Notesale: Turn your study into money

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Ashleigh Still
Factsheet 3 – P6

Unit 2: Business Resources
Magda King

Budget and Financial Control
Next PLC set budgets for many reasons
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The profits can sometimes be damaged if the costs aren’t managed effectively
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There are two types of costs – Fixed and Variable
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Examples of this
include rent, insurance and salaries
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Variable costs change depending on how many sales are made, for example he amount of
stock that is bought
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They will allocate a set allowance to each department and this will be
for them to spend over the next financial year
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Variance analysis: Next must measure the difference between what they budget and the actual
costs or sales revenue that they have received overall
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If their sales
are lower or their costs are higher, it is known as adverse variance
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Ashleigh Still
Factsheet 3 – P6

Unit 2: Business Resources
Magda King
Bidding to Increase Future Resources

Next may need increase the money that they have available in the business
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They could possibly do this by applying for capital grants to fund their
brand expansion without having to take out a bank loan, or by requesting that small or large
investors invest in their business, perhaps for shares in return
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Appropriate Liquidity/Working Capital
Working capital is the amount of money that Next need each day to pay their bills and fixed
costs in order for them to keep the business going
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Working capital = assets – liabilities
NEXT
Total assets = £2,543
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3m
£2,543
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3m = £1,555
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Appropriate Reserves to Address Emergencies/Crises
Next will have to make sure they keep some money set aside each month of the financial year
as provision in case of an emergency
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This is generally set at
the beginning when originally planning budgets

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