spending less on capital equipment collecting receivables from clients and

Spending less on capital equipment collecting

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– spending less on capital equipment, collecting receivables from clients, and using inventory more effectively. Concentrating on the cash flow implies that a venture can easily embark on finding new ways to create cash (Mowen, Hansen, & Heitger, 2012). Furthermore, cash flow help with financing decisions. Almost all aspects of a business require cash but with cash flow, the program can gauge whether to use excess cash generated from profits, borrow money from banks, or raise outside capital. (c) Budget Variance Analyses Variance analysis is an important toll just like every other aspects of a business. One of the benefits for variance analysis is that is helps in understanding the cost components of products or services and the subsequent actions needed to control such costs. For example, managers can change suppliers if they discover through variance analysis that budget was overrun because the firm used an expensive supplier of raw materials (Marshall, McManus, & Viele, 2011). What is more, variance analysis is essential in reconciliation purposes. Planning gaps, which are differences between projected and desired results, are reconcilable using a variance analysis. This analysis also helps in quantifying errors, wastages, and losses. By comparing budgeted results with the actual outcomes, any corporate flaws can be quantified – this assists line managers in making better decisions when they ascribe monetary value to resources (Mowen, Hansen, & Heitger, 2012). Lastly, the analysis provides insights on the reasons underlying an organization’s performance. With this analysis, managers are able to find answer to bad or good outcomes. In particular, the investigative process that occurs after an incident enables the management to comprehend why the events transpired in the way they did.
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FINANCIAL PROCESSES 4 References Marshall, D. H., McManus, W. W., & Viele, D. F. (2011). Accounting: what the numbers mean . McGraw-Hill/Irwin. Mowen, M. M., Hansen, D. R., & Heitger, D. L. (2012). Managerial Accounting: The Cornerstones of Business Decisions . South-Western Cengage Learning.
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