Optimizing Cash Distribution and Budgeting Strategies for Profit Maximization

Executive Summary

The paper is all about the cash distribution and budgeting that is to be applied in t he organization to gain the profit in the business. The chosen organization is William Limited that is oriented to their business. Evaluation of cash distribution and breakeven point is also defined in this paper for better underrating of the business. Sources of funding are defined here properly for the gain in the business to be understood. Other issues in this business are also defined finally with the help of some recommendations in this paper.

Introduction

William Limited is situated in UK and Africa and focuses on the business aspect in oider to support the financial property. It operats from UK and have headquarter in Africa . William Limited has been the organization earning a good profit from past many years and is focused for earning good market value and the shares in future. Williams Limited focuses on expanding their business and to boost up the cash and capital that is required in European nation. Williams Limited is seen to have a five year future planning and incorporating new technologies in organization. Two modules are seen to be implemented by them and those are Module A na the other one is Module B. The total expenditures are evaluated by the help of workers, employees, investing on opening of new firm and the investment on other resources that are seen in the organization. Investment in the new brand in London is being demonstrated over this paper. The break even analysis, investment over different sources is demonstrated over this paper.

Literature Review

Accounting model and the financial reports are defined here for the good analysis of business in William Limited here. long term investment and the other one is small term investment being evaluated for analysis of future investment. A number of accounting model is defined for the management purpose. These investment model that are demonstrated in the organization here is, merger model, cash flow that is discounted, model of consolidation for business, total cash budget models and few others. Budgeting model is being discussed among these models so that its implementations can be easily determined. Business analysis and financial planning are being discussed by the implementation of this budgeting model in this case (Mark, 2017). In budgeting model are two parts are to be defined and those are cash flow involved in total investement and the budget for the business. Thus it can be said that statistic and flexible model can be achieved in this case. This budgeting model is defined in such a way that can help the William Limited to gain a good phase in the business in future. Planning and profit is thus easy to be gained by this budgeting model in the organization. Business structure and marketing competency can be easily evaluated by implementation of cash budgeting model present (Samara, 2018). The financial funding and the planning for future business aspect is possible by this model. Thus it can be defined as an essential tool for the business and their analysis.

Sources of funding

For raising the funds mainly two of the sources are being defined here and those are based on two sources of funding. These funding are external funding and the other is internal funding. In “internal” sourcing the equity funding is seen to be important for raising the funds and is one of the famous for the companies. Capital is raised here in this case by the promotion of shares and by the help of selling those in to the share markets. This is generally useful when the short term of rising funds is required or if the risk is less. In this case the shareholders are seen to be the new owners of the companies with the internal sources so that the risk paying are absent while the sources of funding (cberuk.com, 2020).

Advantages

In the equity method that risk is seen to be less and the company is not involved in the interest paying method.

Payments payback is not necessary in this case of equity method as the profits are prioritizes and thus the credit problems are eliminated here in this case (Ribeiro, 2018).

These funds are generally taken only at the necessary times and cannot be taken at any time as it may affect the growth of business.

It is helpful for the long term planning as the equity doesn’t provides an expectation of immediate results.

Owner is seen to be fully control and functioning the organization properly.

Tax liabilities re also seen to be reducing and these are calculated after deduction of the loans.

Disadvantage

Due to the increment of number of shareholders the owner can lose the control over management and the organization function.

A conflict between the shareholders can be seen easily as they are increasing in number in the organizations.

A time taking process and the decision making in the organization is not managed properly as the decision making are upon the shareholders.

Another method that can be seen here is of debt where the funds are seen to be raising so that can be returned on time and are also based on “external sources” of investing.

Risk is seen to be high and the credit process in also to be increased.

In case of loss or profit and thus fixed payment is to be made by the organization (Tarus, 2017).

The sources of funding are composed of profit, ventures taxes and the grants as per various investments in the organizations. Funding are seen to be invested for the starting of new business and new productions in the London. Bank had laid down a loan of about E210000 for the 1st April. ELP and ALP selling can be seen to be important for the funding of the business. For ELP the offering is seen to be of E300 and for ALP the offering is about E400. A good profit making can be easily seen by the help of this ELP and ALP method. Venture capital in investment is important for the organization, if they want to get a business potential and equity funds. Thus sources of funding applied here can be equity method as it can help in reducing the risk and to gain a god future perspective in the business (www.geujournals, 2019).

Investment appraisal

An attractive method that can be helpful for the business to grow in the market is investment appraisal. The profit of company and the future investment on business can be easily achieved due to this investment appraisal method (Zambrzhitskaia, 2017). Three of methods are applied in the Williams Limited for the investment appraisal and those are “payback period, net present value and rate of returns” for accounting. The periods of payback can be said to be the investment from the initial to the ending one. Short period of assigning of these investment are generally seen in this paper. The cash inflow and the outflow is being defined by the net present value for the evaluation of the budget in the business and is helpful in producing profit for the organization. Capital budgeting is a determining factor of the selected net present value in this case. Another one is “accounting rate of return” and is able to define the investment that is to be made in organization. The expenditure method that is implemented here proper one for the business so that the two investment methods gain be understood here properly (beta.companieshouse, 2020).

Cash Budgeting

This cash budgeting is one of the essential factors that is useful for the cash generation according to planning seen and the planning of the total investments that is to be made. For proper business analysis the distribution and planning of the cash is done properly. The cash inflow and the outflow can be easily understood by these tools in the organization proeplry. “Fixed cost and the variable cost that is evaluated here in William Limited is 255110 and 6033.75”. “Thus the total cash outflow is 261143 and the cash inflow was 441600” that was computed by the help of cash budgeting method. Total computed sales were around 435600 and the total computed capital was around 6000. Thus the investments cash inflow in William Limited is founded 180456.3. the cash to be budgeting here is around seen to be invested upon telephone, loan, electricity, insurance and many others resources that are used (Joyce, 2016). Moreover the employee, marketing team, staff and the other employee is seen to be engaged in the distribution of this cash distribution part. The computed “ELP value is around E21000, administration is E7500 and salary of staffs is E19500”. Cost distribution is preceded properly for the cost budgeting method involved in this part.

Break even analysis

Gain of profit in William Limited is seen by the help of this Break even analysis point. Risk that is to be seen in organization is analysed here by the “break even analysis” and by presence of profit required to be seen in the sales. New tools and technologies are to be implemented in William limited is being defined by the help of this “break even analysis method”. This one is being evaluated in the five years plan. Cost of tools, investment and the cash generated is seen here by break even analysis part. Expenditure of software’s is being evaluated by the help of these two modules A and B. Analysis of “fixed cost and variable cost” for computation is achieved by the help of this break even analysis. Revenue constructed here is over 30% cash to be demonstrated.

Limited margins are being evaluated by the “contribution margin” that is calculated here in the sales contribution (Staniewski, 2016). “Break even analysis for ELP and ALP” are evaluated to be of values 1.3274378546 and 2.538345092. Total cash that is evaluated to be around “6033.75 and the fixed cost is 255110”. The “break even analysis” is found to be distributed around three parts and those are investment of new tools, invested and earning capitals and the revenue generated by sales that is to be generated for Williams Limited. Contribution margin is around 91759.5. It was 121805 value found for the Fixed cost and the 640.5 for variable cost. ALP is calculated as “52516.5, fixed cost 133305 and the variable cost 283.5”. For the second part of the “contribution margin” evaluated was around 90534 for ELP and 51991.5 for the ALP. The same value is evaluate in the final part and “ALP is 52009.88” (www.williamslea, 2020).

Cost Distribution

“Break even point for April

Break even point for May

Break even point for June

Cash flow of the company”

Other issues

Innovations and the complexities that are arised in the William Limited organization is being discussed over here in this case. A better business mode l can be evaluated and be implemented in the organization here. Policies and the regulations used in the organization is to be modified so that can be beneficial for the whole organization. Employee and the staffs are seen to be highly enhanced and incorporated with the tools and technologies for good future of the organization (Stamenkov, G., 2018). The local market and the global market name is to be gained so that profit can be generated easily in this new business implementation.

Conclusion and recommendation

Thus it can be understood that new business implemented and opening in London can gain a good profit if the roots are set in the local market in short period of time. The sources of funding that are evaluated is seen to be ethical one and helpful for the whole organization to gain a good business aspect. Different sources expenditures are evaluated for the proper computation in the William Limited. ELP and ALP values are discussed for the proper business model analysis in this case. A proper cost distribution and cost planning is easily evaluated for “William Limited” in this case.

Continue your journey with our comprehensive guide to Optimization of Amazons Outbound Supply Chain.

Reference List

Journals

Mark, M.S., Solberg, E., Sarpebakken, B. and Hambro, C., 2017. Constraints and possibilities: A comparative study of public support to industry-oriented research and development.

Samara, E., Galanakis, K., Bakouros, I. and Skalkos, D., 2018. Effectiveness of Regional Innovation Actions: Cases from Small, Low-Innovative Regions. Journal of the Knowledge Economy, pp.1-34.

Ribeiro, I., Sobral, P., Peças, P. and Henriques, E., 2018. A sustainable business model to fight food waste. Journal of cleaner production, 177, pp.262-275.

Tarus, S. and Juma, D., 2017. ROLE OF CASH PLANNING TECHNIQUE ON FINANCIAL PERFORMANCE IN PUBLIC HOSPITALS IN KAJIADO NORTH SUB-COUNTY. International Journal of Finance, 2(7), pp.1-12.

Zambrzhitskaia, E., Kozlova, T. and Mamaeva, A., 2017. Specifics of formation the portfolio of orders on the basis of break even analysis for Iron and Steel Works. In SHS Web of Conferences (Vol. 35, p. 01017). EDP Sciences.

Joyce, A. and Paquin, R.L., 2016. The triple layered business model canvas: A tool to design more sustainable business models. Journal of cleaner production, 135, pp.1474-1486.

Staniewski, M.W., Szopiński, T. and Awruk, K., 2016. Setting up a business and funding sources. Journal of Business Research, 69(6), pp.2108-2112.

Stamenkov, G., 2018. SOURCES OF FUNDING IN CERTAIN STAGES OF THE LIFE OF A SMALL BUSINESS. Yearbook-Faculty of Economics, 10(1), pp.91-100.