A Analyzing Of Cash Budgets And Hoe Its Used To Make Decisions Finance Essay

A Analyzing Of Cash Budgets And Hoe Its Used To Make Decisions Finance Essay Regardless of the type of business, the ability to gauge performance using budgeting is a matter of life and death in the business world. Hence, to make decisions on the organization most managers use the cash budget, which forecast cash inflows and outflows. Moving from organizations budgeting systems, then comes another important element for products, the unit cost. Adding up, unit cost relates resources consumed to outputs produced to help managers to make better management and resource allocation decisions. Moreover, looking at pricing, it is the most important decision that is made in an organization upon its products and services. Never the less, there are many approaches to pricing, some scientific, some not. Yet, all the methods are been used by organizations managements to become the market leader by taking the righteous pricing decisions. Besides pricing decisions, one of the most important long-term decisions for any business relates to investment. Investment is the purch ase or creation of assets with the objective of making gains in the future. This is discussed further in the body of the report. Last but not the least, records that provide an indication of a company’s assets and debts, are well known as financial statements. There are main financial statements, which helps managers to forecast and make better decisions on the organizations issues. Furthermore, these financial statements differ from one business type to another. In addition, these can be justified annually using a number of ratios. Introduction Just as there are several organizational models for delivering extension services to the public, there are a number of ways to finance those services and to keep track of the money. Financial management may be fundamental to success. Poor financial management, on the other hand, often accompanies and contributes to failure. Managing financial resources and making decisions look upon principles related to money matters. Managers apply these concepts as appropriate to situations they face in their own organizations and in accordance with the rules and customs of their own countries. Because people are more readily inclined to apply ideas that deal with practical concerns, this discussion will be organized around practical problems. Task 1 (P3.1) Case Study – Budgets Analyzing of Cash Budget and how it’s used to Make Decisions Every organization knows the significant of a cash budget and how it can be determine the future directions of its business. In fact, cash budget is one of the key components of a master budget. Never the less, it is the most difficult budget to prepare as compared to the rest. Cash budget in reality is a foretell of cash inflow and cash outflow actions, which are likely to take place in the future. It can be a net cash surplus or net cash shortfall position. Cash Inflows Operating Activities From sales of goods and services From returns on invesment ÄÂ °nvesting Activities From sales of plant, property and equipment From sales of invesment From collection of principal on loans to other companies Financing Activities From sales of equity securities (issuing company’s own stock)