Zero Based Budgeting Case Study

Q1. Options to raise equity funds.

By understanding the equity base and financial statements of SRS LTD (Annual report, 2015) we can say company is performing better as the sales revenue is increasing every year. Company was having a turnover of Rs. 3447.83 crore in 2014, which increased to Rs 6000 crore in 2015 (Batra, 2015). Company invested a huge of amount in the real estate and has a land area of about 500 acres and now company is in process of building various projects as the land prices are going up on the daily basis so huge booking are made which is increasing the equity of the company (Srs real estate, 2015).

Various options to raise equity funds: -

Raising Equity Fund by Personal Capital – The company already own a medical equipment

These incudes such as Rental expenses, Factory area cleaning cost (Gowthrope, 2008).

This is not necessary in process costing environment because in this environment all the unit or products produced are identical or can be regarded as similar to other. So there is no need to distinguish between direct and indirect cost (Atrill and McLaney, 2009).

Q2.

Q3. Rationales for preparing zero- based budgeting?

A zero-based budgeting is defined, as it requires all expenses of each period to be classified. Zero base budgets are known as a budget created by scratching each period. It is distinguished from other traditional budgets, as this is not considered on the previous budgets, in short it ignores all the previous budgets held by the company (Wilkinson, 2013).

Rationales for preparing zero based budgeting- to control cost in the organization zero-based budgeting is the most efficient way (Wilkinson, 2013).

Main aim of zero based budgeting is to save money and improve on their services however their main goal is to lower wasteful expenses and on other hand without letting company to reduce its value (Goodrich, 2013).