Manage Budgets And Financial Plans – Sample

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Task 1

Review and Analyse Financial Statements


Part One: Introduction

*A brief history of Bean’s Coffee

*Summary of the company’s financial performance of last year (mentions key achievement/ KPI…..etc )

*new Plan- two more coffee shops + expand coffee beans distribution

* The passage is going to review and analyse the financial report for last financial year and examine the company’s projected incomes, expenses, asset position, cash flow, and potential risks.

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(since 2006)

    Part Two: Body paragraphs

    Body Paragraph 1 – incomes

    * This year’s incomes:

    * Next 2 years: anticipated incomes

    * Reasons for your anticipation

    Body Paragraph 2 – expenses

    * This year’s Expenses

    * Next 2 years: anticipated expenses

    * Reasons for your anticipation

    Body Paragraph 3 – cash flow

    * Cash flowat the end of last financial year:

    * Next 2 years: anticipated

    * Reasons for your anticipation

    * Other Investment

    * Liabilities

    Body Paragraph 4 – asset positions

    * net assetsat the end of last financial year:

    * Next 2 years: anticipated

    * Reasons for your anticipation

    * Other Investment

    * Liabilities

    Part Three: Conclusion

    *In conclusion, this report has analysed the company’s financial reports and predict its financial situation in the upcoming year.

    *Positive side


    * discuss problems and potential risks: for example, new shops’ locations, human resources, management difficulties etc

    * provide solutions or strategies to the upcoming challenges 


    List of your references used



    Bean’s coffee is one of the private companies. It is not only popular among the local residents but also outside the country. The main sale it does is of coffee beans to Australia which has contributed $0.8 million out of the total revenue amounting to $1.85 million.

    The coffee shop has a great idea of serving of certified fair trade coffee. Not only this, the coffee is served from organic and sustainable suppliers.

    The company plans to expand its operations vide opening its coffee shops in other parts of the country. With the increase in stores, it is planning to expand the business of coffee beans distribution in the other parts which will help it in earning more profits.

    In terms of trading account, the total turnover of coffee shop was $1.85 million having profit of $0.2 million. The gross profit of the company is 62.79% of the sales and 1.26% as its net profit.  The decline in profit from the gross profit to the net profit is the indicator that indirect expenses are greater than the direct expenses.

    Analysis of Incomes:

    Current year income earned is of $23 million and has cost of sales amounting to $9 million which makes a gross profit of the current year of $13 million. In the next financial year, the projection of sales is $31 million whereas the cost of sales remains $12 million and generating gross profit of $18 million.

    These figures show that in the coming years, the coffee shop is planning to increase its amount of sales of $8 million along with increase in profit of $5 million.

    Analysis of Expenses:

    The expanses of the current year are of $0.8 million salary expense and $0.2 million of other business expenses. These have estimated to remain as of salary expanses and there has been estimation of slight increase of 0.01million which means when the sales will increase and the expenses will remain constant, the profits of the shop will rise (Ballard, 1990). This is also reflecting that the shop is not operating at its full capacity as the increase in sales is keeping the cost constant and fixed and hence it can be said that the fixed costs reaming the same will only be capable of increasing the profits when the shop is capable of operating at its full capacity. With this increase in this year, if the shop will continue to perform with this increase, then the profits of the shop will increase continuously.     

    Analysis of Assets:

    The current balance sheet of the shop states that as part of current assets, the cash has increased from $2.6 million to $9.8 million in the next succeeding year. This indicates that there will be great inflow of the cash in the next period and it is advisable to invest this cash into some asset so that it is capable of earning income on such investment rather than keeping in the bank and deprecating the same. The interest rate of the bank is much lower than that of inflation rate which means that the cash held in bank will only depreciate and hence shop should look for options to invest and earn passive income in the same (Zyren & Petrick,1998). The inventory of the assets and fixed assets have been estimated at the same amount which is not correct estimate as the value of the inventory and fixed assets cannot remain intact in the two periods and the value of inventory and fixed assets changes with time. Once deprecation is charged, the written down value of the assets should be shown in the balance sheet instead of the costs. There is only increase in the balance of cash and hence the projections need revision for its correct estimate.   

    Analysis of Liabilities:

    The current figures of the liabilities in the balance sheet are of $5.7 million and balance of owner’s stake in the business is valued at $3.7 million. In the projections made for the next year, the balances of notes payable show a decrease of $6 million which is good for the shop. With the decrease in the current liabilities, there is increase in owner’s equity of $ 8 million which is clear indication of increase in profits in the current year.


    As part of analysis it can be seen that with the increase in sales, the shop owners are making a consistent effort towards the growth and profitability of the shop. With the increase in stores and sale of coffee beans in other parts of the country with the new idea of selling organic coffee is definitely a good bet for the owners of the shop. The fixed costs and inventory are kept at constant price which may lead to deviation in estimation of profitability of the shop. Methods should be inbuilt within the system to work at the full capacity of the shop in order to increase the profits.    

    Task 2

    Prepare and Present a Project Budget: Team Project

    Budget Proposal 2020-2021


    This budget proposal provides necessary costs associated with the key projects to be carried out in Financial Year 2019-20. Anticipated expenses and their justifications will be itemised in the budget proposal below. This proposal will also include a project budget which presents the details of cost elements.

    Group Dynamics

    Student IDStudent NameRoleContribution

    Budget Assumptions (List of projects and anticipated costs):

    • Equipment Investment
      • To upgrade POS software
      • To invest in new coffee machines (up to $54,000)
    • Property investment
      • Acquisition of additional floor space (425sqm, $350/sqm)
    • Marketing 
      • To expand catering business – advertising
      • To sponsor at least one local sports event
      • To sponsor at least one international sports event
      • To rebrand corporate logo and image
      • To upgrade company’s website
      • business trips – coffee contracts (Ghana and Vietnam)
    • Employment
      • To hire more staff (average $55,000 pa salary plus super plus 7% employment costs)
    • Training
      • To conduct staff training within the company

    (Made recommendation for financial management process to ensure best practice. Determine how to allocate financial resources available)

    Monitoring of Project Expenses

    Explain how you and your team will monitor the expenses that will be spend on above mentioned projects

    Budget Evaluation Process

    Explain how you will collect financial data and information to analyse your budgeting (actual vs. forecast) and ensuring effectiveness of financial management processes

    Contingency Plan

    Make recommendation if risks arise/actual cost differs from your forecast budget

    Strategies for Financial and Budgetary Controls

    Recommendations (effective Financial Management)

    Based on your proposal, make a conclusion and recommendation on how you will manage your finance in your company.

    Project Budget

    Refer to Excel sheet

    Presentation slides of the Proposal

    Refer to PPT

    Reference List of your references used


    The cash balance at the end of the year 2021 is $ 2,672,400. The budget proposal taking the estimates given in the question is as below:

    ParticularsAmount in $
    Investment in Coffee Machine54,000
    Acquisition of Additional Floor Space1,48,750
    Hiring More Staff55,000
    Employment Costs3,850


    The coffee shop owners have closing cash balance of $2,672,400 which will be reduced to 2,410,800 (2,672,400 -261,600). In addition to this, the coffee shop owners will have revised profit of $ 7,152,000 (7,413,600-261,600).

    • Equipment Investment

    The coffee shop owners should not consider updating the POS software and rather invest in buying a new machine (Bruns et. Al,1975). This will help the owners to increase the coffee sale and profits of the shop.

    • Property Investment

    The coffee shop should not consider buying a new additional space and should focus on increasing the sales in the upcoming 2 years Nuševa et. Al,2017).

    • Marketing

    The plans which have been thought are expansion of catering business and sponsoring local and international sports events in the country will create market presence and the customers will get attracted and as a result, the sales will be boosted (Binkley,1983) It is planned to rebrand its logo and image along with the shop’s website which will help the customers to know more about the shop and build their interest in such shop which will be very beneficial for the shop.

    • Employment

    The hiring of the new staff involving the cost of $55,000 should also not be incurred and deferred for upcoming 2 years so that once the sales are increased, then the employment can be made. It can be seen that already the salary costs are higher than the other costs.

    • Training

    The trainings should definitely be conducted for training the staff at regular intervals which will make customers more comfortable in the coffee and also staff would be well equipped to understand the needs of the customers (Cassar & Gibson,2008).

    Monitoring of Project Expenses

    If the above expenses are incurred, then monthly and quarterly review is a must to analyse whether incurring such additional expenses will help in generating the revenues for the coffee shop. The same reviews have to be compared with the previous year figures so as to develop an understanding of additional expenses (Li, 2007).

    Budget Evaluation Process

    It is recommended that all the expenses listed above should not be incurred in one quarter and rather should be distributed on monthly basis so that incurring of such additional expenses should not create extra burden on the shop in one go (Susanty,2015).

    Contingency Plan

    The shop owners should have adequate cash balance at the monthly interval so that if the extra expenses do not provide the benefit as budgeted, then the shop owners should have cash balance for recovering of any extra expense, if any. Also, the shop should not only sell beans but also increase the variety in the existing predicts so that adequate revenue is recognised.      

    Strategies for financial and budgetary controls

    The best strategy to implement such costs is to incur it in a phased manner. The needs of the customers should be analysed on the basis of seasons and location and what sales are more in which month and according to that such expenses should be incurred. This method will not only reduce the burden of the extra cost but will also help in increasing the extra revenue which can be due to additional costs. 


    In the end, it would be recommended that with the increase in sales as expected in the next year, it should not be presumed that the forecast will be in increasing trend for every year and hence precautions should be taken to incur such additional costs which are to be done. The best method to implement such decision of incurring additional costs should be done in slow and phased manner in order to analyse the benefit of such additional costs in regular intervals. This will help the management in deciding whether incurring of additional costs by it, is helping in generation of more sales and revenue or is just contributing towards increasing the costs and lowering the profits. Also, customer needs according to different location and season should be kept in mind so as to provide them good service in terms of satisfaction which will help the shop to increase the revenue.      


    Ballard, C. L. (1990). Marginal welfare cost calculations: Differential analysis vs. balanced-budget analysis. Journal of Public Economics41(2), 263-276.

    Binkley, J. K. (1983). Marketing costs and instability in the international grain trade. American Journal of Agricultural Economics65(1), 57-64.

    Bruns, W. J., & Waterhouse, J. H. (1975). Budgetary control and organization structure. Journal of accounting research, 177-203.

    Cassar, G., & Gibson, B. (2008). Budgets, internal reports, and manager forecast accuracy. Contemporary Accounting Research25(3), 707-738.

    Li, H. H. (2007). Establishing a Western coffee shop chain in China (Doctoral dissertation, Faculty of Business Administration-Simon Fraser University).

    Nuševa, D., Mijić, K., & Jakšić, D. (2017). The performances of coffee processors and coffee market in the Republic of Serbia. Економика пољопривреде64(1).

    Susanty, A., & Kenny, E. (2015). The relationship between brand equity, customer satisfaction, and brand loyalty on coffee shop: Study of Excelso and Starbucks. ASEAN Marketing Journal, 14-27.

    Zyren, J., & Petrick, A. (1998). Tutorial on basic link budget analysis. Application Note AN9804, Harris Semiconductor31.