Edexcel Business A Level Revision

Budgets - are forecasts or plans for the future finances of a business. It sets out targets to be met, the costs of achieving them and how that spending might be financed. Income budget - A target set for the amount of revenue to be achieved in a set period of time. Expenditure budget -  A limit placed on the amount to be spent in a given period of time Profit budget -  A target set for the surplus between income and expenditure in a given period of time Budgets can be: Income Expenditure Profit (Income - Expenditure) The purpose of setting budgets... Provides a quantifiable target, that can be communicated to interested parties, against which actual outcomes can be measured. For example, are sales targets being achieved? Are managers keeping expenditure under control? Is the business operating efficiently to achieve profit targets?  Helps with planning and forecasting to inform decision making. For example, what are this years' priorities? Where were b...

Sales forecast - is an estimation of future sales that may be based on previous sales figures, sales volumes, trends, market surveys and trends or managerial estimates. The purpose of this for the following categories are: Finance Inform cash-flow forecasts i.e. how much money can the business expect to flow in from sales.(sales will directly affect cash inflow and so any change in future sales will alter the cash flow and so any change in future sales will alter the cash flow forecast and the level and availability of working capital) Predict sales volume and sales revenue Assess ability to break-even Help set budgets (if sales are forecasted to increase, the business will need to increase departmental budgets for production and distribution) Profit and Loss forecast (future sales will have a direct bearing on this) People Plan workforce needs for: Sales team Seasonal staff in stores or distribution Peak times Operatives to ensure supply meets demand (the...