’s Bug Blasters has doubled the profit margin (16%) other than Rollins Inc. (6.6%) In regards to solvency, Berry’s Bug Blasters incurred no interest expense while Rollins Inc. paid $761,000 interest expense. Another commonly used profitability ratio used primarily by investors is the return on common stockholders’ equity. Berry’s Bug Blasters and Rollins Inc. performed splendidly and tied at 30%. The ratio, horizontal, and vertical analysis performed managers, creditors, and investors can see that Berry’s Bug Blasters remains competitive, and is a valuable investment. I hope you have gained further insight into the financial health of Berry’s Bug Blasters.

References:
Weygandt, J.J., Kimmel, P.D., & Kieso, D.E. (2010). Financial Accounting (7th ed.). Hoboken, NJ: John Wiley & Sons.
Apollo Group Virtual Organization. (2011). Berry’s Bug Blasters. Retrieved from:https://ecampus.phoenix.edu/secure/aapd/CIST/VOP/Business/Berrys/index.asp on July 24, 2015.

Carroway Clothing Limited Essay

Carroway Clothing Limited Essay

Carroway Clothing Limited (CCL) is a Canadian-controlled private corporation (CCPC) that was incorporated 10 years ago. CCL follows accounting standards for private enterprises (ASPE). It is owned by two brothers, Chip and Charles Carroway, who started the company after identifying an opportunity to design and manufacture clothing with innovative fabric. The Carroway brothers have run the business together and have an equal stake in its equity.

You are Rose Reddick, a recently graduated CGA assigned as team leader to complete the March 31, 20X3, financial statement audit of CCL.

This is the second year that your firm has done CCL’s audit. The audit planning was completed in early March by Blake Mouton, another CGA in your firm, but he has recently announced he is resigning from the firm. Due to scheduling conflicts and an unusually busy season, he will be unable to continue with the remainder of the audit before he leaves, and you have been asked to take over leadership of the audit team.

It is now late April, and the team under Blake’s supervision has completed about two-thirds of the audit field work. The audit is scheduled to be completed by May 15, and realizing that you have a limited amount of time to complete your work on this audit, you immediately begin your review of the work done to date and the available client background information. Client background

The Carroway brothers started manufacturing athletic wear, utilizing new techniques in fabric treatments to increase the durability of the fabric. CCL’s range of products includes clothing lines for women and men. The products are, primarily athletic wear, but three years ago they added a line of soil-resistant work clothing.

Tax losses have occurred in the early years, but sales have grown each year since the company was started. As sales increased, Chip hired a team of design specialists to create new clothing items with innovative features. This team was hired three years ago to begin the research and development required to bring new products to market. Chip also hired a marketing manager with a degree in fine arts to design the tags attached to each piece of clothing and develop the marketing programs. At the same time, specialized software was implemented to produce tags for the products. Because there are specific requirements for content and format of the tags, the production manager is the only individual with authorized access to the software.

In July 20X2, CCL signed a contract to produce a line of athletic wear for Sports Shop, a small chain of sporting goods stores. The line of athletic wear features the chain’s logo and trademark colours. CCL ships product to these stores using a company truck. The contract specifies that Sports Shop is to pay for each shipment within 30 days of signed receipt of delivery. Recently, Sports Shop has disputed some of the amounts owing to CCL, maintaining that there is no proof of receipt of the shipment. When Chip questioned the CCL driver, the driver admitted that when he was running late with his deliveries, he simply dropped the shipment at the store counter and did not wait for the store manager’s signature. Chip has not provided an allowance for these receivables since the delivery was made even though there is no signature. In fact, CCL has never recorded an allowance in any fiscal year and has not had any issues with uncollectible accounts.

The research and early stages of development of CCL’s products were financed by a combination of capital invested by the brothers, bank financing, and a government grant (see financial statements, Exhibit 1). Scientific Research and Experimental Development (SR&ED) credits were received in 20X1 and 20X2 and have been reported as government grants for accounting purposes. The sales volume of the soil-resistant clothing is now great enough to assure the lenders and any potential investors that these products are commercially viable. In fact, based on the 20X1/X2 results, they expect the current product line to become a significant commercial success.

The cost of developing this product line, called Walton Work Wear has been deferred and is being amortized (straight-line) at the rate of 10% per year starting in 20X2 (see Deferred Development Schedule, Exhibit 2). Original research costs for the Walton Work Wear products were expensed when incurred, net of grants and SR&ED credits. The prior-year audit file shows that this treatment of SR&ED credits is consistent with CCL’s reporting of all taxes (payable and recoverable), which have been accounted for on a current basis without regard to recognition of the future tax effects of any current transactions.

During the past year, the brothers have turned their attention to a moisture management and odourreduction feature for the athletics tops. They are confident that within two years their current research will lead to a product line that keeps the sweat away from the skin and minimizes the impact of perspiration on the clothing. The preliminary prototype works effectively for the first several minutes, but the protection barrier degrades quickly and more work is required. This product line will be called Carroway Cool Top and is currently in the research stage only. The deferred development costs for this product line are $975,000.

In order to finance completion of the new research and development of the Carroway Cool Top products, Chip Carroway expects to obtain a long-term bank loan for CCL. He is aware that this long-term bank loan will include a more stringent debt to equity covenant than the existing line of credit. He is also interested in the option of going public and issuing new shares to raise funds for future growth. However, Chip is concerned about the implications of losing some control over CCL so he is leaning towards remaining a CCPC.

CCL’s chief financial officer, Jack Lawson, was the original office manager and bookkeeper when CCL was first established, and although he has no professional accounting credentials, he does have a degree in business administration with a major in finance. He is responsible for the preparation of financial reports and is involved in all of the financing discussions. Jack has always been employed by companies which are private and he has no experience in the requirements of going public, so Chip will require additional information from you in order to be able to make an informed decision between the financing options available.

CCL has grown rapidly over the last three years, after implementing its research and development activities. During 20X1, the implementation of the research and development department resulted in the hiring of many new employees in research and development, production, and administration. CCL would like to provide an incentive plan to these new employees, but is not in a position to provide a cash bonus. Therefore, CCL is considering a limited issue of stock options to its employees. The stock options would entitle an employee to acquire equity shares of CCL at $50 per share at any time starting six months after the date of their issue. Some employees are uncertain about the impact of the issue of stock options on their taxable income and are considering disposing of them immediately upon acquisition.

Chip has recently been notified about a pending lawsuit and provided Blake with some preliminary details when he was at the office in March. Six months ago, the production process of one of the fabric treatments resulted in an accidental but illegal leak of chemicals into the environment. The local environmental agency objected to such a release of chemicals, and when their objections were ignored they filed a lawsuit against CCL, alleging that CCL was negligent in the release of the chemicals and in violation of environmental regulations. Chip is not concerned about this lawsuit since he notes that the amount of chemicals that leaked from CCL equipment was not significant, but he would like to know whether there are any other risks associated with this issue and how they should be dealt with.

Review of audit findings to date

The audit-planning file indicates that Blake assessed the inherent risk associated with this audit as low. The reasons for this assessment include the fact that this is the second year of the engagement and no audit or financial reporting problems have been uncovered in the past audit. Blake included a note that the design of the clothing tags is now being handled jointly with the marketing manager, who had persuaded the production manager to give her access to the specialized software while he was away from the office on vacation.

During this time, the marketing manager redesigned the tags to include more marketing elements and minimized the font size of the list of additives used in the fabric treatment so that there was more room to describe the innovative features of the clothing. The newly designed tags have been on product for the past two months, and CCL has recently heard some feedback from concerned customers that the information about the additives is difficult to read. These customers have allergies to certain chemicals, so it is imperative they are aware of the chemicals used in the treatment of these fabrics.

Another important factor influencing the risk assessment is that, in spite of operating losses in the past, CCL has never had serious cash flow problems, due to Jack’s careful business planning and the good relationship CCL has with its lender. CCL is experiencing growth in profits, indicating that the investment in the research and development department is paying off. The draft financial statements show positive net income and strong revenue, with a portion of this revenue being generated by the Walton Work Wear line of products in 20X3 (see Exhibit 1).

Although no misstatements or errors have been documented in the work completed so far, you are not sure if this is because conclusions have not yet been drawn on most sections of the audit file. In addition to evaluating all of the evidence gathered so far, the following audit work still needs to be completed: review of the accounts in Exhibit 2; team leader review of all work done by subordinates; completion of the audit work on unrecorded liabilities, subsequent events, and contingencies; and review of the draft tax returns.

Once all of these steps have been completed and approval of the statements is received from the client, the schedule of unadjusted errors and final review of the financial statements must be completed. The file will then be ready for a final partner review before release of the audit report. You see from the files that Blake has used traditional sampling to sample small amounts of data for the audit and you are not comfortable basing your conclusions on the work done because with the increase in sales this year and the research and development activities, there is a large amount of data to audit. You are considering an appropriate alternative, such as generalized audit software.

Upon examining the file, you realize that a number of financial reporting and potential tax issues have arisen this year that were not present in prior years. These issues and other new information have not been adequately addressed in the current-year audit plan.

You believe that the client should be informed of your concerns regarding the current year’s issues as well as the implications of the financing options.

Analyzing Pro Forma Statements Essay

Analyzing Pro Forma Statements Essay

Upper management has propositioned the financial analysis team to develop Pro Forma financial statements covering the next five years for the new product line that increases revenue in a similar but slightly different market. (The make-believe company is a restaurant group, the make-believe new product is pizza). The financial statement helps assess the possible financial impacts of pizza. The Pro Forma statements are based on the current year’s (2014) Balance Sheet and Profit/Loss Statement and are projected for an 18% increase in sales each year for the next five years.

Analysis for the Pro Forma statement indicates that sales increases from the 2014 mark of $571,379 to $1,307,177 by the end of 2019. Consequently, the projected additional revenue will have the following financial, reflected on the Profit/Loss Statement: Cost of Goods Sold increases by $25,000 per year (pizza is a low cost product after the equipment and license overhead is paid for). Currently COGS is $182,129, after year five the COGS will be $282,129.

Therefore projected gross profit will grow to $1,025,048 from $414,250 Wages increase by 12.

5% in the first year because of the new hires. Every year after the wage expense increases 2.5% because of merit based raises and bonuses. In 2014 our wage expense is $172,704, by 2019 it will grow to $214,462. Credit Card Fees and Taxes are expected to grow 20% each year because of the additional sales from $14,852 and $17,800 to $37,325 and $44,292 respectively

The budget for Supplies, Water/Sewage, Utilities, Repairs and Maintenance will also increase every year by 20% given the additional sales. The following table organizes this data:

Net profit is projected to grow from $109,531 to $332,283 by 2019

The Current Assets accounts of Cash, Accounts Receivables, Inventories, Pre-paid Assets, and Other are also projected to increase. Cash is projected to increase from the current amount of $200,000 to $457,552 by the end of 2019. Accounts Receivables will increase from the current amount of $371,379 to $$849,625.

Inventory will increase from the current amount of $9,100 to $20,819 by the end of projected period, and Prepaid Assets will climb from $2,500 to $5,816. Total Fixed Assets are not projected to increase, the property and equipment assets associated with Total Fixed assets will depreciate stagnantly by $15,000 over the 5 year projected period. The Asset category, “Other” will increase from $988 to $2,107. Along with the increase of these asset accounts, the Liabilities Account of Account Payable will increase from $147,179 to $365,682 by the end of 2019.

From the prepared Pro Forma projections, expanding the product line to pizza is good for the bottom line. Net Profit will increase by approximately 322% and Cash is projected to increase by 228%. The additional retained earnings over the five year period from the pizza line can be used to finance the project. In other words, by applying the retained earnings from the pizza line project back into the company we can finance the project in-house.

References:

Parrino, R., Kidwell, D. S, & Bates, T.W. (2012). Fundamentals of corporate finance (2nd ed). Hoboken NJ: Wiley.

Balance Sheet and Public Sector Reform Essay

Balance Sheet and Public Sector Reform Essay

Financial control

1.1 Assess the relationship(s) between a financial system or function and other systems or functions in an organisation Answer: Information and records are of critical importance to the functioning and controlling of systems in general, including organisational systems. Given the central importance of information and records to systems operation, including public sector organisations and the societies they exist to govern, we should not be surprised to learn that public sector reform efforts that overlook the information component often fail to meet their immediate objectives and the longer-term goal of establishing a framework for good governance.

Efforts to improve the management of public sector records in many countries have been hampered by a gap between the National Archives and the government’s record-creating departments.

The result has been that most of the records in the custody of the Archives are over forty years old, while the records in government departments remain unmanaged. Some National Archives have inspecting powers, but there are few professionals trained to manage current records.

Moreover, there are rarely systems in place to ensure that semi-current and non-current records are transferred to secure accommodation or appropriately destroyed. The introduction of computerized systems, often a key part of public sector reform projects, is compounding existing record-keeping problems. These computerized systems are using information that may be seriously flawed and based on collapsed paper-based systems.

It is because effective management of records is so crucial to achieving public sector reform objectives, which lead to good governance, that restructuring must encompass the management of records. Restructuring of records and archives management processes must be seen as an integral part of the restructuring of core government processes to ensure the success of public sector reform efforts. 1.2 Describe the systems of accounts and financial statements used to control a financial system Answer: Financial statements are the primary means of communicating financial information to parties outside the business organization. The four basic financial statements:

Balance Sheet
Income Statement
Statement of Cash Flows
Statement of Retained Earnings

ACCOUNTING SYSTEMS

In small enterprises there can be different kinds of accounting systems such as external, internal and tax accounting. Annex 3 summarises data per Member State concerning accounting system requirements for small enterprises. On the basis of this data, the following descriptions of accounting systems are given:

Internal accounting

Internal accounting, also called management accounting is based on the enterprise’s internal accounting procedures and recorded accounting information. Internal accounting is intended for managers within organizations, to provide them with the economic basis to make informed business decisions that would allow them to be better equipped in their management and control functions.

For example, managers may want to be able to assess the contribution or the profitability of different products or services that they supply by comparing the revenues and costs that they generate. Unlike external accounting information, internal accounting is usually confidential and it is accessible only to the management. In most cases, small enterprises do not use internal accounting at all due to their size. Internal accounting is normally not governed by national legislation. However, in some Member States internal accounting is compulsory even for small enterprises.

External accounting

External accounting, also called financial accounting is concerned with the preparation of financial statements for decision makers, such as the owners, suppliers, banks, governments and its agencies, customers and other stakeholders outside the enterprise. External accounting makes use of the accounting information from the internal accounting system. In the preparation of the external accounting, the small enterprise may be governed by local 1.3 Analyse financial information contained in a set of accounts or financial statements Answer: The two main sources of data for financial analysis are a company’s balance sheet and income statement. The balance sheet outlines the financial and physical resources that a company has available for business activities in the future. It is important to note, however, that the balance sheet only lists these resources, and makes no judgment about how well they will be used by management.

For this reason, the balance sheet is more useful in analysing a company’s current financial position than its expected performance. The main elements of the balance sheet are assets and liabilities. Assets generally include both current assets (cash or equivalents that will be converted to cash within one year, such as accounts receivable, inventory, and prepaid expenses) and noncurrent assets (assets that are held for more than one year and are used in running the business, including fixed assets like property, plant, and equipment; long-term investments; and intangible assets like patents, copyrights, and goodwill). Both the total amount of assets and the makeup of asset accounts are of interest to financial analysts. The balance sheet also includes two categories of liabilities, current liabilities (debts that will come due within one year, such as accounts payable, short-term loans, and taxes) and long-term debts (debts that are due more than one year from the date of the statement).Liabilities are important to financial analysts because businesses have same obligation to pay their bills regularly as individuals, while business income tends to be less certain.

Long-term liabilities are less important to analysts, since they lack the urgency of short-term debts, though their presence does indicate that a company is strong enough to be allowed to borrow money. The balance sheet also commonly includes stock-holders’ equity accounts, which detail the permanent capital of the business. The total equity usually consists of two parts: the money that has been invested by shareholders, and the money that has been retained from profits and reinvested in the business. In general the more equity that is held by a business, the better the ability of the business to borrow additional funds. In contrast to the balance sheet, the income statement provides information about a company’s performance over a certain period of time.

Although it does not reveal much about the company’s current financial condition, it does provide indications of its future viability. The main elements of the income statement are revenues earned; expenses incurred, and net profit or loss. Revenues consist mainly of sales, though financial analysts may also note the inclusion of royalties, interest, and extraordinary items. Likewise, operating expenses usually consist primarily of the cost of goods sold, but can also include some unusual items. Net income is the “bottom line” of the income statement. This figure is the main indicator of a company’s accomplishments over the statement period.

Read more: http://www.answers.com/topic/financial-analysis#ixzz1uKymsDuW 2.1 As a manager you need to fully understand your role in the budgetary process. It is the most basic financial planning and control tool. Every manager needs to know what costs are associated with their department, and how in relation are they doing to that budget. You might achieve your departmental goals, but if you go over budget in order to achieve those goals, you create financial problems for the company and jeopardize your own job performance review. In most cases, part of your performance appraisal will be based on whether or not you were within budget for the year.

Budgets need to be realistic. You can’t just say at a whim you need 20 new people, just as upper management can’t say you have only $10 for a years’ worth of training classes. Budgets are used to investigate variances, whether you went over or under budget, and address the reasons for the variances. You need to always look at ways to control those variances by controlling costs. By being on top of your budget, you might be able to make changes before it’s too late and you end up having to reduce staff or eliminate a branch of your department. There are basically two types of budgets, a capital expenditure budget and operating budget:

1. Capital expenditure (also known as “Capex”) relates to costs associated with plant and equipment. This is equipment that generally lasts for more than a year such as a copy machine.
2. Operating budget, which is related to the normal day-to-day operations and expenditures such as payroll, supplies, and miscellaneous. There are two types of budgets within an operating budget, sales budgets and expense budgets:

· Sales budget is associated with comparison and variance of the actual revenue brought with the projected revenue. · Expense budget applies to all areas incurring operating expenses, including the sales department. This is the budget we will focus on.

CASH BUDGET FOR 90 DAYS
Beginning cash balance $ 320,000 Add:
Estimated collections on accounts receivable750,000
Estimated cash sales 250,000 $1,320,000 Deduct:

Estimated payments on accounts payable $ 800,000 Estimated cash expenses 150,000 Contractual payments on long-term debt 150,000 Quarterly dividend 50,000 $1,150,000 Estimated ending cash balance $ 170,000

2.2 Budgetary Control is defined as “the establishment of budgets, relating the responsibilities of executives to the requirements of a policy, and the continuous comparison of actual with budgeted results either to secure by individual action the objective of that policy or to provide a base for its revision. 2. Salient features:

a. Objectives: Determining the objectives to be achieved, over the budget period, and the policy (ies) that might be adopted for the achievement of these ends. b. Activities: Determining the variety of activities that should be undertaken for achievement of the objectives. c. Plans: Drawing up a plan or a scheme of operation in respect of each class of activity, in physical as well as monetary terms for the full budget period and its parts. d. Performance Evaluation: Laying out a system of comparison of actual performance by each person section or department with the relevant budget and determination of causes for the discrepancies, if any.

e. Control Action: Ensuring that when the plans are not achieved, corrective actions are taken; And when corrective actions are not possible, ensuring that the plans are revised and objective achieved. Budgetary Control is an integral part of management. It consists in comparisons between the results of actual performance and budgeted performance. Central to this kind of comparison is Standard Costing and Variance Analysis. The purpose of this article is to clarify simply to the leaner, reader, and others peoples who related with accounts, budgets, costing department.

01. Variance Analysis:

In a well-run organization the comparison between actual and budget is used as the basis for deciding the appropriate action. This document sets out how the analysis is used to highest effect. The procedure is actually part of the normal control process. Any variation from expected performance, in terms of budgets, where income or expenditure did not occur as expected. Variance analysis is the act of determining the drivers for those variations. Variances are noted and accounted for. A decision can be made to reduce expenses or reallocate resources.

This technique greatly reduces the need for comprehensive review cycles. 2.3 Budget and Budgetary control, both at management and operational level looks at the future and lays down what has to be achieved. Control verifies whether or not the plans are understood, and puts into effect corrective measures where deviation or underperformance is occurring. This article “Techniques of Budgetary Control” examines how budget and budgetary control can impact on the performance of the organizations

Techniques:

Budgetary Control is an integral part of management. It consists in comparisons between the results of actual performance and budgeted performance. Central to this kind of comparison is Standard Costing and Variance Analysis. The purpose of this article is to clarify simply to the leaner, reader, and others peoples who related with accounts, budgets, costing department. What variance analysis is all about, avoiding pure technicalities and the terminology of accountants? Notice is confined to costs and cost variances in this article. A similar dealing of revenue and revenue variances would also be compulsory to acquire a proper perspective. Following explained The Budgetary Control Techniques

01. Variance Analysis:

In a well-run organization the comparison between actual and budget is used as the basis for deciding the appropriate action. This document sets out how the analysis is used to highest effect. The procedure is actually part of the normal control process. Any variation from expected performance, in terms of budgets, where income or expenditure did not occur as expected. Variance analysis is the act of determining the drivers for those variations. Variances are noted and accounted for. A decision can be made to reduce expenses or reallocate resources. This technique greatly reduces the need for comprehensive review cycles.