raising finance 2.2
- Created by: taylorgargett
- Created on: 25-04-19 11:39
View mindmap
- financial planing 2.2
- sales forecasting
- purpose
- increase promotional activity if sales are forecasted to drop
- see if they need to increase productive capacity
- factors affecting sales forecasts
- difficulties of sales forecasting
- historical data may not represent future data
- seasonality may affect sales
- fluctuation in demand due to consumer trends, sales positions, political events
- purpose
- sales, revenue and costs
- sales volume= sales revenue /price
- sales revenue= price X quantity sold
- break-even
- contribution= selling price-variable costs per uit
- total fixed costs+total variable costs=total revenue
- limitations; assumes every product is sold, costs may increase, fixed costs spread out across product portfolio
- margin of safety- the difference between break-even point and current level of output
- budgets
- purpose
- communication- based on business objectives and reflects on how to achieve that
- forecasting- set against objectives
- motivational- managers to be in control of their own budgets
- planning-financial plan with agreed spending limits to anticipate issues
- variance analysis; analyses budgeted figures against actual
- purpose
- sales forecasting
- consumer trends
- fashion shows or trade fairs help
- helps a business identify upcoming trends
- factors affecting sales forecasts
- economic variables
- interest rates, inflation, unemployment rate, GDP
- sale contracts not renewed due to inflation, so prices may need to lower to keep sales
- if economy slumps then customers may buy inferior goods
- fixed costs; costs that do not vary with the level of output of sales
- e.g rent, rates, interests, insurance, salaries
- sales, revenue and costs
- sales volume= sales revenue /price
- sales revenue= price X quantity sold
- variable costs; costs that vary with the output of sales
- e.g raw materials, fuel, packaging, staff wages
- uses current financial figures, realistic because based off previous data,dynamic market could be wrong
- historical figures budgets
- variance analysis; analyses budgeted figures against actual
- historical figures budgets
- zero based budget
- uses potential data rather than historic, good for start-ups, unreliable as could use bias, useful for dynamic markets
- difficulties of budgeting
- fixed for a year so unflexible
- managers spend up to the limit
- unrealistic budgets are demotivating
- budget driven rather than customer driven
- budgets
- purpose
- communication- based on business objectives and reflects on how to achieve that
- forecasting- set against objectives
- motivational- managers to be in control of their own budgets
- planning-financial plan with agreed spending limits to anticipate issues
- purpose
Comments
No comments have yet been made