Preparation of budget, sensitivity analysis, budgeting toolkit, and determination of capital for commissioning entity
Mashika, Ruth (2016)
Mashika, Ruth
Haaga-Helia ammattikorkeakoulu
2016
All rights reserved
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-201603022812
https://urn.fi/URN:NBN:fi:amk-201603022812
Tiivistelmä
This Bachelors’ thesis deals with financial budget development and analysis for a commissioning entity. The main objective was to identify and evaluate the financial viability of alternative modes of operation, analyse the most preferred operating mode, and provide the commissioning entity with a toolkit to facilitate independent budgeting and analysis.
The thesis consists of a theory section and an empirical section. The theory section describes business model canvas, master budget, cost behaviour, and sensitivity analysis, income tax and capital requirement theories. The empirical section deals with developing deliverables as per thesis’ objectives by describing the modes of operation, creating, and evaluating the financial budgets, conducting sensitivity analysis, and creating a budgeting toolkit. The toolkit would enable the user to create, maintain, and analyse a financial budget.
An interview and discussions with the business owner were primary research methods used in this project. Secondary research method in the form of desktop research also used to collect and confirm data for budgeting and analysis. The budgeting toolkit and supporting user guide were created by using Microsoft Office (Excel and Word respectively).
Two potential modes of operation were identified based on the choice of product delivery channel (traditional and online retail shop). A traditional retail shop proved unfeasible due to high cost structure and low revenue estimations. An online retail shop showed promising results (among other things) with net profit margin projection of 23% and 26% (first and second year). Break-even would be reached in the second quarter of the first year if the likely scenario holds true. Consequently, commissioning entity was able to rule out an impractical implementation (traditional retail shop), get an estimate of the capital (€ 2 720) sufficient to run the business under the stated projections. Furthermore, the entity was able to identify product groups whose contribution margins and sales mix may create significant impact on financial performance if actual sales would be above or below budget
The thesis consists of a theory section and an empirical section. The theory section describes business model canvas, master budget, cost behaviour, and sensitivity analysis, income tax and capital requirement theories. The empirical section deals with developing deliverables as per thesis’ objectives by describing the modes of operation, creating, and evaluating the financial budgets, conducting sensitivity analysis, and creating a budgeting toolkit. The toolkit would enable the user to create, maintain, and analyse a financial budget.
An interview and discussions with the business owner were primary research methods used in this project. Secondary research method in the form of desktop research also used to collect and confirm data for budgeting and analysis. The budgeting toolkit and supporting user guide were created by using Microsoft Office (Excel and Word respectively).
Two potential modes of operation were identified based on the choice of product delivery channel (traditional and online retail shop). A traditional retail shop proved unfeasible due to high cost structure and low revenue estimations. An online retail shop showed promising results (among other things) with net profit margin projection of 23% and 26% (first and second year). Break-even would be reached in the second quarter of the first year if the likely scenario holds true. Consequently, commissioning entity was able to rule out an impractical implementation (traditional retail shop), get an estimate of the capital (€ 2 720) sufficient to run the business under the stated projections. Furthermore, the entity was able to identify product groups whose contribution margins and sales mix may create significant impact on financial performance if actual sales would be above or below budget