...IMPORTANCE OF BUDGETING AND SAVING Importance of Budgeting and Saving Do you find yourself living from paycheck to paycheck, unable to pay your bills, struggling financially? If so, you are amongst the millions of people who suffer from these same issues everyday. One of the best ways for you to get on financial track is to establish a budget. What is a budget you ask? As defined by Merriam-Webster, a budget is “a plan for the coordination of resources and expenditures” or “the amount of money that is available for, required for, or assigned to a particular purpose” (Merriam-Webster). A budget will help you realize your true income, assess your debt, see how your money is really being spent, and should help you save on some of your unnecessary spending. Budgeting is one of the most important factors when it comes to financial stability. A budget is a precise way to help you live within your means and get your finances under control. Making an individual or a family budget will assist you in your planning when it comes to saving for the education expenses of you or your children, maintaining an emergency fund, planning vacations, buying a home and numerous other unexpected events that life may throw your way. IMPORTANCE OF BUDGETING AND SAVING Creating a budget should be a very simple process. You need to figure out how much money you have coming in and how much money you are paying out. List all of your expenses for the week, month...
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...Capital Budgeting Scenarios Paper Megan Bailey FIN/486 3/21/2016 Beverley Loyd Capital Budgeting Scenarios Paper The selected proposal to purchase a labor-saving piece of equipment that will last five years assumes the discount rate or the weighted average cost of capital is 10%. Since the labor content is at 12% of $10 million in annual sales, this can be noted as an annual labor cost of $1.2 million (10,000,000 x 0.12). The new piece of equipment is expected to save 20% of labor annually, resulting in a $240,000 reduction in cost each year over the next five years (1,200,000 x 0.20). The cost of the new piece of equipment is $200,000. In order to determine if the proposal is appropriate and economically viable, the $240,000 savings of labor costs must be discounted to its present value. The present value interest factor for a one-dollar annuity is discounted at 10% for five years. The first year there was a positive cash flow of $218,182, the second year was $198,347, the third year was $180,316, the fourth year was $163,923, and the fifth year was $149,021. The present value of labor cost savings equals to $909,789 from the whole five years. The initial investment is subtracted from the present value of cost savings. The calculation would look like this, ($909,789-$200,000). The net present value equals to $709,789. The net present value method of capital budgeting shows that a positive net present value like this...
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...Dream of the 20th century is considered dead by most of today’s college students and recent graduates who find that getting a job that they are not vastly overqualified for is almost just as difficult as graduating. For those few students who gratefully find themselves at the bottom of the corporate ladder, the next difficult task is appropriately managing their new $45k salary. Financial literacy is defined as “the ability to make informed judgments and to take effective actions regarding current and future use and management of money” (LaBorde, Mottner, and Whalley 2014). Financial literacy and planning have long been considered issues in the US, but more now than ever, in the wake of a recession, they are of critical importance to those entering the work force. My research has led me to make three primary claims: (1) the US is mostly financially illiterate, (2) financial literacy and financial planning are positively correlated, and (3) good financial habits must be developed early. Financial Literacy All of the data supports the claim that a large portion of the US is financially illiterate; also, young adults and college students have even lower levels of financially literacy than the general public. Research indicates that college students today have an exceptionally low level of financial literacy. One financial literacy survey found that only 53 percent of students answered questions on simple, objective financial knowledge correctly. In...
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...“Budgeting is a key component in management short and long term planning” I agreed that budgeting is important to management short and long term planning. Budgeting is important to management as it helps people on making decision whether they have enough money to progress through to the next step of planning, expanding the business and earning profit for themselves. If budgeting or planning doesn’t exist in management, there is a risk on business spending more money than earning it, in other words, not spending enough money to expand the business and stay on competitive level. Budgeting is also helpful in planning the years ahead. For example if a company are planning to purchase a new product, budgeting may help to decide whether how much money are needed to spend. All these planning takes time and money, so budgeting is a key component here by acting as a timetable on when the money is needed, how much amount is needed and what results to expect as the money and effort have been use on whether the company is making any profit. Budgeting is an important planning tool, as other planning strategy such as marketing expenditures or salary levels failure to compromise it will affect the company planning term. So every decision must be well plan and decide to meet the objectives in order for the company to be successful. A budget also helps to keep track on the business whether the company is earning profit and making any necessary changes if needed. If a new business doesn’t...
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...Financial Management Case Presented to Ms. Shama Ahmed Presented by Sabeen Jamil Sana’a Imran Shah Zainab Dadabhoy Table of Contents Executive Summary 3 Section One 4 Introduction 4 Company Information: 4 Background: 4 Section Two 5 Problem Statement: 5 Existing Processes 6 Process of Approving Capital Expenditure Requests 6 Time Value of Money 7 Illustration 7 Proposed Methodology and Requirements: 7 Existing Process of approving capital expenditure requests 8 Strengths of Existing Processes 8 Limitations 8 Section Three 10 Solutions: 10 Present Value Techniques 10 Depreciation Accounts: 10 Taxable Transactions: 11 Assessment Of Suggested Technique 13 Strengths 13 Weaknesses 13 Recommendations: 13 Strategic Investments 14 Replacement Analysis 15 Executive Summary This case revolves around the financial analysis of a Company, Thermo Rubber. The essence of this report was to identify the weaknesses and problems listed in the case and to provide plausible solutions and recommendations to counter it. This involves detail study and extensive analysis to provide a pragmatic view of the company’s financial dealings and propose an implementable solution or alterations in the current financial set-up. Section One Introduction Company...
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...Foundations for Financial Success Volume 1, Issue 1, March 3, 2011 TABLE CONTENTS OF What is financial literacy and why is it important? Financial literacy is the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-being. More specifically, it refers to the set of skills and knowledge that allow an individual to make informed and effective decisions through their understanding of finances. Financial literacy involves a number of different areas of understanding. Learning about money and how it works is an important aspect, as well as understanding products like credit, loans, and investments. Competency in managing money appears to be a skill that doesn’t come naturally to everyone. Unless a person is exposed to the practice of money management, he/she is less likely to understand how it works and it long-term benefits. Without a financial education, it is easy to develop poor spending and financial habits resulting in significant negative consequences such as a poor credit rating, denial of credit, rejection for a checking account and bankruptcy, to name a few. Early financial literacy is the best way to prevent such consequences. In essence, personal financial literacy is much more than managing and investing money. It also includes making all the pieces of your financial life fit together. Achieving Financial Success you must understand and determine where your money goes. Here’s how you can start: Analyzing...
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...Luxury Goods 3.) What are remedies do you do if the salary(s) is delayed? 3.1 Borrowing 3.1.1 Neighbors 3.1.2 Relatives 3.1.3 Lending 3.2 Loaning 3.3 Pawning 4.) Are you managing your budget? 4.1 Yes 4.2 No 5.) What are the importance of budgeting? 6.) In terms of budgeting, It can be help to you to know where money will use? 6.1 Yes 6.2 No Scope and Limitation This research covers primarily for the FMGT Students of University of Caloocan City. This study is focus on the evaluating of weekly budget of selected families at Brgy.28, District II Zone 3 Caloocan City. The respondents are 10-15 families composed of 5-6 members. Evaluate the budget of every family according to their salary, how they manage their money, if their salary are enough to fulfill their needs and wants. What remedies they do if the salary is delayed. It can be helpful to them to know where money will use if they budgeting. QUESTIONNAIRE A STUDY ON...
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...Ch 9 Test – Discounted Cash Flow Analysis • Capital budgeting uses cash flows not accounting profits. • To calculate the value of a capital budgeting project, use incremental cash flows, not total cash flows. • Know what items are considered in cash flow analysis for capital budgeting: ▪ incremental cash flows, ▪ indirect effects, ▪ opportunity costs, ▪ changes in net working capital, ▪ shutdown cash flows,) ▪ beaware of overhead costs. Forget sunk costs. • Know when sunk costs are considered in capital budgeting cash flows (never). • Know importance of using real interest rate to discount real cash flows and nominal interest rate to discount nominal cash flows i.e. Do not mix them together. Know that either method will result in same NPV. (No calculation of real interest rate on test.) • Be able to calculate cash flows from operations. A new project will generate sales of $74 million, cost of $42 million and depreciation of $10 million in the coming year. The firm’s tax rate is 35%. Calculate cash flow for the next year. (Revenue – Cash Expense) x (1-tax rate) + (depreciation x tax rate) {calculator} (74 – 42) x (1 – 0.35) + (10 x 0.35) = $24.3 • Be able to calculate change in net working capital (problem 8 is good example). A house painting business had revenues of $16000 and expenses of $9000. There were no depreciation expenses. However, the business reported the following changes in working capital Beg End A/R ...
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...The article “8 Financial Tips For Young Adults “ was written by Amy Fontinelle, a financial journalist and editor of websites, public policy organizations and books publishers. The author has written the definition of several hundred financial terms for Investopedia’s online dictionary as well as in depth tutorials on budgeting, banking and home buying. In addition, Amy Fontinelle has extensive experience editing corporate documents, public policy papers and articles, scholarly books and finance articles. Her articles have been posted on Yahoo.com, Finance, Forbes.com, SFGates.com and various local news websites. Furthermore, we can read more personal finance articles at Amy’s own personal finance website and learn more about Amy at amyfontinelle.com. The purpose of the article is to inform with factual material. We can learn the basic of managing our money effectively, protecting our wealth and making it easy and fun to save more to be financially secure both today and future. The article consists of eight main points, which are learn self control, take control of your own financial future, know where your money goes, start an emergency fund, start saving for retirement now, get a grip on taxes, guard your health and guard your wealth. The content of this article was organised, through and presented in a clear and concise manner. Amy state that “Do you really want to pay interest on a pair of jeans or a box of cereal?” in her first main point. This statement...
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...Budgeting: How to Build Up Your Wealth Trameika Green Managerial Accounting: BUS 630 Dr. Isabel Wan September 12, 2011 Abstract When hearing the word budget, the first few words that come to mind is money, time, or saving. However, to clearly understand the concept of budgeting, one must have a clear, concise definition of the word. According to InvestorWords.com, budgeting can be defined as “an itemized forecast of an individual's or company's income and expenses expected for some period in the future” (http://www.investorwords.com/600/budget.html). With that being said, one can conclude that budgeting is the foundation of every financial plan. It doesn’t matter if one is making seven figures a year or living from paycheck to paycheck, if you want to control your money and not let your money control you, one’s best bet are to have some type of budgeting plan. Although some may think that budgeting is all about having restrictions on your spending and not be able to enjoy the finer things in life, the sole purpose of having a budget is to allow one to see where their money is actually going and the best way in which to allocate any funds saved. Also, for those who choose to construct a budget, usually save money that would have been otherwise been spent on unnecessary things; thus, making them able to become wealthier and save for better possessions in the long-term. This paper will detail how to create a budget, how budgeting can build your wealth, the...
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...financial Instability of these residents. This explains the strategy to assist Income-earning families living in homeless shelters to build savings to support their move out of shelter and ultimately their long-term financial stability. Income-earning shelter residents’ ability to build savings to support their money before they move out of shelter. Families working to move out of shelter encounter multiple barriers: limited and unstable income; uncertainty about their ability to live within a budget, negative credit and debt histories that hinder their prospects with future landlords; and being un- or underbanked....
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...72056_CH01I 3/13/02 11:02 AM Page 1 CHAPTER 1 The Importance of Return on Investment: ROI A fter reading this chapter, you will be able to • Understand how owners view profitability • Compare the profitability of two companies • Calculate a return on investment using information about profit and investment he owners of a company and the company’s creditors share a similar goal: to increase wealth. They are thus very concerned about profitability in all phases of operations. Creditors are specifically concerned that the company use its resources profitably so that it can pay interest and principal on its debt. Owners are concerned that the company be profitable so that stock values will increase. Company managers must show they can manage the owners’ investment and produce the profits that owners and creditors demand. Because top management must meet the profit expectations of company owners, it passes down to the lower levels of management those profitability goals, which are then spread throughout the company. All managers, therefore, are expected to meet profitability goals, which are often increased and tightened as each level of management seeks a margin of safety. T 1 72056_CH01I 3/13/02 11:02 AM Page 2 ESSENTIALS of Corporate Per formance Measurement TIPS & TECHNIQUES The Accounting Equation Here are two ways to view what accountants refer to as the accounting equation that relates assets and claims to assets by...
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...Budgeting and strategy A Kraft Foods UK case study Case study pages • 1: What is a budget? • 2: Kraft´s income and expenses budget • 3: The importance of feedback • 4: Constructing an expense budget • 5: Advantages and disadvantages of expense budgeting • 6: Alternative types of budgeting • 7: Conclusion Read more: http://businesscasestudies.co.uk/kraft-foods-uk/budgeting-and-strategy/conclusion.html#ixzz1nUCFRFJb What is a budget? A budget is a financial plan that sets out, using figures, an organisation's expected future results. For planning purposes, organisations can use many different types of budgets. For example: • Income and expenditure budgets. These show how much an organisation expects to receive and to spend in future periods. • Production budgets. These set out how much an organisation must produce in coming periods of time in order to meet demand. • Profit budgets. These bring together planned sales, costs, and profit figures. By creating budgets, managers can: • set out a clear plan, involving target figures for defined periods of time • communicate their targets clearly • motivate employees to achieve these targets • control performance by monitoring actual outcomes against planned targets • meet the organisation's objectives. This case study illustrates how Kraft Foods uses budgets to enable it to meet business objectives related to financial performance with a view to achieving...
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...The importance on MA in HR Human resources oversees the people assets that push and pull an organization toward its goals and objectives. Senior management regards HR policies and programs as success factors because they guide worker performance, which has an impact on profitability. Successful HR professionals in today's competitive global market need to be financially intelligent. Like their counterparts in sales and marketing, they need to understand the language spoken by management: accounting. Budgeting HR managers develop and control departmental budgets. An accounting background prepares them to regard budgeted items such as training, recruitment, staffing, incentives and performance evaluation in terms of their cost and dollar benefit to the organization. When accompanied by and based upon payback analyses, HR budget requests give senior management the information it needs to decide how to allocate available funds. Exposure to accounting also helps an HR manager appreciate corporate cash flow in the budgeting process. Employee vacation costs, for example, might be charged monthly rather than when actually incurred for quarterly financial reporting. Managerial accounting is also helpful when it comes to proposing changes or introducing new policies. Belief that the new activity will solve a problem is not enough; the cost must be justified. The HR manager must anticipate senior management’s questions. If he/she has studied accounting, he/she will be able to demonstrate...
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...D3-Evaluate the problems Adam & Josh may have from unmonitored costs and budgets. In this assignment I will talk about why costs and budgets need to be controlled and the advantages and disadvantages of controlling costs and budgets. I will also explain what can happen to a business if costs and budgets are unmonitored. Importance of costs and budgets controlling: It is very important for an organisation to control its costs so that it can manage its financial resources effectively. The reason organisation needs to control their costs properly would be that it would end up saving money on expenses and increase its revenue. This will help the company to increase its revenues and this would allow the company to invest more money if required. For example, the business should control its costs so that it saves money and by having the right amount of stock the business can then have the full benefits of selling those stocks and receiving cash which could be used for other areas of the business. In a business organisation, a budget represents an estimate of future costs and budgets. Budgets may be divided into two basic classes: Capital Budgets and Operating Budgets. Capital budgets are directed towards proposed expenditures for new projects and often require special financing the operating budgets are directed towards achieving short term operational goals of the organisation, for instance, production or profit goals in a business firm. its crucial for a business to control...
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