Cashflow_Budgeting and planning.for profit pptx

strategy monitoring in this chapter we develop a tools to evalute the strategy that has been developed earlier to make sure that what has bein planned acheived and if there is any divaition the team will prvent it from hppining

1. Bob Nardelli's Resignation – Financial Management Implications - CEO of Home Depot (2000–2007) - Resigned abruptly on January 3, 2007 - Received $210M severance package - Controversy over excessive pay and shareholder dissatisfaction Teaching Focus: Impact on Cash Flow Budgeting & Financial Planning

2. Immediate Financial Impact 1. One-time Cash Outflow: $210M severance → Financing Outflow 2. Liquidity Effects: Cash reserve depletion → potential short-term borrowing 3. Market Reaction: Investor confidence drop → potential increase in cost of capital Visual: Flow chart showing cash outflow spike → reduced liquidity → tighter cash budget

3. Strategic & Budgetary Adjustments Actions by New CEO (Frank Blake): - Refocus on core operations & customer service - Moderate capital expenditures - Increase operating spending on stores and staff Cash Flow Budget Changes: | Activity | Before | After | |----------|--------|-------| | CapEx | High | Moderate | | Operating Outflows | Moderate | Higher (service focus) | | Financing Needs | Stable | Potentially Lower | Visual: Bar chart comparing cash flow allocation before vs after resignation

4. Key Lessons for Financial Management 1. Extraordinary events affect cash flow budgets (severance, restructuring) 2. Liquidity planning is crucial (maintain cash buffers) 3. Governance impacts financial stability 4. Align strategy with cash flow realities Summary Quote: "Major leadership events can disrupt the cash flow cycle. Financial managers must rebalance budgets quickly to protect liquidity and sustain operations."