Business Executive Summary (Coursework Sample)

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Table of contents
Introduction………………………………………………………………………………………………………………………………1
Question one…………………………………………………………………………………………………………4
Question two………………………………………………………………………………………………………….7
Question three………………………………………………………………………………………………………9
Question four…………………………………………………………………………………………………………0
Conclusion………………………………………………………………………………………………11
References………………………………………………………………………………………………12
Executive summary
The purpose of any business is profit maximization, growth and growth. Every existing and well-established business started at zero. Before venturing into any business, factors every entrepreneur should consider are start-up capital, legal requirements for the business, availability of market, prospects for growth, labor requirements and the like. Being a new investment, the partners have risked to venture in the business with expectations of good return. The period taken to break-even is a key determinant in how profitable a business is. If it takes long to break-even and start earning profits, then the venture isn’t that promising.
Introduction
Parcel business requires aggressiveness and effective public relations since the market is not very big. The industry is competitive since there are a few players in the market. Evolution of technology has deemed parcel delivery industry less profitable due to emergence of new ways of communication. However, proper accounting and marketing strategies lead to proper management of the business for profit and growth.
It is advisable to have a budget before starting off a business. A budget is an estimate of the sales and profits that are to be realized from a business for a specific time period. Budgets help in cash management and determination of appropriate cost requirements. A good budget should have an estimate that does not have a large variance to the actual values realized. When budget estimate is positive, then the business venture is worth investing in. This paper will analyze the different budgets that a new business can use in its operations and provide for how to effectively use the budgets to maximize profits. Specifically, cash accounting and accrual accounting form the basis of discussion.
Question one
A cash budget is a financial budgeted statement that is prepared to calculate estimated cash inflows and cash outflows during a certain accounting period. Cash budget is also used to determine budgeted cash balance at the end of the financial period (Bond 2013). A cash budget is advantageous in that it helps managers of a business to determine excessive idle cash or cash deficit during business operations.
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Cash budget
For the three months period

1 cash budget




Month 1

Month 2

Month 3


initial investment

60000

0

0


cash sale

6000

8000

10000

23760

Total cash

66000

8000

33760


Expense





Heat light and power

0

0

4000


telephone

0

0

1000


rent

3000

0

0


insurance

4000

0

0


wages

2000

2000

2000


fuel

1000

1000

1000


general expense

500

500

500







Purchases

36000

28000

32000


Van

20000

0



Drawing

5000

5000

5000


Total Expense

71500

36500

45500







Net Cash Flow

-5500

-28500

-11740


Balance Brought Forward

0

-5500

-34000


Ending balance

-5500

-34000

-45740








2. Reconciliation



Operating Profit

27040




Depreciation

500




Accruals

500




Cash invested

60000

88040



Purchased

-20,000




Drwaing

-15000




Prepayement for Rent

-1000




Prepayment insurance

-2500




inventory

-24,000




A/R

-71280

133780








Cash flow

-45740









3. Budgeted Balance sheet





Non-Current Assets

Cost

Depreciation

Net value

Van

20000

500

19500


Current Assets





A/R

71280




inventory/stock

24000




Prepaid Expense

3500




Total Current Assets

98780




Total Assets



118280


Current Liabilities





Bank overdraft

45740




Accruals

500




Net Assets



72040







Capital



60000


Budgeted Profit



27040


Drawings


-15000



Total Equity



72040






















Cash budget is an important task for management. The budget prepare small businesses for seasonal fluctuations of cash flows and prepare the business in taking advantage of discounts from creditors. Since a cash budget provides an estimate for a business cash position, business owners are able to determine how suppliers will be paid, growth prospect of a business, respond from a banker on a loan request, and increase to owner’s equity and profitability. It is therefore important for the partners to fully understand their business before preparing a cash budget. Through the cash budget, recommendations for improvement are also possible. Cash budget acts as a form of control and it is useful there are no accruals.
Recommendations
From the cash statement, it is evident that the business has not made any profits during the first three months of the business start-up. The business is still new and there is no ...