91476
Description
Mind Map by Charlotte Webber, updated more than 1 year ago
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Created by Charlotte Webber
over 11 years ago
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Finance
- Budgeting
- Budget- delegating spending power and monitoring business performance
- Budget holder- the person who is in change in seeing that the budget is kept to
- Expenditure Budgets- a sum of money given to spend in a given amount on time
within a department
- Profit Budgets- sales revenue target for a department or whole business
- Delegated Budgets- giving control in spending of the budget to
departments or individuals
- Benefits
- motivation to staff
(targets set)
- Departments are given responsibilities to spend
budget on what they need
- Departments are given responsibilities to spend
budget on what they need
- Improve Efficiency
- Keeps costs down
- Accountability
- Forward planning by looking at possible outcomes
- motivation to staff
(targets set)
- Disadvantages
- staff can become too
focused on the
budget, resulting in
lack of care to there
tasks
- Demotivate
staff if
targets too
low or high
- Problems caused
if one department
is given a bigger
budget than
another
- staff can become too
focused on the
budget, resulting in
lack of care to there
tasks
- Budget- delegating spending power and monitoring business performance
- Variances
- Variance- difference
between planning and
actual figures
achieved
- Adverse Variance-
when difference results
in lower profits
- sales revenue below budget
- Expenditure exceeds the budget figures
- sales revenue below budget
- Favorable variance- when
difference results in higher profit
- sales revenue higher than budget
- expenditure lower than budget
- sales revenue higher than budget
- Variance- difference
between planning and
actual figures
achieved
- Improving cash flow
- Causes of cash flow problems...
- Lack of planning
- Allowing too much credit
- Overtrading-
producing or
purchasing too much
stock
- Overborrowing-
high interest
payments
- High inflation- prices increase
- seasonal factors-
change of sales during
the year (icecream)
- Lack of planning
- Problems Caused...
- Staff can't be paid
- Bills can't be paid
- can't invest
- Can't buy materials
- BANKRUPSY
- Staff can't be paid
- Solving cash flow...
- Inflows:
- Sales
- Reduce trade credit
- Sell fixed assets
- Get loads or
overdrafts
- Marketing
- Sales
- Outflows:
- Better stock management
- Reduce costs
- Redundancies
- Redundancies
- Change suppliers or
negotiate deals
- Budgeting
- Better stock management
- Inflows:
- Causes of cash flow problems...
- Profit Margin= Gross Profit/ Sales x 100
- Net Profit Margin= Net profit/ Sales X 100
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