What Are The Advantages And Weaknesses Of The Minimum Cash Balance Practice?

The purpose of this paper is to describe the budget process, variances and the major reasons of the variance to make all the financial decisions of the firm properly. This paper would also be helpful to explain that “make” or “Buy” decisions also play a significant role to improve the efficiency of the firm. In addition, the paper would also be useful to clarify that non-financial performance measure may be unsafe for the image of the firm.

The company have generated very low operating cash flows, which is caused by a negative net income(16, 55) in 94,95, again with sales going down and cost of goods sold increasing. The company current ratio (2.3, 2.1, 2.5) in 93, 94, 95 are indicating satisfactory but when analyze quick ratio (1.1, 1.1, 1.3), and we also know that sales are down which mean more inventories. Now the account payable days has been increasing (49, 62, and 66). They have been delaying there payment which mean more cash on

The report below analyzes the performance of Peyton business, the budget, the actual performance and the variance from the budget. Further, the report provides the causes of the variance and the strategies that should be

In this task I’m going to analyse the figures on cash flow that I created in P3 and justify why you think the business might have problems also provide range of solutions.

The cash budget is another aspect of budget expectation. The cash budget determines how much cash an organization have on hand, and how much is needed to meet each expense. The cash budget will reveal to companies the availability of any type of surplus the company has for short-term investments.

As a result, holding cash would be essential component of the firm strategy. To develop new products, buy new equipment or expand geographically, firm has to spend money on marketing research, product design, prototype development and so on. Moreover, if a recession hits and the economy start to slow down,

Although the company seems to be profitable, it has faced shortage of cash. It happened due to increase in Accounts Receivable as well as Inventories. On the other hand, Accounts Payable does not increase that rapidly and difficulties regarding cash collection become evident. Furthermore, the cash collection cycle becomes larger (59 days in year 2003, while more than 70 in year 2006).

Recommendations based on the balance sheet are little, since the company is performing so well. Firstly, we can increase cash - meaning, make more sales and have more discounts to attract buyers. Furthermore, increase "service" sales. Introduce a dry-cleaning line or a tailor service. Secondly, increase property - more stores. We see that we are performing well and with more stores, we will increase assets. By doing so, we increase our collateral and gain more financial status. Overall, the company is performing very well

Budgets must be closely monitored (and stuck to) in order to fully achieve to the businesses maximum potential. The processes and internal techniques must be managed and all resources must be effectively used. It is very important for a business such as Tesco to manage their resources and control their costs in order to budget. Managing resources and controlling costs to a budget is very beneficial for Tesco as it involves a lot of different resources and money is always flowing in and out of the business, which, if managed well, will improve the performance of Tesco.

Also, according to its leverage ratios, the company’s debts are not only very high, but are also increasing. Its decreasing TIE ratio indicates that its capability to pay interests is decreasing. The company’s efficiency ratios indicate that despite the fact that its fixed assets are increasingly being utilized to generate sales during the years 1990-1991 as indicated by its increasing fixed asset turnover ratio, the decreasing total assets turnover indicate that overall the company’s total assets are not efficiently being put to use. Thus, as a whole its asset management is becoming less efficient. Last but not the least, based on its profitability ratios, the company’s ability to make profit is decreasing.

The company’s day-to-day operations did not change significantly over the last few years. Average collection period, inventory turnover, accounts payable, accounts receivable as well as cash conversion cycle all went up and down over the last four years but mainly stayed in the same range. So, there is no any significant change in operations. Mr. Cartwright has a very sound control over operations of the firm. Therefore, I believe, the company needs few more years to recover from the debts

Budgeting is crucial in the well-being of a company especially the financial health status of a company. In fact, no professionally managed firm would fail to budget, since the budget establishes what is authorized, how to plan for purchasing contracts and hiring, and indicates how much financing is needed to support planned activity. It is routine for a company to budget for its expenses. Expense budgets act as a guideline of how much revenue a company would require keeping the activities running. It is used to set the company’s targets for a certain period.

Looking at the analysis above, cash budget is important for Doomy Corporation to have, because it ties all of the rest of Doomy’s planning down to numbers and also timing. Also it is the roadmap where they believe they want to go so it helps them set goals in terms of what revenue

Along with these, it is also evident that the company must fix its processes involving bad debt accounting and revenue recognition. They should also attend to their accounts receivable to come up with better terms that would make collections faster and more efficient.

The management of cash is essential to the survival of any organization. Managing an organization’s financial operation requires knowledge of the economy and ways to maximize revenue. For any organization to operate on a daily basis adequate cash flow is required. Without cash management the organization will be unable to function because there is no cash readily available in case of inconsistencies in the market. Cash is also needed to keep the cycle of the company’s operations going.