Financial Performance Analysis of Grow Management Consultancy for 2014

Part-A
Executive Summary
The report presented here provides an analysis of the financial performance of Grow
Management Consultancy for 2014. The overall performance of the business is good as depicted
from the net profit of $652,077. The company has further plans to improve the sale of E-book
publication and Workshop.
Introduction
This report has been prepared to analyze the financial performance of Grow Management
Consultants, a company engaged in providing leadership consultancy services. The report will
highlight the trend in revenues and profits of the company. An analysis of cash flows will also be
conducted. Apart from it, the report will produce a concise discussion on the strategic goals and
priorities of the company. Further, a discussion on the use of accounting software will also be
done in the report.
Analysis of Financial Performance 2014-15
The overall financial performance of the company has been assessed to be positive for the
2014. The actual and budgeted figures of net profit and revenues for the year 2014 have been
shown below:
The revenues of the company were $1,335,600 in the year 2014 and company made net
profit of 652,077. The net margin is worked out to be 48.82% (652,077/1,335,600). The net
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margin of the company is very high which indicates that the business has high profitability
potential.
The gross margin is computed by dividing the gross profits with total sales and gross
profit is computed by deducting the cost of sales from sales (Goldmann, 2017). The total sale
from workshops and publications was $40,000 against the cost of sale of $34,000. Thus, the
gross margin of workshop and publication is worked out to be 17.65% (40,000-34,000/34,000).
The gross margin of workshop and publication is also good which indicates that the company
can increase the workshops and E-book publications in the coming years.
The overall profit of the business was $652,077 in 2014. However, segment wise analysis
of profits provides more detailed and deep picture of profitability. It also helps the managers to
identify the segments earning profits and segments that are incurring losses so that appropriate
resource allocation could accordingly be done. In case of Grow Management Consultancy, it has
been observed that the workshop segment of the company has earned profit of $14,000 while the
E-book publication segment has incurred losses of $8,000 in 2014.
The revenues from workshops were budgeted at $45,000 however; the actual sale was
recorded at $38,000. The negative variance of $7,000 is worked out in the case of workshop
sales. Further, the sale from publications was budgeted at $15,000 and actual sale was recorded
at $2,000, leaving a negative variance of $13,000. The main reason behind negative variance in
workshop sale was lack of attraction for the clients. The content of the workshops was company
specific which caused failure of the workshop model. Further, E-book publications are too costly
making it difficult for the company to increase the sale volume.
Analysis of Strategic Goals and Priorities
Strategic goals of the company for the year 2015 include increasing sales of E-books and
workshops. The company is to primarily focus on putting more efforts on marketing for E-books
and workshops. Following costs will be incurred to meet these operational plans:
Workshop
Type Cost
Venue and catering in Sydney CBD $5,000
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Speaker fees and travel $10,000
Marketing $5,000
Conference bags $1,000
Staff time (appoint casual Project Officer
for 6 months, may be permanent
depending on success)
$30,000
Total
E-Book Publications
Type Cost
Contract writer $10,000
Desk top publishing $3,000
Marketing $1,200
Analysis of Cash Flow Statements
The analysis of cash flow statement shows the liquidity position of the business. It has
been found out that cash inflows of Grow Management Consultancy are much higher than the
cash outflows. The figures show that the company has cash surplus in each month growing with
rapid pace. The cash surplus for the month of July 2014 was $39,559 which grew to $87,520 in
June 2015.
Analysis of Financial Software
Grow Management Consultancy uses MYOB accounting software for the purpose of
book keeping and financial reporting of the financial events and transactions. MYOB is a cloud
based accounting package which provides a company the platform with all facilities for
accounting and book keeping. The accounting software provides an edge to the firm by cutting
the high IT infrastructure and maintenance cost (R&G Technology, 2014). The maintenance
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