MFRD Assignment
Executive Summary
Managing financial resources and decisions is a concept of managing the finances of a company for running it efficiently and making decisions which are best fit for the company’s current working and position. The assignment covered analysis Living Wood Ltd, a furniture manufacturer.
With the help from the cash budget prepared, I found that Living Wood is not producing as efficiently that they could be. They have many resources available to them, that could assist the company in improving their current state, however they are not employing them. Detailed analysis of Living Wood is conducted further in the Assignment.
Contents
Executive Summary 2
Introduction 5
PART 1 6
1a.Sources of Finance for Living Wood 6
1b. Sources of Finance 6
1c.Importance of Financial Planning 7
1d. Importance of Financial Planning in Decision Making 9
PART 2 12
2a.Ratios and the Performance of Living Wood 12
2b. Difference between Financial Statements 14
PART 3 17
3a. Material and Labour Variances 17
3b. Calculation of Variances 18
3c. Comment on Variances 18
PART 4 19
PART 5 23
5.Cash Budget 23
PART 6 24
6.Financial Strategies of Living Wood 24
Conclusion 25
References 26
List of Figures
Figure 1: Components of a financial statement 8
Figure 2: Decision Making Factors 10
Figure 3: Components of a Profit and Loss account 15
Figure 4: Breakeven chart for Living wood 20
Figure 5: Revised breakeven chart for Living wood 21
Introduction
Living Wood Ltd is a private limited company that was set up by three carpenters, Billi kid, Bengazy and Lee Jones. It is a medium-sized company that produces furniture for the retail sector and private homes, and is mainly in the domestic market. Living Wood has been in business for five years, and employs around two hundred staff.
The three founders are extremely enthusiastic about their designs and furniture, however, they are unable to integrate other business functions like marketing, administration or sourcing of materials
Managing financial resources and decisions is a concept of managing the finances of a company for running it efficiently and making decisions which are best fit for the company’s current working and position. The assignment covered analysis Living Wood Ltd, a furniture manufacturer.
With the help from the cash budget prepared, I found that Living Wood is not producing as efficiently that they could be. They have many resources available to them, that could assist the company in improving their current state, however they are not employing them. Detailed analysis of Living Wood is conducted further in the Assignment.
Contents
Executive Summary 2
Introduction 5
PART 1 6
1a.Sources of Finance for Living Wood 6
1b. Sources of Finance 6
1c.Importance of Financial Planning 7
1d. Importance of Financial Planning in Decision Making 9
PART 2 12
2a.Ratios and the Performance of Living Wood 12
2b. Difference between Financial Statements 14
PART 3 17
3a. Material and Labour Variances 17
3b. Calculation of Variances 18
3c. Comment on Variances 18
PART 4 19
PART 5 23
5.Cash Budget 23
PART 6 24
6.Financial Strategies of Living Wood 24
Conclusion 25
References 26
List of Figures
Figure 1: Components of a financial statement 8
Figure 2: Decision Making Factors 10
Figure 3: Components of a Profit and Loss account 15
Figure 4: Breakeven chart for Living wood 20
Figure 5: Revised breakeven chart for Living wood 21
Introduction
Living Wood Ltd is a private limited company that was set up by three carpenters, Billi kid, Bengazy and Lee Jones. It is a medium-sized company that produces furniture for the retail sector and private homes, and is mainly in the domestic market. Living Wood has been in business for five years, and employs around two hundred staff.
The three founders are extremely enthusiastic about their designs and furniture, however, they are unable to integrate other business functions like marketing, administration or sourcing of materials
References: Armstrong, M, 2010. A Handbook of Management Techniques. 3rd ed. India: Kogan Page Ward, J, 2000. Project Management Terms Silbiger, S, 2005. The Ten Day MBA. 3rd ed. New York: HarperCollins FutureAccountant William Pirraglia. 2009. What Is the Difference Between a Balance Sheet Versus a Profit and Loss Statement?. [ONLINE] Available at: http://www.ehow.com/about_4697312_sheet-versus-profit-loss-statement.html. [Accessed 18 February 11]. Leo Lingham. 2007. Writing Business Plans. [ONLINE] Available at: http://en.allexperts.com/q/Writing-Business-Plans-2081/Profit-Loss-v-Cash.htm. [Accessed 26 February 11] Investopedia Entrepreneur. 2011. Elements of a Business Plan. [ONLINE] Available at:http://www.entrepreneur.com/startingabusiness/businessplans/article38308-7.html. [Accessed 16 March 11] Shyam Bhatawdekar biz/ed. 2005. Quantitative and Qualitative Factors in Decision Making - Mind Map. [ONLINE] Available at:http://www.bized.co.uk/educators/16-19/business/strategy/presentation/decision2_map.htm. [Accessed 16 March 11] Wikipedia