Finance illustration Finance theory

Cash Flow management

Budgets are statements setting out the planned performance of a business typically in a table made up of numbers. Usually these plans deal with money units (£'s/pence) but they can also consist of other measurable units e.g. units of output. Creating a budget enables an and actual figures is termed a variance.

Variance is an important management tool because it enables businesses to manage their business - i.e. to take informed decisions based on management information (i.e. how actual performance compares with budgeted performance).eg; either favourable or unfavourable. A favourable variance is one where actual business performance proves to be better than what was budgeted for.

A variance is a difference between what actually happens and what is budgeted to happen. Arsenal Football Club has budgeted for the following gate receipts from it's next three matches: You can see that there were positive variances for the match against Wolverhampton (£100,000). There was a disappointing negative variance for the cup match against Hull (-200,000), but the Manchester United game yielded the expected revenue.



Supporting Documents

These downloads will help to put finance theory into context using real world examples from real businesses.

Entering a new market with a new product
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Discover how Experian used finance theory to prosper in the financial services industry by downloading our premium case study.

Using sports marketing to engage with consumers
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Learn how Kia Motors applied finance theory to prosper in the automotive industry by downloading our premium case study.

Planning effective marketing strategies for a target audience
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Find out how adidas used finance theory to thrive in the sportswear industry by downloading our premium case study.

Using the marketing mix in the fashion industry
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Find out how Ben Sherman applied finance theory to succeed in the fashion industry by downloading our premium case study.

Re-focussing a company's culture and marketing mix
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Learn how Argos used finance theory to thrive in the retail industry by downloading our premium case study.