Budgeting Essay

1796 words - 8 pages

Kenya Ratcliff
American Intercontinental University
FINA425 – Budgeting
January 24, 2016

This is a research paper about financial budgets. This research paper talks about a management director would establish policies and system for a business and/or organization. This research paper will help to explain the different style of budgets, budget cycles and the guidelines rules for set up a financial budget for a business and/or organization.

Unit 3 Individual Project
This is a report from the management director to establish policies and systems for the new business, I Can Business Incorporated (ICBI). This report will be delivered to the board of directors of ...view middle of the document...

Examples of liabilities are loans and store credit. Owner’s equity is the part of the business that belongs to the owner. Basically it’s the difference between the total assets and the total liabilities. The owner can claim any remaining assets once creditors and debts are paid off.
The income statement or the profit & loss statement is a financial report that gives management information regarding the profit or loss for the last accounting period. This report is very important to management and business owners because the income statement shows how the business is really doing, if it’s “health” (profit) or “sick” (loss). Managers and business owners want a “healthy” (profitable) business because the profit is the reason why the business is operating in the first place. The income statement consists only of revenues and expenses. Revenues are an inflow of assets or in other words cash flowing into the business. Expenses are an outflow or other using up of assets or in other words cash flowing out of the business to pay off operating costs.
The cash flow statements are a statement that details the incoming and outgoing flow of cash during the same time period as the income statement. Examples include cash flow from operating activities, cash flow from investing activities and cash flow from financing activities. The statements of shareholders’ equity is a statement that discloses sources of change in the shareholders’ equity accounts. Equity for shareholders can increase by the following two ways: amounts invested by the shareholders of the corporation and amounts earned by the corporation on behalf of the shareholders. Examples include common stock, preferred stock, additional paid-in capital (paid-in capital in excess of par value) and retained earnings.
Explain the budget cycle and process.
There are four basic phases to the budget cycle, preparing the budget, approving the budget, executing the budget, and evaluating the budget. The first phase, preparing the budget, starts with a brainstorming session to careful plan out where the money will be needed the most first and then going down the line with new ideas or initiatives that can be started right away. Top executives and management officers offers some insight to what each department can expect to receive in monetary funds. Upon making their spending decisions, each department will send their requests to the top executives and management and wait for inclusion in or exclusion from, the final document.
The second phase, approving the budget, is when the budget is subject to further debate. The approval of the budget isn’t based on a yes or no basis. The approval of the budget is another opportunity to rethink and fine tune how the business is really spending its funds.
The third phase, executing the budget, top executives can freeze the money to departments to prevent foolish or wastefully spending of money. At this point, departments can request reprogramming...

Other Essays Like Budgeting

Captial Budgeting Essay

1020 words - 5 pages because cash flows will also be negative” (Investopedia, 2012). By using net present value, Guillermo can see how much to invest today and how much cash flow they would have for a set number of years. Net present value is made for outside investors, and for managers. Internal Rate of Return “The discount rate often used in capital budgeting that makes the net present value of all cash flows from a particular

Capital Budgeting Essay

2877 words - 12 pages Contents 1.0 INTRODUCTION 3 2.0 STAGES OF BUDGETING 4 3.0 CASH BUDGET 6 4.0 FACTORS INFLUENCING INVESTMENT OF SURPLUS BUDGET: 7 5.0 STEPS TO STTING UP CREDIT CONTROL SYSTEM: 9 6.0 DECISION MAKING IN CREDIT CONTROL SYSTEM 11 7.0 OVERDRAFT 12 8.0 CONCLUSION 14 9.0 REFRENCES 15 10.0 BIBLIOGRAPHIES 16 1.0 INTRODUCTION In Every organization be it in manufacturing or service sector need a guideline or plan so that it will be

Capital Budgeting

1785 words - 8 pages has a bright future and a long successful road ahead. Reference: Business Dictionary.com. (2007-2009). Profitability Index. Retrieved April 27, 2009, from http://www.businessdictionary.com/definition/profitability-index.html Investopedia. (2009). Risk Premium. Retrieved April 27, 2009, from http://www.investopedia.com/terms/r/riskpremium.asp University of Phoenix. (2009). Capital Budgeting [Computer Software]. Retrieved April 27, 2009, from University of Phoenix, Simulation, MBA 540-Maximizing Shareholder Wealth.

Budgeting Case

4682 words - 19 pages A Case Method Approach of Teaching how Cost-Volume-Profit Analysis is connected to the Flexible Budgeting Process and Variance Analysis To start a successful business, students need to understand the steps necessary to achieve their desired profits. While Managerial textbooks teach each step independently, we demonstrate how these steps are integrated. We present a Multi-Disciplinary Case-Method approach to teaching Cost-Volume-Profit

Capital Budgeting Fundamentals

4179 words - 17 pages Valuation and Capital Budgeting Part I Capital Budgeting M. Lambert Valuation and Capital Budgeting Part I, HEC-ULg 2013-2014 – Marie Lambert 1 Real investments • Real investments are expenditures that generate cash in the future and, as opposed to financial investments, like stocks and bonds, are not financial instruments that trade in the financial markets • Corporations create value for their shareholders by making good real

Capital Budgeting Problems

4865 words - 20 pages CAPITAL BUDGETING PROBLEMS: CHAPTER 10 Answers to Warm-Up Exercises E10-1. Answer: Payback period The payback period for Project Hydrogen is 4.29 years. The payback period for Project Helium is 5.75 years. Both projects are acceptable because their payback periods are less than Elysian Fields’ maximum payback period criterion of 6 years. NPV E10-2. Answer: Year 1 2 3 4 5 Cash Inflow $400,000 375,000 300,000 350,000 200,000 Total

Capital Budgeting at Aes

1258 words - 6 pages Case 3: Globalizing the Cost of Capital and Capital Budgeting at AES Question 1 Explain and comment on the capital budgeting method used historically by AES. Is there a need for change? Explain. Question 2 If Venerus implements the suggested methodology, what will be the adjusted discount rate for the Red Oak project (USA) and the Lal Plr project (Pakistan)? Question 3 Calculate the effect that a revision of its cost

Finance Capital Budgeting Memo

1146 words - 5 pages | Finance 390 | Memo To: | Bob Saunders and Maria Gonzalez | From: | Kelly Moeller | cc: | Antar Salim | Date: | April 13, 2015 | Re: | Capital Budgeting | | | After reviewing your case, it appears that you are trying to determine whether Project A or Project B would be more feasible. Project A has an investment of about $2,000,000 on plant, equipment and supplies. During the first year of operations, the sales and cash flows

Capital Budgeting Simulation Analysis

1512 words - 7 pages ------------------------------------------------- New Heritage Doll Company Capital Budgeting Simulation Analysis Xiaomeng Jin (Emma) Chuzhao Yin (Lavana

Capital Budgeting Practice In Bd

2354 words - 10 pages Executive Summary Reckitt Benckiser Bangladesh Ltd is a leading player in the FMCG market of Bangladesh with a focus on Health, Hygiene & Home. Making differencing from conventional playing company in Bangladesh Reckitt Benckiser has strong intention for modern developed capital budgeting technique in evaluating their potential projects especially in large R&D projects. The company mainly uses IRR. It uses sophisticated methods to

Accounting 504 Case Study Budgeting

577 words - 3 pages ACCT504 Case Study 3 on Cash Budgeting The cash budget was covered during Week 4 when we covered TCO D and you read Chapter 7. There is also a practice case study to work on. Your Professor will provide the solution to the practice case study at the end of Week 5. This case study should be uploaded by 11:59PM Mountain time of the Sunday ending Week 6 to the Week 6 Assignment Dropbox. You are encouraged to use the Excel template file provided

Related Papers

Budgeting Essay

2415 words - 10 pages “The traditional budget is a rigid tool and therefore be discarded in practice”. Should the traditional budgetary model be abandoned as suggested above? Introduction What is budget and budgeting? Budget is a financial plan, which is tailored individually for each entity covering specific future period of time and which enables to determine manager’s targets and to predict the consequence of that specific financial period (Langfield

Capital Budgeting Essay

1152 words - 5 pages Capital Budgeting By Joan Shoueka Capital Budgeting is defined in accounting and finance as “the planning of long-term corporate financial projects relating to investments funded through and affecting the firm's capital structure (Wikipedia, 2014).” It allocates resources for major capital or investment expenditures. Creating and implementing a budget is crucial to any business or organization for many reasons. One reason is because

Capital Budgeting Essay 1072 Words

1072 words - 5 pages Capital Budgeting The Capital Budgeting simulation asks the user to decide between two mutually exclusive capital investment proposals. In the following discussion, an analysis of the risks associated with the investment decision will be presented. Furthermore, a mitigation plan for each risk discussed will be included in the following discussion. In what long-lived assets should the firm invest (Ross 2005)? This question concerns the left

Capital Budgeting Essay 2383 Words

2383 words - 10 pages regardless of functional specialization. Topics include financial analysis and planning, time value of money, valuation, capital budgeting, risk/return trade-offs, cost of capital, and capital structure. The pedagogical approach used is a mixture of lectures and case examples. Cases are often used as a vehicle for discussing the complexities of real-world financial problems. To benefit most from this method of teaching, you will want to come