• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Explain the importance to a selected business of cash ow, working capital, costs and budgets and break-even.

Extracts from this document...


Transfer-Encoding: chunked I am the assistant finance manager of PricewaterhouseCoopers (PwC) and I have been asked to write a report to Nintendo giving advice and guidance on the factors of business survival. These factors consist of cash flow, working capital, costs, budgets and break-even. The first factor Nintendo need to consider is cash flow; Cash flow is the movement of cash going in and out a business over a period of time. Cash flow is important because it will allow Nintendo to identify problems before they occur. They can do this by looking at a cash flow forecast; this is a prediction of how much they are expected to make and pay. From the cash flow forecast Nintendo will be able to see if they will have any deficits. If they do they may need to find a solution. This could be, a loan, trying to reduce costs or trying to sell more of their products. Additionally, cash flow can help Nintendo use extra cash. The forecast will be able to predict when Nintendo will have excess cash and therefore Nintendo can plan in advance what they want to do with it. For example, if they have extra cash they may want to use this to release a new product, this is because they will be in less danger of deficits. ...read more.


Moreover, working capital can be used to improve their business. They can do this by identifying where they can make improvements for example they can increase the amount of cash coming into their business like obtaining external finances or selling stock so that they are not holding as much. And they can also decrease money going out, for instance selling assets, leasing rather than buying or spreading their costs out. Costs are something else Nintendo need to consider. Costs are an amount that has to be paid or given in order to get something. Costs are important for business survival because Nintendo can calculate their total costs. Nintendo will be able to do this because they will know their fixed and variable costs. Therefore Nintendo will be able to total those costs and will be able to classify how much money they need to have in order to be able to pay for them. Additionally, because Nintendo will be able to know their total costs they will then be able to determine a selling price for their products. This is because they will know how much money they have to pay, therefore they can set a price which allows them to meet those payments but also allows them to make a profit. ...read more.


Nintendo will need to work out their break-even point in order to determine how many products they will need to sell in order to make a profit. However if they cannot reach break-even point then Nintendo may need to cut costs by finding cheaper raw materials or making some staff redundant. Nintendo may also need to raise the prices of their products. However they will need to ask them self?s if customers will be willing to pay a higher price and do research within competitors in order to higher their prices. From break-even analysis Nintendo will be able to see how changing costs and sale prices will affect how much they need to sell. They can see this by using a spreadsheet or chart which highlights clearly the break-even point. If the fixed costs increase Nintendo will need to sell more products to break-even. Whereas if fixed costs decrease they won?t have to sell as much. In addition, if Nintendo increase the selling price they will need to sell less however if they lower the price they will need to sell more to meet break-even. In conclusion, all these things talked about will help Nintendo prepare for business survival. Cash flow, working capital, costs, budgets and break-even are really important factors to consider. If done correctly Nintendo will make large profits and will become one of the largest and most successful businesses in the world. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Case Studies and Analysis section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Case Studies and Analysis essays

  1. Aims and Objectives of A Business

    All profit goes back to the club which can be used to buy more upgraded version of the gym equipments and also sell the old ones therefore, there is knew gym equipments every two to three years later. This will attract prospective members to join WRFC.


    * The resource investigator: who is outgoing and will explore and report on ideas and developments from outside the group * The company worker: who is an administrator rather than a leader, and good at carrying out agreed plans * The teamworker: who supports the team, helps to keep it

  1. The main purpose of this research is to know and analyze whether the Olympic ...

    In general there are more number of benefits by using the case study approach and significant benefit is that the information which is been gathered by using this source is true and correct and it is even more trustworthy when compared with the information from the other different types of the data sources.

  2. How Evans Enterprise party and wedding planners could use IT to help manage their ...

    Most of management problems arise because of lack of effective communication. Chances of misunderstanding and misrepresentation can be minimized with proper communication systems. 2. 3 - Categories of communication There are two main types of communication in a business, each with their own different variations.

  1. Business plan. The business that I am going to produce is a personalised logo ...

    The connection between the customer and PDW will be distinguished as consumers have to speak up and make their exact specification of the design that they are in need of. Section 1- Business plan a business plan is a formal document that is used in order to raise the finance, it ids presented to the potential leader of the company/business.

  2. For this coursework I will produce a portfolio of work investigating the factors that ...

    Tesco's Main Aim - Profit Every company has an aim to make profit, Tesco is not exempt from this and have to ensure they are doing everything they can to make as much as profit they can. We can see in this chart that they have been extremely successful in

  1. Justify recommendations on ways in which problems with cash ow, working capital, costs and ...

    Or another way to resolve cash flow would be to chase up bad debts. Nike could have a solicitor threaten legal action. This will persuade Nike?s debtors to pay their debts and Nike will gain the cash that?s owed. Furthermore, Over-investment in capacity can lead to cash flow problems; this

  2. The Cash Flow Problems of Saab.

    Apart from heavy debts, another cause of Saab?s business failure is less investment. Investment is a kind of cash flow into a business, a firm can use the investment to run its business and also a firm with more investments flow into its business operation can solve its problem of lacking money.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work