Jet2 Task 2 Essay Example
Subject: Financial Statement Analysis – Task 2
Summary Report
A budget, as defined by Hilton (2009 pg 348), is a detailed plan, expressed in quantitative terms that specifies how resources will be acquired and used during a specific period of time. A budget is a financial document utilized to project future income and expenses. A budget is based on how much you make in income and what your monthly expenses are. Budgets evaluate performances while the plan is what is going to happen or refine what you want to accomplish by thinking ahead. The purpose of having a budget is it improves efficiency, assigns responsibility, provides direction, and helps businesses plans and control finances. Managers use the budget as a benchmark against which to compare the results to of actual operations.
There are budgetary areas that raise concern in the budget planning of Competition Bikes, Inc. One area is forecasting of the sales budget. The sales projection in units for year 9 is set at 3510. In comparison to year 8, there was a 15% decrease in units sold in comparison to year 7 levels. Due to the present economic situation, there is no support for the projected sales to reflect 3510, as professional rider’s sponsorship is at a decline. The decline is expected to continue for another three years. The sales projections does not seem realistic as going forward there are no discussions as to how to increase sponsorships in the declining market.
There is no breakdown in quarterly activity to better utilize forecasting for the master budgeting plan. Inventory purchases such as materials are not taken into consideration with seasonal activity. Biking is an outdoor sport which competition events take place from spring to summer. By highlighting seasonal trends, the company should have higher levels of inventory during spring and lower inventory during the fall. By having these figures divided quarterly would better provide an accurate forecast
Summary Report
A budget, as defined by Hilton (2009 pg 348), is a detailed plan, expressed in quantitative terms that specifies how resources will be acquired and used during a specific period of time. A budget is a financial document utilized to project future income and expenses. A budget is based on how much you make in income and what your monthly expenses are. Budgets evaluate performances while the plan is what is going to happen or refine what you want to accomplish by thinking ahead. The purpose of having a budget is it improves efficiency, assigns responsibility, provides direction, and helps businesses plans and control finances. Managers use the budget as a benchmark against which to compare the results to of actual operations.
There are budgetary areas that raise concern in the budget planning of Competition Bikes, Inc. One area is forecasting of the sales budget. The sales projection in units for year 9 is set at 3510. In comparison to year 8, there was a 15% decrease in units sold in comparison to year 7 levels. Due to the present economic situation, there is no support for the projected sales to reflect 3510, as professional rider’s sponsorship is at a decline. The decline is expected to continue for another three years. The sales projections does not seem realistic as going forward there are no discussions as to how to increase sponsorships in the declining market.
There is no breakdown in quarterly activity to better utilize forecasting for the master budgeting plan. Inventory purchases such as materials are not taken into consideration with seasonal activity. Biking is an outdoor sport which competition events take place from spring to summer. By highlighting seasonal trends, the company should have higher levels of inventory during spring and lower inventory during the fall. By having these figures divided quarterly would better provide an accurate forecast