Master of Business Administration

(MBA)

Finance for Managers

Assignment Support

Nalin Anthony
MBA, MSc.(Finance), ACMA,MCIM,LLB
 Task 1 – 550 words

Select an organisation and three financial statements :

• A balance sheet
• A profit / loss statement
• A source and application of funds

Address each of the following:

1.1: Determine what financial information is needed and assess its validity.

1.2: Analyse different financial documents and information and formulate conclusions about financial
performance levels and needs of stakeholders.

1.3: Conduct comparative analysis of financial information and data.

1.4: Critically review and question financial information and data.

 Identify What Financial Information Is Needed:
a. Income Statement (Profit and Loss Statement):
• Revenue and Sales: This is about organization's sources of income and it’s business model.
• Expenses: Types (category) and the breakdown of expenses to ensure they are correct and complete.
• Net Income (Profit/Loss): Determine whether the organization is making a profit or incurring a loss.

b. Balance Sheet:
• Assets: Examine the assets owned by the compnay, current and non-current assets.
• Liabilities: Check organization's obligations. This includes current and long-term liabilities
• Equity: Assess owners' or shareholders' stake in the organization.

c. Cash Flow Statement:

Operating Activities: Cash generation or consumption from operating activities to understand the organization's
core .
Investing Activities: Cash flows from organization’s making investments in assets or disposing of assets.
Financing Activities: How the organization is financing its operations. This includes loans, equity issuances, and
dividend payments.
 Assess the Validity of Financial Information:

a. Review for Completeness: Ensure that all relevant financial transactions have been recorded in
the financial statements.

b. Cross-Check with Source Documents: Compare the information in the financial statements with
source documents like invoices, bank statements, and contracts to verify accuracy.

c. Consistency: Check for consistency in accounting methods and practices if accounting principles
and conventions (ex: IFRS) have been consistently applied.

d. Comparative Analysis: Compare the current financial statements with previous periods or industry
benchmarks to identify any unusual fluctuations or trends.
e. Independent Verification: If possible, involve an external auditor or financial expert to
independently assess the validity of the financial information.

f. Internal Controls: Evaluate the effectiveness of internal controls in place to prevent errors or
fraud in financial reporting.

g. Management's Notes and Disclosures: Pay attention to any notes and disclosures provided by
management in the financial statements.

h. Financial Ratios and Metrics: Calculate and analyze key financial ratios (e.g., liquidity,
profitability, solvency) to gain deeper insights into the financial health of the organization.

By following these steps, you can determine what financial information is needed from basic
financial statements and assess the validity of that information. This process is crucial for making
informed financial decisions and ensuring the accuracy and reliability of financial reporting.
 Task 2 – 400 words

Chose an organisation or a department within an organisation you are familiar with and
explicitly address each of the following:

2.1: Identify how a budget can be produced taking into account financial constraints and
achievement of targets and accounting conventions.

2.2: Be able to assess a budget.

2.3: Identify how a budget for a complex organization can support organizational objectives
and targets whilst taking into account financial constraints and accounting conventions.

In doing so, note the budget process used; the type of budget and management accounting
practices adopted by the organisation.
Set Clear Objectives and Targets:
Define your financial goals, objectives, and targets for the budget period. These could
include revenue targets, expense reduction goals, profit margins, or other financial metrics.

Gather Financial Data:

Collect historical financial data, including income statements, balance sheets, and cash flow
statements. This data will serve as a foundation for your budget.

Identify Financial Constraints:

Identify any financial constraints or limitations that your organization faces. These could be
limited cash flow, borrowing restrictions, or regulatory constraints. Recognizing these
constraints is crucial to developing a realistic budget.
Revenue Projections:
Estimate your sources of revenue, such as sales, investments, grants, or other income
streams. Ensure that these projections are based on realistic assumptions and market
analysis.

Expense Forecasting:
List all anticipated expenses, both fixed and variable. This includes salaries, utilities, rent,
materials, and any other operational costs. Consider any potential cost reductions or cost-
saving strategies.

Accounting Conventions:
Adhere to generally accepted accounting principles (GAAP) or other relevant accounting
standards. This ensures that your budget follows standardized accounting conventions and is
consistent with financial reporting requirements.
Involve Key Stakeholders: Department heads, finance teams, and senior management, in the budgeting
process. Collaboratively define assumptions and expectations.

Revenue Projections: Based on historical data and market analysis. Consider factors like market growth,
pricing strategies, and customer behavior. Be realistic and conservative in your revenue projections.

Expense Budgeting: Estimate expenses on each cost center. Work closely with department heads to
understand their resource needs and cost drivers. Consider both fixed and variable expenses.

Capital Expenditure: If applicable, plan for capital expenditures (CapEx). Ensure that CapEx aligns with the
organization's long-term objectives and that it fits within the financial constraints.

Cash Flow Forecast:

Create a cash flow forecast to manage liquidity. It's crucial to ensure that the organization has enough cash
to meet its obligations, even during challenging periods.
Risk Assessment: Identify potential risks and uncertainties that could impact the budget. Develop contingency plans to
address these risks, especially in a complex organization where external factors can play a significant role.

Budget Review and Approval: Present the budget proposal to senior management for review and approval. Ensure that it
aligns with organizational objectives and constraints.

Monitoring and Reporting: Implement a system for regular monitoring and reporting of budget performance. Compare
actual results to the budgeted figures and analyze any variances. This allows for timely corrective actions.

Continuous Improvement: Periodically review and update the budget to reflect changes in the business environment or
organizational priorities. Budgeting is an ongoing process that should adapt to evolving circumstances.

Communication and Accountability: Communicate the budget throughout the organization, making sure that all
employees understand their roles in achieving budgetary goals. Hold departments accountable for their budget
performance.

By following these steps and integrating them into your budgeting process, you can produce a budget that considers
financial constraints, aligns with organizational objectives, adheres to accounting conventions, and supports a complex
organization's success.
 Task 3 – 550 words

Chose an organisation you are familiar with and research their approach to managing
proposal and projects and explicitly address each of the following:

3.1: Identify criteria by which proposals can be judged.

3.2: Critically analyse the viability of a proposal for expenditure.

3.3: Identify the strengths and weaknesses of a proposal and give feedback on the financial
proposal.

3.4: Analyse the viability of a proposal for expenditure.