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John Thistle Case Study

Read the following case study focusing on cash flow forecasting: http://www.accountingweb.co.uk/cgi-bin/item.cgi?id=116061 and download the available document

Since joining the company, John Thistle, the management accountant has focused much attention on planning and control of the business through the introduction of the budgetary control system. When formulating the plans and budgeted financial statements for Year 03, which featured in the case study on interpretation of financial statements, John spent time on forecasting the cash flow for the budget period.

Are there any observations that you can make from reading this case? Do you agree or disagree with Thistle's approach? Explain your answer.

Solution Preview

Accurate forecasting is a fundamental part of financial management. In terms of Thistle's approach to management and the focus on planning and forecasting, analyzing the cash flow for any business is an important factor. Forecasting is important at both the group (enterprise) and business unit levels. An accurate forecast will help the group to:

Effectively manage investor expectations
Optimize its corporate financing
Re-plan and re-allocate resources across the portfolio of business units to better manage future performance
Regularly review the performance of business unit general managers

At the business unit level, forecasting helps:

Align key business functions and ...

Solution Summary

This solution discusses the case study regarding John Thistle and the planning and controlling of the business through the budgetary control system.