Managing Finance Resources and Decisions subject Assignment - 1

Managing Finance Resources and Decisions subject - Assignment Example When it comes to the cash flow forecast of North Seaton, the prediction shows that the company is failing to generate adequate income to cover its expenditures. A relatively comparison of the income and expenditure data suggests that the increase in expenditure is not being equally complemented with a similar or greater level of increase in the net income (Schleifer, Sullivan and Murdough, 2014). That is why the monthly surplus figures are far lower than the deficits which in turn results in the company incurring significant proportion of cash flow deficits every month. Moreover, the company is failing to attain economies of scale and scope which is why the purchase expenditures have been increase in the last six months of the year. The cash deficits that has been realized every month is also because of the insurance premium of  £55,000 and  £50,000 paid in the month of January and May respectively. This has largely depleted the profit margin for the company. The quarterly bill p aid for electricity and heat has also reduced the company’s margin of income. Although the expenditure behind buying company vehicles was one off, but it has proven to be big burden for the company given the fact that they have to incur a constant maintenance expense of  £11,000 throughout the year. All the above mentioned facts are largely responsible for the cash deficits incurred by the company every month. b. The major reason behind such problems within the sales budget can be attributed to the failure of the company analysts in forecasting the demand for products. The inaccurate predictions led to a demand supply gap which in turn led the company to incur negative variances between sales budget and the generated sales (Nugus, 2009). Other reasons that can be attributed to this discrepancy are inappropriate marketing strategies adopted by the company,