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Posted on March 13th, 2013, by

Explaining how budgeting would benefit Jengo Ltd.’s planning and control of its inventory, recruitment and cash management activities, firstly, it is important to state about the budget generally.
The budget is a scheme of incomes and expenditures of a certain person (family, business, organizations, states, etc.) established for a certain period of time, usually one year. The budget is an act that provides and establishes the costs and revenues of the state and other organizations or companies.
The budget is one of the main economic categories, which unites other economic categories, such as taxes, spending, etc., since a constant resource mobilization and expenditure is implemented through the budget.
According to Sinuany-Stern (1993, p. 297), “There are two main parts in the preparation of a budget: the operational budget and the capital budget”¦The operational budget includes the production areas and the non-production areas.”¯ The capital budget is an integral part of the consolidated budget. It reflects all the inflows and outflows of cash used in the investing activities of the enterprise.

Thus, it is possible to add that budgetary control and budgeting are very important and essential components for any businesses in many ways, and consequently, they would be advantageous and beneficial for Jengo Ltd.

A budgetary control is the most important part of the financial control exercised in the budget process. The main purpose of which is to monitor the budget legislation by all parties of fiscal relations. That is why it will be very useful and helpful in constructing some framework of the budgets and corporate planning that will follow afterwards. In addition, a budgetary control would be very important and rewarding in forecasting and could help to get to know about different external factors.

All in all, this is a widespread fact that budgeting can help an organization or a company to create a business plan. According to the Business Link that is a government’s online resource (n.d., para. 2), “A business plan is a written document that describes a business, its objectives, its strategies, the market it is in and its financial forecasts.”¯
Observing the above-mentioned theme, it is possible to add that budget will specify and ensure the opportunities for creating a well-organized and well-grounded business plan for a company.
Jengo will be able to have such a good opportunity to define the so-called target groups, to specify the plan’s requirements, and to outline the plan’s contents and main issues that are necessary to be reviewed coupled with financial details and problems.

Talking about recruitment, it should be noted that budgeting plays a key role and will be very helpful in Jengo’s recruitment efforts. Broadly speaking, recruitment is a business process, which is one of the main responsibilities of HR-managers or recruiters.

The correct choice of a candidate may help to increase productivity, profits and employee’s loyalty. The wrong choice usually has bad consequences and causes a large staff turnover or a lack of employees’ competence. That is why it is very important for Jengo to carry out an adequate policy in relation to recruitment.
A direct labor budget will be got ready with the help of the general budget in accordance with the activities, which the organization or company will try to achieve and implement. It will be very useful for Jengo because it will help to follow forecasting of the expenditure, which must be placed on labor.

From the point of view of inventory control, budgeting is essential and integral and will apply to Jengo.

Inventory control has a serious impact on the organization as a whole. On the one hand, the shortage of raw materials or products can lead to the large losses in production and market share. On the other hand, a glut of warehouse inventory leads to their obsolescence, deterioration, as well as an inefficient investment of working capital.
Therefore, an effective inventory control allows an organization or a company to meet or exceed the customers’ expectations, creating the stocks of each product, which will maximize the net profit.
Summarizing the presented information, it is possible to say that the above-stated way budgeting will be decisive and determinative to Jengo Ltd, because it allows the organization to have well-known cash flows in order to improve and support the company’s daily operations and activities. Jengo should consider budgeting to be a real tool for managing business performance and achieving strategic goals and objectives.

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