Budget and Financial Planning for Bhp Billiton

BHP Billiton Budget and Financial Planning

Company Overview

BHP Billiton is a global Anglo-Australian company specialized in petroleum, metal and mining. Headquartered in Melbourne, the BHP Billiton is one of the world largest mining company using the 2013 total revenue. The BHP Billiton was established in 2001, and has been ranked as a top performing mining company in the world. At the end of 2015 fiscal year, BHP Billiton recorded $44.6 Billion as the total revenue with the net income of $1.9 Billion. In 2010, the company recorded a net income of $12.7 Billion, and by the end of 2014 fiscal year, the net income increased to $13.8 Billion. However, the company net income drastically declines to $1.9 billion at the end of the 2015 fiscal year. (Annual Report, 2015).

This report carries out a financial and budget planning for the BHP Billiton to enhance a greater understanding on the strategy the company will employ in increasing its net income.

b. My Team

The task of my team is to carry out the financial and budget planning for the BHP Billiton. The responsibilities are to design effective financial and budget plan for BHP Billiton to assist the company to improve its financial capability in the forthcoming fiscal years. (Morning Star, 2015).

c. Types of Financial and Budgets Plans

The report prepares the operational and short-term budget plan and cash flow projections for BHB Billiton.

2.

The paper selects the BHP Billiton income statement budget plan for 2016

BHP Billiton ($ Billion) Income Statements

2014 Budget

2016 Budget

Difference

Sales

Sales -- Quarter 1

Sales - Quarter 2

Sales - Quarter 3

Sales - Quarter 4

Other

Total Sales

54

88

(34)

Cost of Goods

Beginning Inventory

Goods Manufactured

Shipping Charges

Labor (wages & payroll)

Other

Less Ending Inventory

Cost of Goods Sold

38

39

(1)

Gross Profit

15

49

(34)

Non-Operating Income

Interest Income

Rental Income

Other

Total Non-Operating Income

Total INCOME

15

49

(34)

EXPENSES

Operating Expenses

Accounting and Legal

2

2

(0)

Advertising

2

2

(0)

Depreciation

Dues & Subscriptions

Insurance

Interest Expense

Maintenance & Repairs

Office Supplies

5

5

1

Payroll Expenses

1

1

1

Postage

Rent

Research & Development

0

0

(0)

Salaries & Wages

Taxes & Licenses

Telephone

Travel

Utilities

1

1

Web Hosting & Domains

Other

Total Operating Expenses

11

11

0

Non-Recurring Expenses

Furniture, Equipment & Software

1

1

(0)

Gifts Given

Other

Total Non-Recurring Expenses

1

1

(0)

Total EXPENSES

12

12

(0)

Net Income Before Taxes

4

37

(33)

Income Tax Expense

2

2

(0)

NET INCOME

2

35

(33)

2a. Relevant personnel to consult for the financial and budget plan are Chief Financial Officer and Accountant of the company.

2c. I will consult the company financial statements for the past 5 years, calculate the average to estimate the company financial performances in the last 5 years. Moreover, I will carry out market analysis of the industry that BHP is operating. The findings will assist in estimating the accurate budget planning for company.

3a. The issue encountered that might affect my work team operation is about the method to prepare accurate budget planning for the BHP since the company is being affected by external environmental factors such as political factors, global economic factors and socio-cultural factors. The strategy to overcome the issues is to carry out the analysis external environmental factors that might affect market demands of the company and use the findings to forecast the budget planning.

3b. The strategy to use in overcoming the issue is to use the contingency plan using the sensitivity analysis for the budget. For example, the report will reduce 30% from the net income in case the original budget plan is not realized. The sensitive analysis will assist in overcoming the issues that might have arisen from the budget.

3c. The step to take to improve the financial planning is to diverse the business operations by investing part of the income in a top performing companies to increase the company net incomes.

4(a). The strategy to disseminate the information of the budget plan to the team member is through:

Electronic communication

written communication

formal meetings

group meetings and sessions, and face-to-face presentations that include teleconferencing and video-conferencing.

4b. The roles and responsibilities of the team member are to provide advice, support and guidance that could assist in budget implementation. Moreover, the team member should ensure that the role and responsibilities are well understood. It is also critical to provide appropriate support to assist staff members to carry out their duties effectively.

4(c) The resources to assist team members achieving their tasks are:

human resources

physical resources

financial resources

Information management systems that include hardware and software

record-keeping systems.

Provides access to different documented financial procedures provides training that include coaching, and mentoring.

Provides relevant information from the internet and intranet.

Conducting information session and briefing.

Access specialist advice.

ASSESSMENT 2

1a. Method to monitor expenses include:

understands the company performance indicators records the company expenditure information.

1b. To control costs, managers must create financial report relating to:

assets consumables equipment expenditure income stock, and wastage.

2a. The manager must monitor the variance budget and investigate the overruns to allow a timely response of the overruns without allowing administrative burden.

2b. Organizational procedure to report the budget is through:

regular reports

project or progress reports, and Issue-generated and requested reports.

The report must also be

well-structured

complete and accurate

genuine

mindful and targeted of the reader

proactive and positive

Well-timed.

2c. The required improvement is that the budget should be designed in such a way to meet organization objectives and policies. The action taken to improve the budget is to align the budget with organization policies and objectives.

ASSESSMENT 3

1a. Information to manage an organizational finance effectively are to keep accurate of the following:

income and expenditure

cash-flow data

bank account records

contracts

credit card receipts

employee time sheets

Moreover, the following data should be maintained accurately:

insurance reports job costing invoices quotations taxation records, and wages and salaries books.

1b. Maintaining accurate and timely financial information assists an organization to eliminate fraud, and comply with financial rules and regulations.

2. A CFO (chief financial officer) is responsible and in charge of an organizational financial management. They support work team by providing the work team with appropriate financial information and expertise to prepare financial data.

3. Basic accounting guideline and principles are to follow the GAAP guideline in preparing the company financial statement. Moreover, an organization must keep record of income statement, balance sheet and cash flow statements. (PwC, 2011).

4a. The GST is Goods & Services Tax. The GST is implemented by charging 10% on the goods and services purchased in Australia. The GST is applied to most businesses in Australia.

4b. Businesses that need to register for GST are as follows:

Businesses having turnover of $75, 000 or greater per year

Non-profit organizations having a turnover of $150, 000 or greater per year.

5a. A BAS (Business Activity Statement) is a tax that reports business requirements on a monthly basis.

5a. Three reporting cycles for BAS are monthly, quarterly and yearly. The payment due dates are:

Quarter

Due date

September quarter

28 October

December quarter

28 February

March quarter

28 April

June quarter

28 July

6. Manager must report gross income, operating income, income before tax, and plant depreciation.