Managing Financial Resources and Decisions - Coursework Example

The paper  “Managing Financial Resources and Decisions ” is a well-turned example of finance & accounting coursework. This paper seeks to accomplish five tasks by doing certain computations and answering questions related to the preparation of cash budget, making pricing decisions, deciding what project to choose using alternative methods, discussing the importance and use of financial statements, and critically evaluating the source of financing for the business organization.
2. Tasks 1 to 5 with requirements and answers

Tasks 1 - Cash Budget preparation
T.1.(a) Prepare the Cash Budget for the four months ending September 2013.
The cash budget of the company is as shown in Table A below

T.1. (b) Explanation of what does a Surplus’ and ‘Deficit’ mean in regards to a cash budget and recommendation as any appropriate actions in case of a surplus or deficit.
A surplus means the cash inflows, based on the prepared cash budget, are greater than the cash outflows of the company for a particular period. On the other hand, a deficit means the cash inflows are less than the cash outflows of the company for the same period.

When a company has a surplus, it can either repay debts on time, or it has enough working capital to run the operations or pay maturing obligations. Further excess could also be used for long-term investments of the company like buying a new property, plant, or equipment. Such new acquisitions for property, plant, and equipment must be the result of a need or with the result of the further expected growth of revenues from operations and later for more cash flows. Excess cash or surplus could also be used or in research and development costs or upgrading existing product lines, or making new product lines to address the changing needs and wants of customers.

Having a surplus is good generally as it would mean that the company is liquid so that it can meet its currently maturing obligations. However, having too much would also be bad as it could mean not maximizing wealth since it may mean not investing in income-producing properties (Bodie, Kane, and Marcus, 2007).