Main types of Forecasts
In business we need don’t like
surprises...
Sales Forecast
A sales forecast is a planned target of obtaining sales revenue. To do
this a company uses their own previous sales data, market research of
target audience and examining the competition. For start up companies it
becomes more difficult due to they have to previous sales data to base their
projections on.
Take for example a supermarket company Woolmart, they expect to generate
an increase of sales by 10% in America and the rest of the world. To do this
they look back on previous year’s sales and see where an improvement can be
made. If they think they can increase sales in April, the company might use extra
advertising or sales promotions to entice customers into their stores.
To learn out how to improve sales forecasting check out this link:
http://www.inc.com/guides/201105/tips-for-improving-sales-forecasting.html
http://www.inc.com/guides/201105/tips-for-improving-sales-forecasting.html
Cash Flow Forecast
A cash flow forecast predicts the target of obtaining cash for the
business avoiding liquidity problems in the future. It is an estimation of how
much cash flows in and out of the business. One advantage of a cash flow
forecast it that it helps to identify problems of not having enough cash for
future months. Once identified a bank overdraft can be set up to help with the
cash flow.
Here is an example of a company having problems with cash flow. The furniture
company OKEA has lent too much credit to its customers for the month of April.
This means that while OKEA's financial records of profit will look
reasonable there is not enough cash to be in a healthy position. Just because
there is profit does not mean there is cash.
Remember that while we are living in an increasing credit world cash is
still king!
Learn more of cash flows by checking out this link:
Cash Flow Analysis - Understanding The Statement Of Cash Flows Part 1
Cash Flow Statement
Uploaded by SilenceDogoodsghost on Sep 18, 2010
To learn more about how to prepare a cash flow forecast, check out this link:
http://www.fastlinksolutions.co.uk/cashflow.htm
Main Types of Budgets
The
Enforcer of Budgets?
Master Budget
A master budget is a financial plan that sets out targets for production
of goods, the level of sales, the amount allocated for expenses. A master
budget comprises of different budgets from different departments. These include
the sales department, purchases department the payroll department and many
more.
The budget is usually presented by monthly or quarterly periods of the
fiscal year.
To learn about more of a master budget check out this link:
Cash Budget
A cash budget is an estimation of how much cash will come in and go out of
the business. It can be carried out for the year, month, weeks or days. However
if you are making a budget for a few days the business is in some trouble.
The cash budget is important to carry out operations such as paying
wages, electricity bills and interest on loans. The budget determines how much
a business can spend in a period of time. In other words the business must be
able to pay their bills. The budget can also help the business with regards to
giving credit to its customers. It can help determine how much credit can be
given to customers.
Here is an example of a cash budget:
Assume no credit has been given or received. Only cash has been used.
Assume the company The Bugle Ltd. has a cash balance of €100 brought
forward for the month April, the company can create a cash budget:
€
Cash Balance 100
Expected Cash Receipts Sale 5000
Total Cash 5100
Cash Payments
Wages 3000
Electric Bills 700
General Expenses 500
Advertising 50
Total Cash Payments 4250
Cash Balance 850
The company expects to make €850 cash for the month of April and will be
brought forward to May.
For a more detailed look on a cash budget check out this link:
Sales Budget
A sales budget is a financial plan that expects a certain level of sales
for the budgeted period. This helps predicts how many products will have to be
made in order to make a certain level of sales. The sales budget determines the
price and how many units will be produced to make a sales target.
The budget also helps to keep the allocation of selling expenses,
marketing expenses and advertising expenses on budget to achieve targeted
sales.
To learn more about how a sales budget works follow this link:
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