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Financial Management - Case Study Example

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The surplus for the first four months is higher at slightly more than $ 5 million. This is attributed to the high rate at which revenue is collected through the tools of revenue collection. The next eight months experienced a drastic reduction in revenue collection…
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FINANCIAL MANAGEMENT For the operating monthly budget, see the attached excel spreadsheet. 2. The surplus for the first four months is higher at slightly more than $ 5 million. This is attributed to the high rate at which revenue is collected through the tools of revenue collection. The next eight months experienced a drastic reduction in revenue collection accompanied by escalating expenses. This results into the lower surpluses of slightly above $ 1.5 million. As compared to the first four months, the variation is quite wide.3. The increase in number of vehicles failing inspection is quite positive for the budget as it would lead to increased figures of the budget surplus, given that the revenues collections from inspections would go up by 15% more as compared to the paltry 15% initially.

With revenue collections going up, the personnel may be overwhelmed; therefore, there will be the need for DMV to be tougher in their standards to minimize pilferage of the revenue which would ultimately translate into huge profits at the end of the financial year. This policy is quite good for the company since it increases the value, which would translate well to the shareholders in terms of profits and the dividends issued. On the contrary, this policy may leave the employees dissatisfied if it is not accompanied with the due welfare package.

This is because the policy will be more tougher on the employees as opposed to the procedure they are used to; hence, they would take quite some time to adjust.4. Suppose DMV has a choice of when to implement the new supposedly efficient and effective system, it would result in several impacts depending on the scenario. If they are implemented at the beginning of the year, the finances of the company would drastically rise since the new system through its capture measures will be in the position of ensuring that there is no license that goes non-captured and that all the collections are made and reported.

The costs resulting from such operations will be reported and then worked on appropriately, i.e. not excessively. On the other hand, if the new licenses are not implemented at all, we will only remain with the old systems as the only option. The costs incurred would still be inflated cutting into the profits of the company, hence lowering the surplus. The assumption that the number of licenses issued any month is constant is grossly unrealistic because the results of efficiency will ultimately lead to a rise in the number of the issues.5. The changes that I may suggest for DMV regarding their operating budgets will concern commitment, allocations and time-to-time adjustments of the budgets.

A commitment as an institutional funding is done for the sake of either counteroffers or new equipment, and they lead to a permanent change to the budget. Allocations take place because of the policies set by the management to fast track the company’s operations; they must be obeyed to the letter. The budget depending on the prevailing economic situation should be adjusted frequently. ReferencesThe 2 case studies attached by the customer.

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