Diploma of Leadership Assessment Report 2022

ADVANCE DIPLOMA OF LEADERSHIP 1
Student declaration:
To be filled out and submitted with responses
 I declare that this task is all my own work and I have not cheated or plagiarised the
work or colluded with any other student(s)
 I understand that if I am found to have plagiarised, cheated or colluded, action will be
taken according to process explained to me
 I have correctly referenced all resources and reference texts throughout these
assessment tasks
 I understand the rights to re-assessment
 I understand the right to appeal the decisions made in the assessment

ADVANCE DIPLOMA OF LEADERSHIP 2
Contents
Purpose of the report:.................................................................................................................3
Task 2:........................................................................................................................................3
Financial analysis:..................................................................................................................3
Review:...................................................................................................................................3
Significant movements in profit and loss:..............................................................................8
Significant movements in cash flows:..................................................................................15
Recommendations for improvements:..................................................................................16
Review of business plan:..........................................................................................................16
Benefits of changing accounting system from MYOB to XERO:...........................................18
Profit and sales budget:.........................................................................................................19
References:..............................................................................................................................24

ADVANCE DIPLOMA OF LEADERSHIP 3
Purpose of the report:
The main purpose of this report is to analyse the variances between the actual and the budget
data and figures, implement the budgets. Further, this report talks about the various rules and
regulations that each company has to follow and meet when it comes to conducting the
business operations.
Task 2:
Financial analysis:
Review:
The following table shows the calculated ratios:
(Amounts in $)
Particulars 2016 2017
Profitability ratios:
Gross profit margin: 68.87% 68.57%
Gross profit
68,73,420.0
0
79,63,600.0
0
Net sales
99,80,100.0
0
116,13,600.0
0

ADVANCE DIPLOMA OF LEADERSHIP 4
Net profit margin: 5.45% 3.15%
Net profit
5,44,055.0
0
3,65,361.0
0
Net sales
99,80,100.0
0
116,13,600.0
0
Solvency ratio:
Debt ratio: 0.114536823 0.03350526
Debt
3,00,000.0
0
1,00,000.0
0
Equity
26,19,245.0
0
29,84,606.0
0
Short term liquidity:
Current ratio: 3.714793145 4.473696011
Current Assets
23,23,826.0
0
27,53,627.0
0

ADVANCE DIPLOMA OF LEADERSHIP 5
Current Liabilities
6,25,560.0
0
6,15,515.0
0
Working capital ratio:
16,98,266.0
0
21,38,112.0
0
Current Assets
23,23,826.0
0
27,53,627.0
0
Current Liabilities
6,25,560.0
0
6,15,515.0
0
Total assets turnover ratio: 0.153479528 0.098742987
Net profit
5,44,055.0
0
3,65,361.0
0
Total assets
35,44,805.0
0
37,00,121.0
0
Profitability:
The gross profit has decreased due to the reason that there has been an increase in the amount
of the gross profit but a corresponding low increase in the amount of the net sales.
The net profit has decreased due to the reason that there has been a decrease in the amount of
the net profit but a corresponding low increase in the amount of the net sales.

ADVANCE DIPLOMA OF LEADERSHIP 6
Solvency:
Debt ratio shows the riskiness that the company is exposed to. This ratio has reduced due to
the reason that the company has repaid the amounts that it had borrowed from outside and got
more equity capital into the business. The low ratio is not good since it means an increased
risk for the company.
Short term liquidity:
The current ratio has improved which is good since it shows an increased capability of the
company to meet its short term financial obligations.
The working capital of the company has increased which is gain not good for the company
since it merely means that the company has more cash blocked in its business operations.
Activity:
The total asset turnover ratio has decreased due to decrease in the net profit of the company
and increase in the assets employed into the business of the company. This is again not good
since it shows that the company is not utilising its business assets in the most efficient and
effective way.
The ratio analysis is a quantitative analysis of the data which is used in the calculations so
that the stakeholders could get enough information in this regard. These are the calculations
that are done for some multiple perspectives with regard to the working and the financial
performance such as liquidity, turnover, solvency and the profitability.
It is the method of analysing and comparing the financials by the way of computing the
financial statement value percentages instead of comparing each line item from the financial
statements.
The following are the advantages of using the ratios analysis: