This Project contains an Advertising Agency Budget, And Solved Examples of Cash Budget, Sales Budget, Payback Period

and Net Present Value.

Financial Management
07 Ramlakhan Chauhan 08 Kiran Dalvi 09 Rupak Dhamandkar 10 Shivendra Dikshit 11 Pooja Ghanekar 12 Alisha Golatkar 44 Ninad Zende

Balance Sheet
A balance sheet or statement of financial position is a summary of the financial balances of a sole proprietorship, a business partnership or a company. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A balance sheet is often described as a "snapshot [1] of a company's financial condition". Of the four basic financial statements, the balance sheet is the only statement which applies to a single point in time of a business' calendar year. It's called a balance sheet
because the two sides balance out. This makes sense: a company has to pay for all the things it has (assets) by either borrowing money (liabilities) or getting it from shareholders (shareholders' equity).

A really small business balance sheet lists current assets such as cash, accounts receivable, and inventory, fixed assets such as land, buildings, and equipment, intangible assets such as patents, and liabilities such as accounts payable, accrued expenses, and long-term debt. Contingent liabilities such as warranties are noted in the footnotes to the balance sheet. The small business's equity is the difference between total assets and total liabilities. An Advertising Agency budget is Attached at the end of the project.

ON DOT MARKETING AccountingYear Ended :- 31-3-2011 Assessment Year :- 2011-2012

Trading & Profit &Loss Account For The Year Ended :- 31-3-201

To Artwork & Printing & service charges To Vat To Salary To Rent To Gross Profit

4810417.00 By Artwork & Printing & service charges received 605795.00 264000.00 138000.00 663956.00 6482168.00 74036.00 By Gross Profit 21120.00 42926.00 43571.00 93817.00 20000.00 36000.00 6010.00 430.00 117236.65 5430.00 47000.00 22060.00 6262.00 37998.00

6482168.00

6482168.00 663956.00

To Repairs & Maintainance To Ex-Gratia To Sundry Exps To Conveyance Exps To Telephone Exps To entertainment To Electrical Exps To Printing & Stationery To Bank Charges To MotorCar Exps To Postage Exps To Professional Charges To Audit Fees To Discount To Depreciation To Salary Paid to Partners B.D.Naik R.B.Naik To Share of Profit Partners B.D.Naik R.B.Naik

40526.00 40526.00

4503.00 4503.00 663956.00

663956.00

Balance Sheet As At 31st March 2011

Partners Capital R.B.Naik B.D.Naik Sundry Crediitors (as per list) T.D.S. on SubContract 24973.82 14737.27 Fixed Assets (as per list) 39711.09 686022.00 Sundry Debtors (as per list) 26238.00 T.D.s. on Contract Security Deposit Deposit for Rent Bank Releases Bank Of India HDFC Bank Mogaveera Bank Cash In Hand Rs. 751971.09 Rs. 73135.00 163707.00 3000.00 100000.00 248858.00

12409.00 75006.43 52810.28 23044.88 751971.09

PAYBACK PERIOD The payback period is one of the derivatives of the cash flows. It does not employ the discounted cash flow techniques. It measures the time within which the initial investment of the project would or can be recovered based on the cash accruals generated by the project.

From the following details relating to a project calculate the payback period. Cost of the period Life Cost of capital
Year 1 2 3 4 5 SOLUTION:: Payback period: Year 1 2 3 4 5 Net cash flows Cumulative net cash flows

- 10,000 - 5 years - 10%

Net cash flows PV of Re.1 @ 10%

4,000 3,000 4,000 2,000 4,000

0.909 0.826 0.751 0.683 0.621

4,000 3,000 4,000 2,000 4,000

4,000 7,000 11,000 13,000 17,000

Payback period = 2(3000/4000) = 2.75 years

NET PRESENT VALUE The cash inflows and outflows are discounted using a certain discount. This helps in determining the present value of the cash flows. The discount factor is the rate that is acceptable to the management.

The management of a company proposes to purchase a machines are available Machine A& Machine B. From the following information , the management which of the 2 alternatives will be more profitable under the Net Present Value Method. Machine Initial outlay Net cash flows P.A Estimated life A Rs. 32,000 Rs. 15,000 3 years B Rs. 37,000 Rs. 10,000 6 years

The cost of capital may be taken at 10% p.a. Solution::

Machine A Machine B

Year 1 2 3 4 5 6 PV of cash flows Less:Initial outlays Net present value

PV factor (10%) 0.909 0.826 0.751 0.683 0.621 0.564

Net cash flow 15,000 15,000 15,000 -

PV cash flow 13,635 12,390 11,265 37,290 32,000 5,290

Net cash flow 10,000 10,000 10,000 10,000 10,000 10,000

PV cash flow 9,090 8,260 7,510 6,830 6,210 5,640 43,540 37,500 6,040

CASH BUDGET
Its the most important tool in cash management. Helps the firm to plan and control the use of cash. Its the statement that shows the estimated cash inflows over the planning horizon. Its the net cash position (surplus or deficiency) of a firm as it moves from one budgeting sub-period to another.

Prepare a cash budget of a trader for the months commencing from April with the following details: A) B) C) D) E) F) Cash sales are 25% of total sales. 60% credit sales are collected in same month and balance 40% in the next month. 60% of purchase payment is made in the same month and 40% in the following month. Rent of Rs. 4,000 is paid every month. Dividend received in May of Rs. 11,000. Cash balance on 31st March Rs. 1,00,000. The following details are also provided:

Months March April May June July

Sales 3,00,000 3,00,000 4,00,000 4,00,000 6,00,000

Purchases 2,50,000 3,20,000 3,20,000 4,80,000 4,00,000

Wages 80,000 80,000 80,000 1,00,000 1,00,000

Particulars
Opening balance

April
1,00,000 75,000 1,35,000 2,40,000 5,50,000
1,92,000 1,00,000 4,000 80,000 3,76,000

May
1,74,000 1,00,000 1,80,000 90,000 11,000 5,55,000
1,92,000 1,28,000 4,000 80,000 4,04,000

June
1,51,000 1,00,000 1,80,000 1,20,000 5,51,000
2,88,000 4,000 1,00,000 5,20,000

Receipts
Cash sales (25%) Debtors (60%) Debtors (40%) Dividend Total Receipt

Payments
Purchase (60%) Creditors (40%) Rent Wages Total payment

Closing balance

31,000

SALES BUDGET
The first step in the preparation of the sales budget is to estimate accurately as possible, the sales anticipated during the budget period. Sales estimates indicate the quantity of the various products at different estimated price levels. The total profit as well as the profit contribution of the individual products, with each of the estimated sales when materialised is likely to yield, are computed.

From the following data prepare a sales budget for the year 2003 2004 There all 2 product groups A & B with p,q,r products in the group A &X & Y in the group B . the market is divided into 4 areas :East, West, North, South .Budgeted prices of p,q& r are Rs.4 , Rs. 5 &Rs. 6 respectivelly . in the south area prices are 10% higher because of extra cost of distribution. Products X &Y are priced at Rs 10 &Rs 12 respectively and these are not sold in the south area . Expected sales of X & Y are 1000 and 15000 unitsrespectivelly. The area wise breap-up sales of X &Y is: Products X Y North 50% 40% West 30% 30% East 20% 30%

SALES OF P,Q& R ARE EXPECTED TO BE: P: North = 30,000 ; East = 5,000 ; South = 2,000 Q: East = 5,000 ; West = 4,000 ; South = 3,000 R: West = 4,000 ; North = 6,000 Group A : Product P Product Q Product R
Products North West East Total

Group B : Product X Product Y

X Y

10,000 * 50% = 5,000 15,000 * 40% = 6,000

10,000 * 30% = 3,000 15,000 * 30% = 4,500

10,000 * 20% = 2,000 15,000 * 30% = 4,500

10,000 15,000

Selling price per unit in South. P : Rs 4 +10% = Rs 4.4 Q : Rs 5 +10% = Rs 5.5 R :Rs 6 + 10% = Rs 6.6

North South Product U *SP = Amount U *SP = Amount P 3000 4 12,000 2,000 4.4 8,800 Q 5 2,000 3,000 5.5 16,500 R 6,000 6 3,000 6.6 Total 48,000 25,300 X 5000 10 50,000 Y 6000 12 72,000 Total 1,22,000 Grand 1,70,000 25,300 total

East U *SP = Amount 5,000 4 20,000 5,000 5 25,000 6 45,000 2,000 10 20,000 4,500 12 54,000 74,000

West U *SP = Amount 4 4,000 5 20,000 4,000 6 24,000 44,000 3,000 10 30,000 4,500 12 54,000 1,28,000

Total U *SP = Amount 10,000 - 40,800 12,000 - 61,500 10,000 - 60,000 1,62,300 10,000 - 1,00,000 15,000 - 1,80,000 4,42,300

1,19,000

1,28,000

4,42,300