PUBLIC ADMINISTRATION-PUBLIC BUDGETING & FINANCIAL MANAGEMENT

Public Administration-Public Budgeting & Financial Management



Public Administration-Public Budgeting & Financial Management

Cash Budget

 

July

Aug

Sept

Oct

Nov

Dec

Jan

Feb

Mar

April

May

June

Cash Sales

7,500 6,000 3,000 3,000 7,000 8,000 1,000 2,000 4,000 5,000 6,000 7,500

Credit Sales

 

6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500

Total Sales

7,500 12,500 9,500 9,500 13,500 14,500 7,500 8,500 10,500 11,500 12,500 14,000

Purchases

3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000

Shop

200,000

 

 

 

 

 

 

 

 

 

 

 

Fixtures

12,000

 

 

 

 

 

 

 

 

 

 

 

Van

10,000

 

 

 

 

 

 

 

 

 

 

 

Loan Payment

675 675 675 675 675 675 675 675 675 675 675 675

Council Tax

 

 

 

 

 

3,000 4,000

Repair & Maintenance

500 500 500 500 500 500 500 500 500 500 500 500

Wages

2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000

Xmas bonus 1,000

 

 

 

 

 

 

Insurance Premium

3,000

 

 

 

 

 

 

 

 

 

 

 

Telephone Expenses

75 75 75 75 75 75 75 75 75 75 75 75

Total cash Expenses

231,250 6,250 6,250 6,250 6,250 10,250 6,250 6,250 6,250 6,250 6,250 10,250

Total (223,750)

6,250 3,250 3,250 7,250 4,250 1,250 2,250 4,250 5,250 6,250 3,750

According to the forecasted profit and loss account and cash budgeted (attached in excel sheet), we can easily say that this project is not financially viable. The trend of net income is not very attractive. We can see from the projected profit and loss account that net income starts from negative and touches 10k in July. From August to December, the trend is declining which indicates that there might be some probability of loss in the first year. But if we see the net income for the whole year, its positive and votes for the acceptance of the project. Coming to cash budget, we can say that cash budget is showing a clear sign of cash deficit which is against the acceptance of the project. (Barlett and Steele 2007)

Process of budget setting & Advantages to Businesses

Budgets can take many forms and serve many functions.  Budgets can provide the basis for detailed sales targets, staffing plans, inventory production, cash investment/borrowing, capital expenditures (for plant assets, etc.), and on and on.  Budgets provide benchmarks against which to compare actual results and develop corrective measures.  Budgets give managers "preapproval" for execution of spending plans.  Budgets allow managers to provide forward looking guidance to investors and creditors.  Budgets are necessary to convince banks and other lenders to extend credit.

This section will illustrate the master budget which is a comprehensive set of documents specifying sales targets, production activities, and financing actions.  These documents lead to forward looking financial statements (e.g., projected balance sheet, etc.).  Other types of budgets (e.g., flexible budgets) are covered in subsequent chapters. (Areeda and Turner 2008)

In small organizations, formal budgets are actually a rarity.  The individual owner/manager likely manages only by reference to a general mental budget.  The person has a good sense of expected sales, costs, financing, and asset needs.  Each transaction is under direct oversight of this person and hopefully they have the mental horsepower to keep things on a logical ...