Financial Management: Plans, Changes, Contingency, Approaches, and Evaluation

Financial Management

Table of Contents
ASSESSMENT TASK 1.................................................................................................................3
1. Financial Plans.........................................................................................................................3
2. Making Changes to financial Plan...........................................................................................3
3. Contingency Planning..............................................................................................................4
4. Financial Management Approaches.........................................................................................5
ASSESSEMENT TASK 2...............................................................................................................6
1. Monitor and Control Finances.................................................................................................6
Review variances.........................................................................................................................7
Review and evaluation process ...................................................................................................9
REFERENCES..............................................................................................................................11

ASSESSMENT TASK 1
1. Financial Plans
a)
The name of the organization is Big Red Bicycles (BRB) and the activities it conducted is that it
manufacture and produces Bicycles in order to sold it retailers in Australian market.
b)
The name of the team is Finance team which manages the money in the BRB organization. The
team undertaken the following activities:
 Book-keeping and management of cash flows.
 Budgeting and forecasting.
 Sourcing long-term financing (Bulturbayevich and et.al., 2020).
 Management of taxes and company's investment.
 Financial reporting and analysis for key strategic decision etc.
c)
The responsibility in the given case is implementation and monitoring of long-term sources
plans. In this, various long-term sources such as debt, equity, bonds cost and returns are
analysed by the financial team member of BRB company. They will analysed it to acquire the
funds from the market to diversify the product range of the company which further help in
reducing the poor sales of its Bicycles products. The long-term finance helps the company to
generate more and more money with greater flexibility (Al Breiki and Nobanee, 2019). That's
why it is recommendable to the company to generate funds from debt and equity in the
ratio 2:1 for product diversification and managing working capital.
2. Making Changes to financial Plan
a)
The purpose of the financial plan to diversify the BRB products range to further achieve
the net profit before tax of $1000000. The financial plan helps the company to control the
income, expenses and investment of the BRB company which help the company to achieve its
objectives and goals (Grafova and et.al., 2017). The long-term financing create a strategy for
achieve them.
b)

1. The set financial plan of long-term sources such debt financing and equity financing in
the ratio of 2:1 is achievable. It is because in Australia, the debt and equity sources of
funding is most easily accessible and have simple calculation of cost.
2. The set plan is accurate because it helps the company to generate to reduce its tax as debt
financing give tax benefit and equity help the company to generate more money for
product diversification (Birkenmaier and Fu, 2019).
3. The set financial plan is comprehension because it will address all the events from
running a business to uncertain contingent transaction which may happen in near future.
The set financial plan also include the investment of finance in profitable project.
d)
Cash flow is one of the area that could be adjusted in order to make improvement in current
financial plans (Zimpel and et.al., 2017). It is because this area basically indicates the liquid
position of the company which need to be required to settle the debts and return money to
shareholders.
e)
Chief Financial Officer (CFO) is the person to whom the approaches to financial plan is being
discuss and clarify by the finance teams. They are the senior executives responsible for
managing the financial actions of the company and tracking the cash flows and financial
planning (Yang, 2021).
3. Contingency Planning
Contingent situation Example: During the implementation phase of financial planning, the
BRB company can face the problem of economic recession and stock market crash and for this
they also need to prepare the contingency planning.
a) The contingency plan include:
1. The consequence of stock market crash is that businesses will loss their money and the
impact of which they are unable to pay off its debt and equity liabilities. The economic
recession will dampen the BRB accounts receivables and slow down its supply chain and
liquidity (White and et.al., 2019).
2. In order to identify the required adjustments to financial plan, the finance team will
consult the risk management team and financial expert.