Financial Analysis As The Stability Of The Business Essay

Financial Analysis As The Stability Of The Business - Essay ExampleOne of the primary roles played by budgeting is that it helps in maintaining adequate control over the expenditures incurred by the firm. Budgets suitable provide a plan for the organization in respect of future expenses. Budgets help to set(p) standards of performance. The actual performance of a firm can be measured against the budgeted performance. This helps the organization to easily realize its deviation from the set goals and accordingly take steps for correcting the same. Budgeting is done on the basis of forecasting future transactions. This helps an organization to forecast future scenario and anticipate events that may affect the firms operations. In most organizations, budgets play an key role in decision-making and planning for the coming financial period. On the basis of the forecasted budgets, management is required to decide upon strategies relating to achieving the set targets, reducing costs and m aximizing profits. In Section A, ratio analysis of Nene PLC presented that the company was a sound and profit-making concern that had to focus more on improving its operational efficiency in ordinate to gain higher profits. In Section B, Project Meeney was ascertained to be the most viable project because it provided Millennium PLC with highest NPV and with the lowest Payback Period. Section C found that the global financial crisis was caused by a mix of financial and governmental failures. The discussion on budgeting presented clear views about the advantages and disadvantages of having budgets in companies.