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Budget and Forecasting

In: Business and Management

Submitted By sethtsolomon
Words 1584
Pages 7
Understanding budgets and financial statements was a critical component in the simulation. The success of Elite Solutions depended on the ability to assess the company’s financial position at any given time and make informed decisions based on the information provided.

I chose to take a conservative approach at production capacity out of the gate, beginning the simulation with a capacity of 25 units per day, as the likelihood of sales exceeding that mark would have been highly unlikely and understanding that turning a profit is a tall order in the first quarter of any business. Initial budgeting was focused on directing the company’s limited capital toward the opening of the first two locations, New York and Tokyo. As the simulation moved into the 3rd and 4th quarters, it became imperative to budget for factors outside the realm of manufacturing. Each quarter, the ability to direct advertising, marketing research and human resource dollars was a requirement for success. The need to balance adequate staffing needs in relation to production and product demand required the use of multiple research and demand projection budgets.

From the onset, my goal was to turn an overall profit during the first 4 quarters of operation. The pro-forma statements give simple to understand metrics of the financial position of Elite Solutions. Each quarter, I was able to ascertain the financial position, specifically regarding net operating cash flow and the cash balance at the end of each period to determine the relative success of each quarters’ activities.

B2
My initial approach to the manufacturing process was based primarily on projections of future demand. In the simulation, this is an area I had significant concerns in, especially during the 2nd quarter where operating capacity had skyrocketed. There are a number of strategies available to improve efficiency...

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