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Unit 5: Accounting Principles and Cash Budget

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Task 1

Evaluation of the function of accounting inside an organisation

There is a significant role in tracking expenditures and income belonging to a particular organisation. Management of the information and statutory compliance modes can be implicated in this context. Hence, there are provisions for the determination of relevant decisions in business after the execution of appropriate choices in business. Analysis of financial data can take place after overseeing monetary types of transactions (Grossi et al. 2020). Therefore, investing in companies can take place after the effective implication of decisions in this approach of reporting. The disclosure of information can also take place in this regard. Moreover, analysis of resources can take place after the implementation of measures in this aspect.

There is a need to evaluate all kinds of financial functions and there is a need for the classification of financial functions based on attributes. There is a pertinent need for the inclusion of all kinds of activities of financing and therefore, financial decisions of all tasks can take place in this specified scenario. Principles of accounting are necessary for providing accurate types of reports (Bebbington and Unerman, 2020). Hence, these are contemplated for the acquisition of effective decisions in this regard. classification of financial modes of transactions can take place after the derivation of measures in this scenario. Therefore, an appropriate representation of all information can be necessary for the escalation of profitability in business.

Ascertaining the profitability of the business can be depicted as one of the most suitable advantages after the accomplishment of principles of accounting. Hence, these are derived as one of the most significant opportunities and these are evaluated as principles in the determination of pertinent measures in business. Scopes of business can become implicated after the derivation of information in this regard (Gofwan, 2022). There is a definition of scopes and these are derived as appropriate strategies in this specified context.

Development of projects can take place after the derivation of measures in this regard. Clarification of business transactions of business can become involved after derivation of effective situations in business. Therefore, these are regarded as appropriate modes of transactions and these are implicated as frameworks in this context. A financial mode of analysis can be implemented for the derivation of ideas and these are incorporated into this system (Hopper, 2019). Prediction of transactions can also become implicated after analysis of operations in this regard. Statutory modes of requirements can take place for the implication of measures in this context. Presentation of transactions can become involved after the application of requirements in this situation.

Critical mode of evaluation of the function of accounting in the acquisition of decisions and meeting the needs of stakeholders

There is a requirement for the implementation of reports on accounting to meet expectations. There are probabilities for meeting the standards of business as stakeholders can get appropriate information about the business. Hence, it can be explained as a suitable procedure for meeting the expectations of all stakeholders (Retolaza and San-Jose, 2021). Detailed mode of information is necessary to be processed so that it can meet the expectations of all stakeholders. Hence, the advantages of business can become implicated after the implementation of effective decisions in this regard. Competencies of business can be enhanced after the incorporation of necessary ideas and effective procedures of the business.

Investing in appropriate business decisions can become possible after the availability of information in this regard. Financial modes of information can become developed after the effective implementation of decisions (Costa and Lucena, 2021). There is a requirement for the derivation of features for implication in the procedures of the business. There are possibilities for the creation of a table of budgets after the implication of effective ideas in this scenario. There is an implication of controlling costs for evaluating the performances of all workers. Hence, fraud can be prevented after the derivation of effective measures in this regard. Hence, possibilities for an implication of costs can be developed in this specified scenario. Frauds can become prevented and these are incorporated as effective forms of measures in this regard (Cohen et al. 2020). Moreover, there is a requirement for the implementation of financial types of statements and these are evaluated in this regard.

Branches associated with accounting and requirements of skills

There is a requirement for a large number of branches and these are implicated for analysis of decisions of the business. Particular modes of ideas can become derived after making pertinent decisions in this scenario. Improvements can be depicted in knowing the consequences of business after the depiction of methods of accounting (Somjai, 2020). There is an implementation of ideas of assumption of budgets and these are implicated as necessary decisions for the depiction of principle ideas. Decisions of business can be met for getting accuracy in decisions of the business. Qualitative modes of characteristics can be implicated after meeting effective features in the business. Prediction of transactions can become implemented after the evaluation of decisions in this scenario. The performance of the business can be met after the implementation of appropriate forms of applications.

Issues related with ethics

Records of transactions are kept and these are implicated in the derivation of essential types of significance. Hence, these are accounted for in the implementation of ideas, and probabilities of business can become enhanced after the derivation of ideas in business. Maintenance of records and accounting can be involved in understanding resources (Zhang et al. 2020). Hence, these are implicated in the derivation of appropriate measures, and the application of these types of measures can become involved after the creation of a “budget table”. Moreover, systematic records are accumulated and effective modes of decision-making can be involved after the application of techniques in this scenario. Acquisition of goals of financing can be met for leading to effective modes of applications of business. Hence, there is a derivation of ideas regarding the profits of the business after the evaluation of these types of implications (Dillard and Vinnari, 2019). Statements are corrected and the application of business ideas is derived in this context.

Roles of technologies in accounting

Management of inventories can take place and these are implicated in controlling financial statements. Hence, these are evaluated for keeping records of items and these are incorporated as measures in this framework. Legal types of compliance and appropriate implementation of control can occur and these are implicated in this regard. Processing of data can take place for the processing of information in this regard (Bellucci et al. 2019). Hence, it is depicted as ideas for affecting principles of business after the implication of ideas in this circumstance.

Production of a 12-month cash budget

In this work, the founder of the business organisation is investing £100,000 of the amount and for their purposes, they are also taking advantage of the loan amount of £50,000. The work is prepared for a 12-month cash budget for this business, taking into consideration that the initial or the main amount of the investment of £100,000 and the loan of £50,000 that has also been secured or placed. The budget has been prepared or made up in such a way or process as to allow for variance in the analysis, allowing or permitting users mainly to see the potential impact of different scenarios upon this specific business. For scenario one discounting Prices by 20% and increasing Sales Volume by 10%. The reducing prices by 20%, it can be seen that a 10% increase in sales volume per month is generated. This may also lead to an increase in specific revenue, but also a huge decrease in the gross or total margin. The main or primary impact of this scenario is shown in the table below.

Case 1 or scenario 1: when the price for this is discounted by 20 percent and the sales volume is increased by 10 percent

In this work, the following assumptions are taken for scenario 1: 

Here the assumption that is taken into account is that the sales volume can increase or grow by 10% in the first month and remain constant at that level for the entire 12 months. Another assumption for this business is it has operating expenses of £5,000 per month, including the loan repayment. The loan repayment may be made up in equal monthly installments over a period of 12 months, including interest.

For the first month, the sales revenue that can be generated is £10,000 (after a 20% discount). The Loan disbursement for this month can be £50,000, the total inflow for this work is £60,000, The Operating expenses for this work can be £5,000, and The Loan repayment for this work can be £4,343 (including interest), The Total outflow for this work can be of £9,343 and the Net cash flow for this work could be of amount £50,657. For the Months of 2 to 12, the Sales revenue is £10,000 (after a 20% discount), and the Total inflow for this work is of the amount of £11,000, the operating expenses for this work may be £5,000, the loan repayment for this work is £4,343, the Total outflow here can be £9,343, the Net cash flow here can be of £1,657. In this work for overall cash budget for 12 months is

Month Inflow Outflow Net cash flow
1 £62,000 £9,843 £52,157
2 £13,200 £9,843 £3,357
3 £13,200 £9,843 £3,357
4 £13,200 £9,843 £3,357
5 £13,200 £9,843 £3,357
6 £13,200 £9,843 £3,357
7 £13,200 £9,843 £3,357
8 £13,200 £9,843 £3,357
9 £13,200 £9,843 £3,357
10 £13,200 £9,843 £3,357
11 £13,200 £9,843 £3,357
12 £13,200 £9,843 £3,357

Table 1: Cashflow budget for scenario 1

The total or the net inflow over 12 months of the period is of the amount of £183,000. The total amount of the outflow over 12 months or the whole year for this is £112,116. The Net cash flow over 12 months or a period of a year is £70,884. The net income is positive all through the year, demonstrating that the business is supposed to create an excess of money over its costs. This excess can be utilized to reinvest in the business or pay back the credit early. It is critical to take note that this is improved on the cash spending plan and genuine outcomes might change in view of various elements.

Case 2: The marketing budget increased by 10 percent and sales revenue increased by of 20 per cent.

If the user increases the marketing budget or the amount of spending by an amount of 10% per month or every month in that case, this may also result in an increased amount of sales volume due to the increased brand visibility and awareness. In this work, another assumption that is taken into consideration is that increasing the marketing budget by 10% per month results in a 20% increase in sales revenue, for this case the updated amount of the cash flow budget is.

Month

Inflow

Outflow

Net cash flow

1

£62,000

£9,843

£52,157

2

£13,200

£9,843

£3,357

3

£13,200

£9,843

£3,357

4

£13,200

£9,843

£3,357

5

£13,200

£9,843

£3,357

6

£13,200

£9,843

£3,357

7

£13,200

£9,843

£3,357

8

£13,200

£9,843

£3,357

9

£13,200

£9,843

£3,357

10

£13,200

£9,843

£3,357

11

£13,200

£9,843

£3,357

12

£13,200

£9,843

£3,357

Table 2: Cashflow budget for scenario 2

For this calculation, the assumption that is taken into consideration is the founder of this business has invested a total of £100,000 of their own capital. The increase in the marketing budget by 10% per month results in a 20% increase in sales revenue. The Operating amount of the expenses remains or stays at £5,000 per month, including the loan repayment. For the 12-month period, the number of installments is equal in this work. From this budget plan it can be told that by expanding the showcasing financial plan, the business is supposed to produce considerably more money, bringing about a positive net income all throughout the year (Kokina, and Blanchette, 2019). In this business, the total amount of the loan of £50,000. The price is discounted by 20%, which can increase the amount of the sales volume by 10% per month.

Case 3: Generating a budget for offering suppliers a one-month’s trade credit

In this case, the budget sheet for this work can be based upon the assumption the founder or the investor of this organization has invested an amount of £100,000 in their own capital. For this business, the secured amount of the loan can be £50,000. The prices are discounted by 20%, which can be increased by the sales volume by an amount of 10% per month. The operating expenses or the main expense for this work always remain at £5,000 per month, including the loan repayment. For this work, the loan repayment amount for this work can be completed by an equal amount of investment for the period of 12 months.

For this first month, the Sales revenue is £12,000 (after a 20% discount and 10% increase from increased sales volume), The amount of Loan disbursement is £50,000, and The total amount of inflow for this work is £62,000, The inventory purchases for this work is of the amount of £8,000 (assuming one month's worth of inventory on hand), The Operating expenses is £5,000, The Loan repayment for this is £4,343 (including interest), The amount of the Total outflow: £17,343, The amount of the Net cash flow for this case is £44,657.

For the Months 2 to 12, this is as the sales revenue of £12,000 (after a 20% discount and 10% increase from increased sales volume), The Total amount of inflow for this is £12,000, The amount of the inventory purchases are of £8,000 (assuming one month's worth of inventory on hand), The operating expenses for this case is £5,000, The loan repayment for this work is £4,343, The total outflow for this work is of £17,343, The net cash flow in this work is of -£5,343 (negative due to outflow being higher than inflow).

Month Inflow Outflow Net cash flow
1 £62,000 £17,343 £44,657
2 £12,000 £17,343 -£5,343
3 £12,000 £17,343 -£5,343
4 £12,000 £17,343 -£5,343
5 £12,000 £17,343 -£5,343
6 £12,000 £17,343 -£5,343
7 £12,000 £17,343 -£5,343
8 £12,000 £17,343 -£5,343
9 £12,000 £17,343 -£5,343
10 £12,000 £17,343 -£5,343
11 £12,000 £17,343 -£5,343
12 £12,000 £17,343 -£5,343

Table 3: Cash flow budget for scenario 3 or case 3

The total inflow in this budget over the period of 12 months is £198,000. The total outflow in this work for over the 12 months or the periods of over, is £208,116. The Net cash flow over the periods of 12 months or the periods over is -£10,116 (is mainly negative due to outflow being higher than inflow).

For case 4: When the rental cost is reduced by 15 percent per month

Month Inflow Outflow Net cash flow
1 £62,000 £21,693 £40,307
2 £12,000 £16,255.50 -£4,255.50
3 £12,000 £16,255.50 -£4,255.50
4 £12,000 £16,255.50 -£4,255.50
5 £12,000 £16,255.50 -£4,255.50
6 £12,000 £16,255.50 -£4,255.50
7 £12,000 £16,255.50 -£4,255.50
8 £12,000 £16,255.50 -£4,255.50
9 £12,000 £16,255.50 -£4,255.50
10 £12,000 £16,255.50 -£4,255.50
11 £12,000 £16,255.50 -£4,255.50
12 £12,000 £16,255.50 -£4,255.50

Table 4: Cashflow budget for scenario 4 or case 4

Here the total amount of the inflow over 12 month’s period is £198,000. The total amount of outflow over 12-month period is £198,466 and to prepare this budget the calculation is based upon the previous assumptions.

Figure 1: Cash flow budget for the financial year 2023

This figure shows the cash flow budget for the total financial year of12 months. In this calculation, the net cash inflow and the net cash outflow of the whole financial year are prepared. In this, the opening and closing balance of the whole financial year is also taken into consideration.

MEMORANDUM

Date: 20-02-2023

To: All Staff

From: John Doe, Head Accountant, and Accounting Department

Subject: Account Report analysis

I am writing this to all the employees of the organization that the accounting of this company has been completed. In this calculation process, all the required criteria are strictly followed. In the first calculation sheet, it is found that the net cash flow is highest for the first month and this is £50,657; where the cash inflow for the month is £60000 and the outflow for the month is £9343. In the next month, the data is average for net cash flow. I have seen from the analysis of the first condition the account of this company is most healthy in the first month. From the analysis report of the second condition, I have seen that our organization gets the highest amount of profit or net cash flow in the first month only. It has done an amount of £52157 in the first month only and it has the average cashflow of £3357 in other months of the financial report.

In report 3 and in report 4 I have seen the same thing the net cashflow is highest in the first month only and in the next of months, they are in the negative amount. The negative amount denotes that the profit generated by the following month is negative because our company has done a loss in this month. From this, I can say our company needs to focus on other months of the financial month also so that the company can get their desired amount of profit. I advise our finance committee and their related employees to specially work on report 3 and report 4 especially because our company had lost a huge profit which is expressed in negative integer. If we don’t focus our attention on that section our company may lose a huge opportunity for future growth and all this can lead them to a huge amount of penalty. The exciting news is that in regard to talking about this with the higher authority of our company has let me know that the innovative and creative solution regarding reports 3 and 4 from any of the employees would be rewarded.

From the budget report and other improvement reports of the organization, I have seen that this organization has not conducted any furthermore in the research and development sector. As all, know to meet with the target of the company it is very important to do growth in the research and development sector and because of this reason, I would suggest our financial committee allocate extra funds to the following sector.

I would recommend the action committee keep a close eye on how our company is doing. I would recommend our financial action team be aware of our levels of stock, the volume of sales, and banking account balance on a daily basis. I would recommend them to see cashflow management for more information on how often our company should assess where we should stand in relation to the goals that are established in our company plan.

Due to customers' late payments, businesses may have serious issues. Our credit terms and conditions must be clear from the start to minimise the risk of non-payment or late payment. I should also issue detailed and concise payments as soon as possible. We may maintain track of your client's account s by employing computer debt management software.

Even the most successful businesses may experience problems if there isn't enough money to pay for ongoing expenses like rent and salaries. Because of this case, I would recommend our team see how to monitor money for our business for further information on understanding the bare necessities your company needs to operate and making sure that does not even plummet underneath it.

If our accounts are not kept up-to-date, then run the danger of losing money by neglecting to monitor past-due payments from customers or having that remember when you we need to pay suppliers. We YouWe can request additional financing, maintain records of our liabilities and creditors, and save time and money on accounting fees by using a strong record-keeping system.

Tax penalties and interest may apply if collection and reporting deadlines are missed. Planning beforehand can help you prevent these avoidable expenses. Maintaining proper records helps our business save time and money while giving us the satisfaction that we are only spending a required amount of tax. As a consequence, it's essential that we fulfil our requirements; for assistance,to see and establish a simple record-keeping system.

Is our company working as efficiently as possible? By altering behaviour or producing goods with the use of current equipment, someone could also save energy plus, consequently, money. It's one of the simplest strategies to reduce spending. The following areas in a typical office should be examined to see where money can be saved by using energy more efficiently in heating, light, office equipment, and air conditioning.

Effective stock management makes sure that we have the proper amount of inventory available there at the correct time to prevent needlessly using up our cash. Put processes in place to monitor stock levels; by taking charge of this, you'll be able to free up cash and ensure that you have the proper amount of stock on hand.

We must pick the appropriate form of financing for our company because they are all intended to serve distinct purposes. Smaller companies typically rely more on business overdrafts and personal borrowing, but this may not be the best source of capital for your firm; instead.

Economic matters are often very stressful to businesses, however, there is support and advice available to help us cope with them before they become too much more to bear, so obtain expert assistance as soon as we need to. Additionally, there are some preliminary actions you may take to lessen the impact, such as focusing on priority debts first and determining ways to enhance cash flow management.

Task 2

Evaluation of the function of accounting inside an organisation

In terms of the purpose of the accounting function, it is important to note that accounting serves as a critical tool for decision-making within an organization. The accounting function is responsible for tracking and managing financial transactions, ensuring compliance with regulatory requirements and ethical standards, and producing financial reports that provide insights into the financial health of the organization (Rouwelaar et al. 2021). By providing accurate and timely financial information, accounting enables management to make informed decisions about the allocation of resources, the assessment of risks, and the identification of growth opportunities. To meet accounting principles, conventions, and standards, financial statements must be prepared for sole traders, partnerships, and non-profit organizations from a given trial balance (Grossi et al. 2020). This involves organizing financial information into various categories such as assets, liabilities, and equity, and presenting it in a standardized format. Additionally, financial ratios must be calculated and given from final accounts, which provide a snapshot of the organization's financial performance over a given period. By analysing these ratios, management can identify trends and make informed decisions about the organization's financial health.

Budgeting and budgetary planning and control are essential for organizations to plan and manage their financial resources effectively. A cash budget can be prepared from a given data set to help organizations anticipate and manage their cash flows. This involves estimating future income and expenses and projecting cash balances over a given period. By monitoring actual cash flows against the budget, management can identify areas of concern and make adjustments as necessary (Bebbington and Unerman, 2020). Accounting plays a critical role in the success of an organization. It provides management with the financial information necessary to make informed decisions, comply with regulatory requirements and ethical standards, and manage resources effectively. By following accounting principles, conventions, and standards, organizations can ensure the accuracy and integrity of their financial information, which is essential for long-term success (Gofwan, 2022).

  • Gross profit margin: Gross profit margin measures the profitability of a company's products or services before accounting for overhead costs.

Gross profit margin measures the profitability of a company's products or services before accounting for overhead costs.

Gross profit margin = (Gross profit / Revenue) x 100

For example, using the data from the Sole Trader Income Statement:

Gross profit margin = (50,000 / 100,000) x 100 = 50%

  • Current ratio: Current ratio measures a company's ability to meet its short-term obligations.

Current ratio = Current assets / Current liabilities

For example, using the data from the Sole Trader Balance Sheet:

Current ratio = (15,445 + 5,000 + 10,000) / 5,000 = 6.09

  • Debt-to-equity ratio: Debt-to-equity ratio measures the proportion of debt to equity in a company's capital structure

Debt-to-equity ratio = Total liabilities / Total equity

For example, using the data from the Partnership Balance Sheet:

Debt-to-equity ratio = 105,000 / 85,445 = 1.23

  • Return on assets (ROA): ROA measures how efficiently a company uses its assets to generate profits

ROA = Net income / Total assets

For example, using the data from the Non-Profit Organization Income Statement and Balance Sheet:

ROA = 20,000 / 70,445 = 0.2837 or 28.37%

  • Return on equity (ROE): ROE measures how much profit a company generates with each dollar of shareholder equity

ROE = Net income / Total equity

For example, using the data from the Sole Trader Income Statement and Balance Sheet:

ROE = 20,000 / 65,445 = 0.3056 or 30.56%

Critical mode of evaluation of the function of accounting in the acquisition of decisions and meeting the needs of stakeholders

There is a requirement for businesses to implement accounting reports to meet stakeholder expectations and the standards of business. By providing detailed information, stakeholders can make informed decisions and the business can enhance its competencies. Effective decisions can be made based on the availability of information, and financial information can be developed through the effective implementation of decisions (Retolaza and San-Jose, 2021). Budget and budgetary planning and control are important tools for businesses, as they have benefits such as providing a roadmap for financial decisions and ensuring that resources are allocated effectively. However, there are also limitations to budgeting, such as uncertainty and the potential for inflexibility (Costa and Lucena, 2021).

Figure 2: Information Regarding Financial Statement

Proper implementation of accounting practices can prevent fraud and other unethical practices within a business. The figure above represents the information regarding financial statements for a sole trader, partnership, and non-profit organization.

Branches associated with accounting and requirements of skills

The accounting function within an organization serves a critical purpose in ensuring compliance with regulatory and ethical constraints. One essential task for the accounting function is to prepare financial statements that meet accounting principles, conventions, and standards (Cohen et al. 2020). These statements provide valuable information about the financial performance and position of an organization. Financial ratios can also be calculated and presented from final accounts, which allow for the comparison of an organization's performance over time. Additionally, budgeting and budgetary planning and control provide an effective means for organizations to plan and allocate resources (Kwilinski, 2019). While a cash budget can be prepared to aid in this process, it is important to consider both the benefits and limitations of budgeting. By meeting these tasks, organizations can improve their decision-making processes and enhance their probabilities for success.

Issues associated with regulations and identification of threats

There can be the existence of threats of vulnerabilities and these are determined as threats as there is an escalation of opportunities for hackers. Hence, all processes of a business are at risk and these are applied as threats in this context. Decisions of business can be met for getting accuracy in decisions of the business. Qualitative modes of characteristics can be implicated after meeting effective features in the business (Almagtome et al. 2020).

There is an implementation of ideas of assumption of budgets and these are implicated as necessary decisions for the depiction of principle ideas. Hence, these are evaluated as effective methods and these are incorporated for the derivation of sustainable mods of ideas associated with the progress of the business. Manipulation of models can become evaluated for the analysis of relevant ideas in the acquisition of decisions of the business (Rezaee and Wang, 2019). Hence, there can be relevant conditions for the allocation of a large number of resources and hence, these are incorporated for the implementation of effective ideas in the evaluation of business decisions. Roles can become evaluated for the development of appropriate modes of ideas for the generation of effective opportunities in decisions of the business.

Evaluation of the budget for their role

This budget plays an important role in the planning and economic growth of this company as this helps to limit or control the budget within their economic limit. This is very much helpful for limiting their resource to the proper purpose so that the investment is properly utilized. A structured form of planning in business is ensured after the effective application of solutions. Evaluation of finances can be incorporated after the application of ideas in this procedure of business (Ritonga, 2020). Budgeting is a crucial aspect of financial planning and management in any organization, as it provides a framework for resource allocation and expenditure control. For this reason, it is important for companies to evaluate their budgets for the roles assigned to them to ensure they are effectively contributing to the organization's economic growth (Akimova et al. 2019). An effective budget limits expenditure to economic limits, thus ensuring that resources are utilized optimally and wastage is minimized. The budget plays an important role in managing the finances of the company, as it provides a clear structure for planning and monitoring expenditures. Crucial aspects of business can be understood in this situation. Hence, these are derived as appropriate forms of opportunities and these are incorporated as effective modes of situations and these are necessary to be implicated in situations of business.

A structured planning process is necessary for the successful execution of business operations. The budget, therefore, serves as a vital tool in the planning process, as it provides a detailed outline of the financial resources required to undertake various business activities. It ensures that the company's financial resources are directed toward achieving the strategic objectives and goals of the organization. The evaluation of finances is an important process that follows the application of ideas in the budgeting procedure (Olaofe-Obasesin, 2020). The purpose of this evaluation is to ensure that the allocated funds are effectively utilized and that the set targets and objectives are achieved (Finkler et al. 2022). The company's financial performance is analysed, and any necessary adjustments are made to the budget to ensure it aligns with the company's economic growth strategy. A budget is a critical tool for planning and managing financial resources in an organization (Korhonen et al. 2021). Evaluation of the budget for each role ensures that resources are utilized efficiently and that the company's financial resources are directed toward achieving the desired objectives. Companies must, therefore, pay close attention to their budgets to ensure they are effective in contributing to the organization's economic growth. Growth can take place in business after the derivation of effective procedures. Hence, these are identified as ideas for the development of business opportunities.

Budgetary modes of solutions

In analysing business transactions, it is important to validate them based on appropriate accounting principles and standards. This ensures that the transactions are recorded accurately and reliably. Financial analysis can then be implemented to derive insights and inform decision-making (Hopper, 2019). It is also necessary to comply with regulatory requirements when presenting financial statements and to ensure that the statements accurately reflect the financial position of the organization. While financial statements are an important tool for evaluating the financial performance of a business, budgeting and planning are also essential for managing cash flows and ensuring long-term growth. The benefits of budgetary control and planning include providing a framework for decision-making, enabling organizations to allocate resources effectively, and identifying potential risks and opportunities for growth.

In the given data, one can see that the net inflow/outflow of cash varies over time. This emphasizes the importance of budgetary planning and control for an organization. By preparing a cash budget, an organization can better manage its cash inflows and outflows and make informed decisions about investments and financing activities.

SWOT Analysis

Company: Tesco PLC

Strengths

  • Strong brand recognition and customer loyalty in the UK retail industry
  • Diversified revenue streams with multiple business segments, including retail, finance, and online shopping (Moura et al. 2021).
  • Well-established supply chain infrastructure and distribution network
  • Strong financial position with high profitability and a low debt-to-equity ratio
  • Robust online presence and e-commerce capabilities

Weaknesses

  • Limited international presence compared to some competitors like Walmart and Amazon
  • Heavy dependence on the UK market for revenue
  • Struggles with reputation and customer trust in the wake of an accounting scandal (Soegoto et al. 2021).
  • Some negative perceptions of the quality of Tesco's own-brand products

Opportunities

  • Expansion into new markets, such as Asia and the Middle East, to increase revenue and diversify geographic risk
  • Growing demand for sustainable and ethical products, which Tesco has been promoting through its "Plan A" sustainability strategy
  • There is an increasing popularity of online shopping and e-commerce, which Tesco can continue to leverage to expand its customer base (Xiao et al. 2021).
  • Opportunities for new business segments, such as Tesco Bank, to expand and grow

Threats

  • Intense competition in the UK retail industry from competitors like Sainsbury's, Asda, and Amazon (Al-Gamdi et al. 2021).
  • Uncertainties and potential disruptions from Brexit and changes to trade policies
  • Increased regulation and scrutiny of the retail industry, particularly around labour practices and environmental impact
  • Potential disruptions to the supply chain from natural disasters, pandemics, or other unexpected events.

References

Akimova, L.M., Levytska, S.O., Pavlov, K.V., Kupchak, V.R. and Karpa, M.I., 2019. The role of accounting in providing sustainable development and national safety of Ukraine. Financial and credit activity problems of theory and practice, 3(30), pp.54-61.

Al-Gamdi, A.A. and Balubaid, M.A., 2021. Development of a Decision Support Tool to Evaluate New Ideas Validation in Idea Generation Process in Organizations. International Journal of Advanced Engineering Research and Science, 8, p.2.

Almagtome, A.H., Al-Yasiri, A.J., Ali, R.S., Kadhim, H.L. and Heider, N.B., 2020. Circular economy initiatives through energy accounting and sustainable energy performance under integrated reporting framework. International Journal of Mathematical, Engineering and Management Sciences, 5(6), p.1032.

Bebbington, J. and Unerman, J., 2020. Advancing research into accounting and the UN sustainable development goals. Accounting, Auditing & Accountability Journal, 33(7), pp.1657-1670.

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