We have covered several ratios in this unit that users of financial statements can work with to evaluate a company's performance. However, not all ratios are important for or applicable to all organizations. In particular, service organizations have different business models than manufacturing organizations. Using the company you worked with for your Unit-5 portfolio assignment (provided below), explain which financial ratios would be applicable to the company and which would not. State the reasons for your assertions.

As portfolio activities are to be self-reflective, please make sure to connect the portfolio assignment to:

• Your personal experiences. Reflect on how this assignment topic is applicable to and will benefit you.
• Course readings and any external readings.
• Discussion forum posts or other course objectives

Portfolio Assignment - 5

A manufacturing companies involves in the production of physical products while the service companies are involved in services, the necessities and value involved within the production for both types of companies are different, so as their master budget.

A master budget combines all of the smaller budgets within your business and turns them into one overall budget, so you will get a complete overview of your company finances. The master budget includes the HR, marketing, and all other departmental budgets to produce an overall single budget (Baggott, 2019).

Let us take an example of Insurance provider Company, National Life Insurance Ltd, a profit service company, the method it might use to form its master budget are:

Creating sales budget by forecasting the longer-term potential sales and cost of products sold

Employees' budget: It will be said budgeted payroll, this helps in establishing the standards for efficiency rate and bonus/incentive schemes

Subsequently preparation of selling and administrative budget directly because service companies do not have raw materials, finished goods, or merchandise inventories and hence no budgets regarding this would be prepared.

Then preparation of cash budget and another financial budget like budgeted income statement and budgeted balance sheet

By combining all these small budgets, the final master budget is formed by any service company.

The budget process for the service company differs from a manufacturing company as below:

Organizations that primarily produce a tangible product and typically have low customer contact ("Operations management: An integrated approach, 5th edition," n.d.).

There are differences regarding period cost and product cost as most of the product cost in the manufacturing firms are considered as period cost in a service organization

Difference regarding fixed and variable cost also exists between the process of making a master budget for manufacturing company and non-manufacturing company

Organizations that primarily produce an intangible product, such as ideas, assistance, or information, ("Operations management: An integrated approach, 5th edition," n.d.).

This assignment topic is applicable to and will benefit us as:

Understanding the way costs are reported for in various type of industries.

Process of making a master budget for different companies.