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
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,…
