Budget?and?Profit?and?Loss?Statement

Description

http://www.writershub.org/writer/orders/93070#instructions 3/4
Note: The official term Income Statement is also known informally as Profit and Loss Statement.
Analyze the revenue items based on information collected since the assignment, and make adjustments as
suggested by your instructor.
Create a Profit and Loss Statement following the income statement format. Conduct an Internet search or use the
example located in the textbook for this course.
This is a build off an previous assignment which I will send to the support email.

Revenue Forecast
Revenue forecasting for any firm is very crucial in helping a firm achieve its set key objectives. Revenue forecasting implies that when a firm has well-established financial framework then, they can carry out activities as planned and ultimately prevent overspending and underspending. Accurate development of a realistic financial planning document for any enterprise works to contain the spending of the firm to a particular budget line thus helping them not surpass the company s budget constraint. Auditors have the sole responsibility of maintaining the books of accounting for any firm and ensuring all the activities on spending are accurately recorded and are in agreement with the state of the enterprise.
Cash flow forecasting is one of the major ways that many companies all around the world use to manage their businesses. According to Cornwall, Vang and Hartman (2013), they perceive enterprise capital management and revenue forecast to be more of an art than science. Despite the fact that most entrepreneurs argue that building estimates with any degree of preciseness is hard, other scholars have come in forcefully to counter this allegation with the fact that stringent involvement in selling does not necessarily guarantee success (Robinson, Sensoy & National Bureau of Economic Research, 2011). In a wider perspective, accurate financial forecasts help in the development of the entire operational and staffing plans thus enhance the productivity of any institution.
In my experience, I ventured into the sale of Pin pop sweets in the nearby shopping center. The daily earnings and the deductions were made in which I was able to estimate the revenue earned monthly and I was able to formulate the cash flow below.

ALPHA COMPANY LIMITED
INTERNAL CASHFLOW PROJECTIONS
JULY TO DECEMBER 2016
JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER
Operating cash($) 1900 100 300 100 80 80
Sources of cash
Receivable collections
Customer deposits
Loans from bank
others

6500

1000

7000

1100

2000
–

6500

1000

1800
300

6000

1200

2000
–

7000

1000

1500
500

6500

1000

1600
–
Total sources of cash, including beginning($) 9400 10200 9900 9300 10080 9180
Uses of cash
payroll
acc. Payable
other overheads
owners compensation
line of credit payments
long-term principal payments
purchases of fixed assets
estimated income taxes
other
2000
1800

1600

1600

1500

300

–

–
500
2000
1600

1600

1600

1800

300

–

500
500
2000
1800

1600

1600

1500

300

500

–
500
2200
1500

1600

1600

1500

300

–

–
500
2220
1700

1600

1600

2300

300

–

500
2000
1800

1600

1600

1500

300

1000

1000
500
Total uses of cash($) 9300 9900 9800 9220 10000 11300
Excess (deficit) of cash 100 300 100 80 80 (2120)

Key assumptions made
1) 75% of the total sales realized will be collected the month after the sale
2) 25% of the sales will be collected the 2nd month after the sale
3) Payables are due in 25days
4) 60% of the eligible receivables can be used for the revolving line of credit.
An appropriate cash flow highlights the capital injections and the withdrawals of the enterprise. The injections may vary from one firm to another depending on their area of expertise. For the case of Alpha Company, some of the cash inflows include the rebates and the tax refunds, the government and other grants, repaid loans which are treated as assets. Other inflows include the royalties, franchise fees, and the license fees. On the other hand, the expenses are treated as the outflows from the enterprise. Some of the outflows that are supposed to be on record constitute, buying new assets, loan repayments, investing surplus funds and also payment to the owners. All these elements make up the cash flow which can be used to predict the future of any institution.
Soon after assessing the cash flow, the totals at the end indicate negative or positive projections. Through this, the firm can put in place special measures which ultimately help to salvage the situation. The opening balance of each month and the closing stock of each accounting period is vital as they are used as the hub for the entire business.
In conclusion, cash flows revenue forecasting is very essential in ensuring the progress of the firm. Revenue forecasting looks into various matters including; the estimated profits, the prospects of investing, the addition or retrenchment of staff and all other elements affecting the business entity.

References
Cornwall, J. R., Vang, D. O., & Hartman, J. M. (2013). Entrepreneurial financial management: An applied approach. Armonk, N.Y: M.E. Sharpe.
Robinson, D. T., Sensoy, B. A., & National Bureau of Economic Research. (2011). Cyclicality, performance measurement, and cash flow liquidity in private equity. Cambridge, Mass: National Bureau of Economic Research.
Sheldon, D. H. (2008). Lean materials planning and execution: A guide to internal and external supply management excellence. Ft. Lauderdale, FL: J. Ross Pub.