Financial Performance Analysis and Reporting

This assignment requires you to analyze a set of financial data, including current assets and liabilities, to calculate the acid test ratio. You are also expected to provide a concise overview of your learning in a finance course and explain how it will benefit your role as a bookkeeper. The assignment emphasizes understanding financial performance indicators, their application in real-world scenarios, and the importance of financial analysis for informed decision-making.

Provide Financial and Business Performance Information
This course is based on the nationally recognised unit of competency:
● FNSACC501 Provide Financial and Business Performance Information
It covers the skills and knowledge required to prepare, document and manage
budgets and forecasts, and encompasses forecasting estimates and monitoring
budgeted outcomes.
ASSESSMENT WORKBOOK
Participant Name:
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Assessment Workbook X: Provide Financial and Business Performance Information
Assessment Workbook X
Provide Financial and Business Performance Information
V1.0
Produced 1 February 2016
Copyright © 2016
All rights reserved. No part of this publication maybe reproduced or distributed in any form or by any
means, or stored in a database or retrieval system other than pursuant to the terms of the Copyright Act
1968 (Commonwealth).
Date Summary of Modifications
Made
Version
1/02/16 Version 1 produced following
assessment validation
V1.0
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Assessment Workbook X: Provide Financial and Business Performance Information
Getting Started
Instructions
There is one (1) workbook for this unit and it contains one (1) assessment
made up of:
● Written Questions – A set of generic questions testing the student’s
general knowledge and understanding of the general theory behind the
unit.
● Exercises - A set of exercises to test the student’s knowledge, analytical
skills in problem solving and performing numerical calculations.
● Case Study – A hypothetical exercise to test the student’s knowledge,
analytical skills in problem solving and performing numerical calculations.
The following questions are divided into the following categories.
The first part of the assessment covers generic underpinning knowledge of tax
law and concepts. These questions are all in a short answer format. The longer
questions requiring creative thought processes are covered in the second part
of the assessment and the case study and involve the calculation of tax
transactions. You must answer all questions using your own words. However
you may reference your learner guide, the PMBOK guide and other online or
hard copy resources to complete this assessment.
The second part of the assessment covers exercises relating to the calculation
and processing of taxation information. Ideally you should be able to answer
these questions based on the processes that are currently in place in your
workplace. If this is not the case, then answer the questions based on
processes that should be implemented in your workplace.
The final part of the assessment is based on a case study involving the
completion of a tax return for an individual.
Requirements for satisfactory completion
For a ‘satisfactory’ result for each component of this workbook, all tasks must
be addressed to a ‘satisfactory’ standard. It is important you;
1. Provide responses using complete sentences, making direct reference to
the question.
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Assessment Workbook X: Provide Financial and Business Performance Information
2. Specifically address all parts of the question providing examples where
appropriate.
Competency Based Assessment
Competency based assessment focuses on whether you are able to perform
the task to the standard expected in the workplace. It relies on you providing
evidence that supports your claim of competence. This evidence is in the form
of your completion of the assessments set for each unit.
Once you have submitted your completed assessments, your instructor will
assess your submission to determine your competence. To be deemed
competent in each course, you are required to achieve a satisfactory result for
all of the assessment components that make up that unit. Where a ‘not yet
satisfactory’ judgement is made, you will be given guidance on steps to take to
improve your performance and provided the opportunity to re-submit evidence
to demonstrate competence. Once a ‘satisfactory’ judgement has been made
on all components for a unit, you will be deemed ‘competent’ in that unit.
Submission
Only submit your workbook once all activities inside are complete. Should you
have any questions regarding your assessments, or not understand what is
required for you to complete your assessment, please feel free to ask your
instructor.
Keep your answers succinct and make sure you are answering the question.
Re-read the question after you have drafted up your response just to be sure
you have covered all that is needed.
Your final assessment result will either be ‘Competent’ or ‘Not Yet Competent’.
When submitting your assessments please ensure that
1. All assessment tasks within the workbook have been completed
2. You have proof read your assessment
Candidate Declaration
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Assessment Workbook X: Provide Financial and Business Performance Information
Submission of this workbook means you agree to abide by the terms of the
candidate declaration below.
By submitting this work, I declare that:
● I have been advised of the assessment requirements, have been made
aware of my rights and responsibilities as an assessment candidate, and
choose to be assessed at this time.
● I am aware that there is a limit to the number of submissions that I can
make for each assessment and I am submitting all documents required to
complete this Assessment Workbook.
● I have organised and named the files I am submitting according to the
instructions provided and I am aware that my assessor will not assess
work that cannot be clearly identified and may request the work be
resubmitted according to the correct process.
● This work is my own and contains no material written by another person
except where due reference is made. I am aware that a false declaration
may lead to the withdrawal of a qualification or statement of attainment.
● I am aware that there is a policy of checking the validity of qualifications
that I submit as evidence as well as the qualifications/evidence of parties
who verify my performance or observable skills. I give my consent to
contact these parties for verification purposes.
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Assessment Workbook X: Provide Financial and Business Performance Information
Written Questions
Instructions
The following questions are divided into three categories.
The first part of the assessment covers generic underpinning knowledge of
basic financial and business performance information. These questions are all
in a short answer format. The longer questions requiring creative thought
processes are covered in the second part of the assessment and the case
study. You must answer all questions using your own words. However
you may reference other online or hard copy resources to complete this
assessment.
The second part of the assessment includes exercises relating to the
calculation and monitoring of financial information and the implementation of
contingency plans to enhance financial performance. Ideally you should be able
to answer these questions based on the processes that are currently in place in
your workplace. If this is not the case, then answer the questions based on
processes that should be implemented in your workplace.
The final part of the assessment is based on a case study involving the
preparation of an advice with respect to the evaluation of business and
financial options and alternatives.
Questions
XQ1: Name two pieces of legislation that govern the provision of financial
services in Australia.
Two pieces of legislation that govern the provision of financial
services in Australia
- The Corporation Act 2001
- Competition and Consumer Act 2010
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Assessment Workbook X: Provide Financial and Business Performance Information
XQ2: Explain three (3) ways the Australian Accounting Standards (“AAS”) can
increase the value of the information contained in the financial statements.
Three ways the Australian Accounting Standards can increase the
value of information
- By applying practice of standardising accounting exercises
- taking up an avenue for coping with the altering environment of accounting;
- By improving overall quality as well as uniformity of practices of reporting;
XQ3:
XQ3A Describe the term “operating cycle”.
XQ3B Why is a satisfactory cash flow so important to a business?
XQ3A
Operating Cycle
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Assessment Workbook X: Provide Financial and Business Performance Information
Operating cycle can be considered to be a satisfactory flow of cash that is
very significant for any business. There are items of particularly trading stock
or else services carried out that have the need to be transformed into sales
for generation of cash flow.
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Assessment Workbook X: Provide Financial and Business Performance Information
XQ3B
Reason why a satisfactory flow of cash is important to a business
A cash flow can be considered to be very important to a specific business as a
negative flow of cash implies that the business is accepting lesser amount of
cash than the amount spent and it might possibly struggle to disburse instant
bills and have the requirement to borrow funds to cover up the deficit.
XQ4: All work groups and team members should work together to achieve a
common goal. List three (3) ways team members in the management of
finance can obtain support to competently perform their role.
Three ways team members in the management of finance can
acquire support to competently perform their role
Team members in the management of finance have the need of acquiring
support to competently execute their roles. However, the support can be
attained by means of documentation of processes, utilization of intranet
founded information and staff briefing.
XQ5: Describe three (3) core interpersonal skills you, as a team member, can
use to effectively work with other team members including those with cultural
differences.
Three core interpersonal rules that can be used for effectively
working with other team members including the ones with cultural
differences
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Assessment Workbook X: Provide Financial and Business Performance Information
- Working as a team player as well as efficiently with others
- Showing assertiveness as well as empathy
- Communicating clearly and distinctly
XQ6:
XQ6A List two (2) appropriate methods for communicating approved
budget information to staff members.
XQ6B Why is it important for work groups and teams to participate in
the budget planning process?
XQ6A
Two appropriate methods for communicating approved budget
information to different members of the staff
- The sanctioned budget information might be presented in tables or else charts else wise
through newsletters as well as memos and be made available in manual or electronic
format. Face to face discussions and meetings can be arranged for presentation of
approved budget information and presenting clarifications of significant facets of
budgeting
- Teleconferencing along with video conferencing might also be utilized for overcoming
diverse geographical barriers
XQ6B
Importance for work groups as well as teams to participate in the
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Assessment Workbook X: Provide Financial and Business Performance Information
budget planning process
Participation in particularly in the budgeting procedure can be considered to
be a significant element of the employee management process of
communication. Essentially, this directs the way towards overall group
acceptance of the presented budgeted goals. In addition to this, the
procedure of generating the budget with the entire team and get the
opportunity to pay attention to the opinions as well as ideas of the team. As
such, participation of the team members can also help management of the
corporation to share the visions and missions of the organization with them.
XQ7: What is the main advantage and disadvantage of using spreadsheet
based financial projections?
Main advantage and disadvantage of using spreadsheet based
financial projections
The primary benefit of utilizing electronic based financial projections is that a
wide array of data can be assimilated and updated routinely and specifically
a “what if” evaluation can also be carried out. However, the disadvantage of
utilizing spreadsheets is that any kind of inaccuracy in a formula can in turn
have a flow on the entire effect and lead to miscalculations in final reports.
XQ8: A business has sales of 5,000 units for the current year. The value of the
sales for the current year is $3,000,000. Inflation is expected to rise by 4%.
Sales figures are expected to rise by 5%. Calculate the following:
XQ8A Estimated no of units to be sold in the following year;
XQ8B cost per unit at the inflated price for the following year;
XQ8C estimated total value of sales for the following year.
XQ8A : 5000 x (1+5%) = 5250 units
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Assessment Workbook X: Provide Financial and Business Performance Information
XQ8B : $600 x (1+4%) = $624
XQ8C : (5250 x $624) = $3,276,000
XQ9: Provide answers with respect to the following financial transactions:
XQ9A an owner invests $550,000 in the business and takes out a long
term loan of $200,000. What is the value of the assets of the business?
XQ9B the assets of a business are $250,000 and the owner has
invested $150,000. What are the liabilities of the business?
XQ9C abusiness owner has invested $350,000. The current assets are
valued at $120,000, current liabilities are $25,000, long term liabilities
are $100,000. What is the value of the fixed assets of the business?
XQ9A: ($550000+$200000) = $750,000
XQ9B: ($250000 - $150000) = $100,000
XQ9C: ($350000+$100000+$25000) - $120000 = $355,000
XQ10: Fill in the missing figures in the production report below:
Budget Actual Variance
$ $ $
Direct material 25,550 ? 1,450U
Direct labour 32,000 35,560 ?
Factory overhead ? 12,250
500F
Budget Actual Variance
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Assessment Workbook X: Provide Financial and Business Performance Information
Direct Material $25,550 $27,000 $1,450 U
Direct Labour $32,000 $35,560 $3,560 U
Factory Overhead $12,750 $12,250 $500 F
XQ11: Interest rate is 12%. Calculate the simple interest to be paid on $8,000
if the amount is borrowed for:
XQ11A two (2) years;
XQ11B three (3)months;
XQ11C 180 days
XQ11A: $8000 x 12% x 2 = $1920
XQ11B: $8000 x 12% x (3/12) = $240
XQ11C: $8000 x 12% x (180/365) = $473
XQ12: $2,500 is invested at 8% per annum for three (3) years. You are
required to calculate:
XQ12A the amount of the investment compounded after three (3) years;
XQ12B the total amount of compound interest earned in that period.
XQ12A: $2500 x (1+8%)3 = $3,149.28
XQ12B: ($3149.28 - $2500) = $649.28
XQ13: Gordonvale Products produces bird cages. The annual cost for the
product is as follows:
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Assessment Workbook X: Provide Financial and Business Performance Information
No of units produced 16,000
Storage cost per annum $4
Cost per order $20
You are required to calculate the economic order quantity (“EOQ”)
.
EOQ = √ 2 x 16000 x ($20/$4) = 400
XQ14: A business is offered a discount of 4% to settle an account in 10 days.
The net amount must be settled within 30 days to avoid interest on the
overdue account. Alternative funding is available at 8% per annum.
Perform calculations to determine whether or not the business should take
advantage of the 4% discount offered.
% Value of Discount : (4% x 365) /[(100% - 4%) x (30 – 10)] = 76.04%
As the company can enjoy higher percentage value of discount in comparison
to the percentage cost of alternative funding, i.e., 8%, it should take
advantage of the discount offered.
XQ15: Calculate the discounted value today of a cash flow of $4,500 to be
received at the end of the year. Interest rate is 8% per annum.
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Assessment Workbook X: Provide Financial and Business Performance Information
Discounted Value of Cash Flow: $4500 / (1+8%)1 = $4,166.67
XQ16: You are required to perform calculations for the following transactions
to determine the cost of funding. The tax rate is 30%.
XQ16A the cost of ordinary shares at 30 June X2. The dividend price per
share at 30 June X1 is 60¢. The growth rate per annum is 3%. Market
price per share at 30 June X2 is $1.
XQ16B the opportunity cost of distributing $10,000 to shareholders
instead of the amount being retained as profit. The amount distributed
can be invested at 9% per annum.
XQ16C the cost of 9% $100 debentures after tax with a current market
price of $150.
XQ16A: Cost of Ordinary Shares: [{$0.60 x (1+3%)} / $1] + 3% = 64.8%
XQ16B: Opportunity Cost: [$10000 x 9% x (1-30%)]/ $10000 = 6.30%
XQ16C: Cost Debenture after Tax: [(9% x $100)/$150] x (1- 30%) = 4.20%
XQ17:
XQ17A If a project requires initial expenditure of $150,000, after a three
(3) year life it has scrap value of $30,000 and the annual average profit
before tax is $28000, what is the accounting rate of return?
XQ17B What are the disadvantages of using the ARR method to evaluate
a project?
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Assessment Workbook X: Provide Financial and Business Performance Information
XQ17A: Accounting Rate of Return: $28000/[($150000+$30000)/2] = 31.11%
XQ17B
Disadvantages of using ARR method for evaluation of a project
The disadvantages of utilizing ARR method are that this mechanism
necessarily does not consider the time value of money and does not rely on
the flows of cash anticipated from particular investments.
XQ18:
XQ18A A company invests $70,000 in a piece of machinery. Net cash
flows of $8,000 are expected each year after the first year. How long
will the project take to recover the initial outlay e.g. calculate the
payback period?
XQ18B What are the disadvantages of using the payback method to
evaluate a project?
XQ18A: $70000/$8000 = 8.75 years
XQ18B
Disadvantages of using the payback method for evaluation of a
project
The disadvantage of utilizing the payback mechanism is that it takes no
notice of the flows of cash after or beyond the pay-back period and does not
take into account particularly the time value of money.
XQ19: A business has capital of $350,000, total assets of $220,000, a gross
profit of $65,000, a net profit of $42,000 and total sales of $250,000. You are
required to calculate:
XQ19A return on capital;
XQ19B return on total assets;
XQ19C gross margin;
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Assessment Workbook X: Provide Financial and Business Performance Information
XQ19D net margin.
XQ19A: $42000/$350000 = 12%
XQ19B: $42000/$220000 = 19.09%
XQ19C: $65000/$250000 = 26%
XQ19D: $42000/$250000 = 16.80%
XQ20: A business has current assets of $220,000, prepayments of $500,
current liabilities of $155,000, an overdraft facility of $25,000 and inventory
worth $50,000. You are required to calculate:
XQ20A the current ratio;
XQ20B liquid ratio.
is the business able to meet all of its debt obligations? Give reasons for your
decision.
XQ20A: $220000/$155000 = 1.42
XQ20B: ($220000 - $500 - $50000) / ($155000 - $25000) = 1.30
XQ21: The COGS sold for a business is $120,000. Opening inventory is
$26,000 and closing inventory is $34,000. Calculate the inventory turnover
ratio for the period and explain why a high ratio is beneficial to the business.
Inventory Turnover Ratio: $120000 /[($26000+$34000)/2] = 4
High inventory turnover ratio is very beneficial for the company as it indicates
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Assessment Workbook X: Provide Financial and Business Performance Information
that the company is converting its inventories into sold products very quickly
and thus it can earn higher profits.
XQ22: The equity of a business is $350,000 and long term liabilities are
$110,000. Calculate the gearing or leverage ratio and explain the benefits of
a business being highly geared.
Gearing Ratio: $110000/$350000 = 0.31
Benefits of a business being highly geared
The benefit of a particular business being extremely geared is that the
interest becomes tax deductible expenditure for the entire business. In
particular, a business having high debt also bears of risk of insolvency.
XQ23: A company has net profit after tax of $65,000, preference dividends of
$5,000 and 20,000 ordinary shares. The net profit after tax distributed to
shareholders is $55,000. You are required to calculate:
XQ23A the earnings per ordinary share;
XQ23B dividend per ordinary share
XQ23A: ($65000 - $5000) / 20000 = $3.00
XQ23B: $55000 / 20000 = $2.75
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Assessment Workbook X: Provide Financial and Business Performance Information
XQ24: What are the reporting obligations of a business to the Australian
Taxation Office (“ATO”) with respect to:
XQ24A goods and services tax (“GST”);
XQ24B PAYG withholding tax;
XQ24C what legislation governs the payment of income tax in Australia?
XQ24A
Goods and Service Tax
Businesses essentially utilize an action statement for the purpose of reporting
and paying diverse tax obligations counting goods and service tax,
instalments of particularly “Pay as you go (PAYG)”, withholding as well as
fringe benefits tax of particularly PAYG. In addition to this, activity statements
can also be utilized by different individuals essentially who have then
requirement to make quarterly disbursements of PAYG instalments.
Businesses also have the need to present reports and pronouncements on
mainly Goods and Services Tax that is accepted and disbursed to the
Australian taxation Office (ATO). Essentially, a specific business can utilize an
activity statement for the purpose of reporting and disbursing goods and
services tax that a specific business has amassed and make claim for credits
of GST.
XQ24B
PAYG withholding tax
In case if a specific business is operated as a business concern, the business
concern have the need to withhold specific amounts from particular
disbursements that are made to members of staff of organization and
amounts that are made specifically from payments to different company
directors for specific services for purposes of taxation.
XQ24C
Legislation governing the payment of income tax particularly in Australia
The legislation that governs the payment of income tax is essentially the
Income Tax Assessment Act of the year 1936 (Cth) as well as legislation
“Income Tax Assessment Act of the year 1997 (Cth).
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Assessment Workbook X: Provide Financial and Business Performance Information
XQ25: Name the commonwealth government authority responsible for
regulating the financial services industry in Australia and briefly describe its
role with respect to the provision of financial services. Provide the name of
the Parliament Secretary to the Treasurer who is responsible for the
supervision of the services provided by the ASIC.
Commonwealth government authority accountable for regulation of
financial service industry in Australia
The Australia Security and Investment Commission also simply referred to as
ASIC is a regulator of Australia’s corporate, financial services as well as
markets. This can make certain that Australia’s markets are necessarily fair
as well as transparent and can be supported by positive and informed
financiers as well as consumers. In essence, ASIC can be considered as an
self-governing Commonwealth Government Body that get administered by
particularly the ASIC Act 2001 as well as the Corporations Act 2001.
Description of the role: The primary role of ASIC is to regulate different
stipulations of financial products, specific product disclosures as well as
different types of financial services. In essence, the ASIC presently covers
under specific portfolio liabilities of the Parliamentary Secretary to mainly the
Treasurer.
Parliament Secretary to the Treasurer responsible for the supervision of the
services delivered by the ASIC is Hon Bernie Ripoll MP.
XQ26: With respect to the provision of financial advice:
XQ26A name two (2) organisations that provide financial advice;
XQ26B perform research and locate a product disclosure statement of
one of these organisations and briefly describe the information
contained in the table of contents of the statement;
XQ26C what is the role of the Australian Competition and Consumer
Commission (“ACCC”);
XQ26D conduct research of the provisions of the Fair Trading Act 1989
(Qld). Under section 86 - Offence, what are provisions and penalties
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Assessment Workbook X: Provide Financial and Business Performance Information
imposed for contravention of this section with respect to the supply or
offer of prohibited services?
XQ26A
Two organizations that deliver financial advice
- Association of Financial Advisers Limited (AFA) reflects different financial advisers as
well as the value of particular financial advice across the nation Australia
- Financial Planning Association of Australia Limited (FPA) is necessarily the largest body
of expert professionals reflecting financial planners across the nation Australia.
XQ26B
Performance of research and location of product disclosure
statement of organizations
FPA- The fee disclosure statement of FPA states that the meaning provided to
the specific term particularly stipulated under section 92H of the regulations
of the Corporations Act of the year 2001. However, a fee disclosure statement
can be considered to be writ statement that presents specific matters
regarding fees disbursed as well as services delivered specifically under Fee
Arrangement mainly over the prior 12 month period of the arrangement.
Description of the information contained in the table of contents of
the statement
The table of contents contains information regarding the Preamble, ongoing
fee arrangement under mainly FPA, suitability of fee arrangement,
documentation of ongoing fee arrangement, delivering service under the
arrangement, renewal of fee arrangement, termination procedure and lastly
notices.
Association of Financial Advisers Limited (AFA) provides product disclosure
statement on retail in addition to group as well as direct insurance. The
information contained therein include
XQ26C
XQ26C Role of the Australian Competition and Consumer Commission
(ACCC)
The role of the Australian Competition and Consumer Commission is to shield
consumer rights, diverse obligations and business rights, carry out industry
rules as well as thorough monitoring of price and avert unlawful anti-
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Assessment Workbook X: Provide Financial and Business Performance Information
competitive behaviour.
XQ26D
XQ26D Provisions of the Fair Trading Act 1989
The provision of the Fair Trading Act of the year 1989 is to carry out
protection of both business as well as consumer rights.
Provisions and penalties are imposed for contraventions of the section 86-
Offence with respect to mainly the supply and offer of different prohibited
services.
XQ27:
XQ27A Describe two (2) effective methods to monitor and improve
services provided to clients.
XQ27B What tool can be used to measure the success or otherwise of
client services provided during a period?
XQ27A
XQ27A Two effective methods for monitoring and improving services
provided to clients
Two effectual mechanisms of monitoring and enhancing services delivered to
clients include undertaking market research, surveys or else by acquiring
feedback by means of questionnaires as well as feedback norms as well as
interviews. In particular, feedback information can be necessarily gathered
from members of the staff, customers as well as clients and can be utilized to
maintain and enhance the overall service quality else wise products. Again,
feedback information can also ne enumerated by the total complaints or else
returns of different merchandise accepted. In addition to this, face to face
communication can be considered as a strong communication form since it
comprises of the use of diverse verbal as well as non-verbal language,
opinion, listening as well as observation.
XQ27B
XQ27BTool that can be utilized for enumerating success or else
client services delivered during a specific period
-Trend analysis can be considered as an important management tool that can
be utilized for the purpose of planning as well as controlling a specific
business. Essentially, in a specific business, it will indicate towards the
alterations in financial as well as diverse non-financial items.
-Performance reports also act as a tool for particularly management to carry
out the process of supervising and monitoring the overall budget
performance, process of decision making and procedure of future planning.
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Assessment Workbook X: Provide Financial and Business Performance Information
XQ28: With respect to providing services to clients and customers describe
three (3) appropriate methods of communication with respect to each of the
following:
XQ28A obtaining verbal advice from a client or customer including a
client or a customer from a different culture or non English speaking
background;
XQ28B listening to clients and customers;
XQ28C providing written communication.
Three appropriate methods of communication with respect to
obtaining verbal advice from a client or else a customer from a
different culture
-Conducting market research, interviews as well as surveys or else obtain
feedback by means of questionnaires for acquiring information
-Maintaining simple language, presenting timely and pertinent facts and
establishing rapport particularly between both sender as well as receiver
-Making certain that there are pauses and punctuations between different
sentences to provide time for the purpose of comprehension
XQ28B Three appropriate methods of communication with respect to
listening to clients and customers
-Focussing on particularly what specific speaker is talking about
-Body language reflecting interest in particularly what the speaker is talking
about
-Looking at the specific speaker
XQ28C Three appropriate methods of communication with respect to
providing written communication
- Maintaining a plain style of writing
- Presentation of a language that is appropriate for the targeted audience
- Presentation of mainly succinct as well as clear words for enhancement of readability
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Assessment Workbook X: Provide Financial and Business Performance Information
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Assessment Workbook X: Provide Financial and Business Performance Information
Workplace Exercises
The second part of this assessment includes exercises relating to the
calculation and monitoring of financial information and the implementation of
contingency plans to enhance financial performance.
Exercises
XE1: The sales budget for Grosvenor Grooming Products Pty Ltd for the
month of February XXXX is as follows:
Product Units
Value
Brushes 2,000
40,000
Clippers 2,500
37,500
Flexi groomers 3,000
45,000
Safety tethers 1,500
30,000
Grooming mitts 1,000
10,000
March sales are forecasted as follows:
Brushes to increase by 10%
Clippers to increase by 5%
Flexi groomers to remain the same
Safety tethers to increase by 20%
Grooming mitts to decrease by 10%
The selling price for brushes, clippers and flexi groomers are to remain the
same. The selling price for safety tethers is to increase by $2 and the
selling price of grooming mitts to increase by $5.
You are required to prepare a sales budget for Grosvenor Grooming
Products for the month of April XXXX.
Particulars Brushes Clippers
Flexi
Groomer
s
Safety
Tethers
Groomin
g Mitts Total
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Assessment Workbook X: Provide Financial and Business Performance Information
Current Sales Value $40,000 $37,500 $45,000 $30,000 $10,000
$162,50
0
Current Sales Volume 2000 2500 3000 1500 1000
Current Selling Price p.u. $20 $15 $15 $20 $10
% of Change in Sales Volume 10% 5% 0% 20% -10%
Increase/(Decrease) in
selling price p.u. $0 $0 $0 $2 $5
Forecasted Sales Volume 2200 2625 3000 1800 900
Forcasted Selling Price p.u. $20 $15 $15 $22 $15
Forecasted Sales Value $44,000 $39,375 $45,000 $39,600 $13,500
$181,4
75
XE2: Waterloo Furniture Products is preparing its budget for the quarter
ended 30 December XXXX.
Sales for the quarter are estimated as follows: $
October 300,000
November 320,000
December 350,000
Other transactions include:
Cost of Goods sold (“COGS”) is estimated 30% of sales figures.
Salaries are estimated at $150,000 each month
Administration expenses are estimated 10% of sales each month
You are required to:
XE2A calculate the expected profit or loss for the quarter;
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Assessment Workbook X: Provide Financial and Business Performance Information
XE2B calculate the amended figures if sales decrease by 2% each
month and COGS decrease by 2%.
Requirement XE2A:
Particulars October
Novemb
er
Decemb
er
Total for
the Quarter
Expected Sales $300,000 $320,000 $350,000 $970,000
COGS
($90,000
) ($96,000)
($105,00
0) ($291,000)
Gross Profit $210,000 $224,000 $245,000 $679,000
Salaries
($150,00
0)
($150,00
0)
($150,00
0) ($450,000)
Administration Expenses
($30,000
) ($32,000)
($35,000
) ($97,000)
Net Profit/(Loss) $30,000 $42,000 $60,000 $132,000
Requirement XE2B:
Particulars October
Novembe
r December
Total for
the Quarter
Expected Sales $300,000 $320,000 $350,000 $970,000
Decrease in Sales 2% 2% 2%
Revised Sales $294,000 $313,600 $343,000 $950,600
COGS ($90,000) ($96,000) ($105,000) ($291,000)
Decrease in COGS 2% 2% 2%
Revised COGS ($88,200) ($94,080) ($102,900) ($285,180)
Gross Profit $205,800 $219,520 $240,100 $665,420
Salaries
($150,000
)
($150,000
) ($150,000) ($450,000)
Administration Expenses ($30,000) ($32,000) ($35,000) ($97,000)
Net Profit/(Loss) $25,800 $37,520 $55,100 $118,420
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Assessment Workbook X: Provide Financial and Business Performance Information
XE3: Baroona Industries produces a single product. The buying price (“BP”) of
material is $12 per unit. The actual buying cost (“AP”) of the material was
$10 per unit. Total output is 100 units and budgeted purchase quantity
(“BPQ”) was 4 kg per unit and actual purchase quantity (“APQ”) is 5kg per
unit. The business has the following direct labour usages: budgeted hours per
unit of output (“BH”) is 12 hours, budgeted rate (“BR”) is $25 per hour, actual
hours (“AH”) of output is 13 hours per unit, actual rate (“AR”) is $20 per hour.
You are required to calculate the following variances for the period
XE3A total direct material cost variance, the direct material price
variance and direct material usage variance;
XE3B total direct labour variance, direct labour rate variance and direct
labour efficiency variance.
Requirement XE3A:
Total Direct Material Cost Variance:
Particulars Amount
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Assessment Workbook X: Provide Financial and Business Performance Information
Total Output 100
Budgeted Cost per unit $12
Budgeted Quanity per Unit (in kg.) 4
Budgeted Material Cost $4,800
Actual Cost per unit $10
Actual Quantity per unit (in kg.) 5
Actual Material Cost $5,000
Total Direct Material Cost Variance ($200)
Remarks UF
Direct Material Price Variance:
Particulars Amount
Total Output 100
Budgeted Cost per unit $12
Actual Cost per unit $10
Actual Quantity per unit (in kg.) 5
Direct Material Price Variance $1,000
Remarks F
Direct Material Usage Variance:
Particulars Amount
Total Output 100
Budgeted Quantity per unit (in kg.) 4
Actual Quantity per unit (in kg.) 5
Budgeted Cost per unit $12
Direct Mateial Usage Variance
($1,200
)
Remarks UF
Requirement XE3B:
Total Direct Labor Variance:
Particulars Amount
Total Output 100
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Assessment Workbook X: Provide Financial and Business Performance Information
Budgeted Labor Cost per hour $25
Budgeted Labor Hour per unit 12
Budgeted Labor Cost $30,000
Actual Labor Cost per hour $20
Actual Labor Hour per unit 13
Actual Labor Cost $26,000
Total Direct Labor Variance $4,000
Remarks F
Direct Labor Rate Variance:
Particulars Amount
Total Output 100
Budgeted Labor Rate per hour $25
Actual Labor Cost per hour $20
Actual Labor Hour per unit 13
Direct Labor Rate Variance $6,500
Remarks F
Direct Labor Efficiency Variance:
Particulars Amount
Total Output 100
Budgeted Labor Hour per unit 12
Actual Labor Hour per unit 13
Budgeted Labor Rate per hour $25
Direct Labor Efficiency Variance
($2,500
)
Remarks UF
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Assessment Workbook X: Provide Financial and Business Performance Information
XE4: Green Acres Enterprises wants to raise $1,500,000. The funds comprise
debentures of $500,000, retained earnings of $300,000, issue of new shares
$700,000. The company tax rate is 30%. The cost of retained earnings is
10%, the cost of new ordinary share issues is 6% and debentures pay 8%.
Calculate the weighted average cost of capital (“WACC”).
Particulars Amount Weight Cost
Tax
Rate
Net
Cost WACC
Debentures $500,000 33% 8% 30% 5.60% 1.87%
Retained Earnings $300,000 20% 10% 0% 10.00% 2.00%
Issue of New
Shares $700,000 47% 6% 0% 6.00% 2.80%
Total
$1,500,00
0 100% 6.67%
XE5: Contingency planning forms part of the control process in risk
management and is undertaken to avoid disruptions in normal business
operations.
You are required to describe four (4) methods an organisation can use to:
XE5A respond to a downturn in revenue;
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Assessment Workbook X: Provide Financial and Business Performance Information
XE5B respond to an increase in cost of goods sold (“COGS”);
XE5C reduce expenses;
XE5D overcome cash flow problems.
XE5A Description of methods in response to downturn in revenue
The organization can use the strategy of conducting aggressive advertising in
response to downturn in revenue. The advertising stratagems include
utilization of television as well as radio advertisement, utilization of
billboards, presenting gifts along with prizes and introduction of various new
products.
XE5B Description of methods in response to an increase in cost of
goods sold\
In response to increase in cost of goods sold (COGS), the management of the
business can think about decreasing the same by purchasing particularly
goods sold, purchasing raw materials, lessening the total number of members
of the staff as well as inventory.
XE5C Description of methods in response to reduction in expenses
In response to reduction in expenses, management of the business can
lessen costs by turning off lights, specific equipments along with systems of
air conditioning at the time when these are not necessary. In addition to this,
management of the business can purchase the different recyclable materials
for reduction of costs and share diverse resources with different corporations
where appropriate.
XE5D Description of methods in response to overcoming cash flow problems
- The borrowings need to be apt as well as timely in a bid to minimize any kind of interest.
- Excessive capital assets also need to be sold as well as leased back for the purpose of
covering shortfalls in mainly cash.
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Assessment Workbook X: Provide Financial and Business Performance Information
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Assessment Workbook X: Provide Financial and Business Performance Information
Case Study
The following questions are divided into two categories.
The first set of questions cover generic underpinning knowledge of basic
project management terms and concepts. These questions are all in a short
answer format. The longer questions requiring creative thought processes are
covered in the case studies assessment. You must answer all questions
using your own words. However you may reference your learner guide and
other online or hard copy resources to complete this assessment.
The second set of questions cover processes you would be likely to encounter
in a workplace.
This case study is based on a hypothetical situation which will not require you
to have access to the workplace, although your past and present workplace
experiences may help with the responses you provide. Note: In all instances
“XXXX” represents the current year.
Introduction
You are a financial advisor employed by GMC Financial Planners, 400
Adelaide Street, BrisbaneQld 4000. On Tuesday, 16 April XXXX, the
organisation was approached by Mr Maxwell Lewis of Maxwell Lewis Freight
Company, 400 Wangaratta Road, Coopers Plains Qld 4108 who requires a
new delivery vehicle for his business. Maxwell is considering two alternative
projects. One project involves the purchase of a Freight liner sprinter 2500
for $50,000 and the other the purchase of a Ford E350 for $80,000.
Maxwell expects to generate the following cash flows over the next 5 and 6
years for the two (2) vehicles respectively.
Year Freight Line 2500
Cash flow
Ford E350
Cash flow
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Assessment Workbook X: Provide Financial and Business Performance Information
$ $
0 -50,000 -80,000
1 20,000 30,000
2 15,000 25,000
3 10,000 15,000
4 12,000 10,000
5 6,000 8,000
6 Nil 6,000
Nil
He has requested your advice with respect to which project would be the
most preferable for his purposes. He would like the advice prepared in
written format as soon as possible.
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Assessment Workbook X: Provide Financial and Business Performance Information
CSX1
You are required to:
CSX1A Prepare a draft letter of advice for Maxwell. The initial
paragraph is to thank Maxwell for his instructions and to
confirm the verbal instructions given.
CSX1B Set out the information in the letter with respect to each
project and include a graph for each project showing the
expected cash flows over the relevant periods.
CSX1C Perform an evaluation by calculating the net present value
(“NPV”) of each project.Table showing calculations is to appear
in the letter. Present value factor is 8%.
Values are as follows:
Year 8% PV
0
1 0.92592593
2 1.78326475
3 2.57709699
4 3.31212684
5 3.99271004
6 4.62287966
CSX1D Letter is to contain relevant headings and subheadings as
required so the information is clear, culturally appropriate, and
can be easily read and understood.
CSX1E Include in your letter details of the most preferable option for
Maxwell and present the letter of advice to your supervising
officer for review and comments.
(Note: You are required to prepare this information in accordance with
generally accepted commercial practice e.g. discuss your ideas and
document format and content with your manager (Trainer) prior to
commencement to insure your completed work will be to the presentation
and content standards required).
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Assessment Workbook X: Provide Financial and Business Performance Information
Once the advice is approved by your supervising office and you forward the
letter by mail to Maxwell. Two (2) days later, 18April XXXX, Maxwell
telephones and says that he is still undecided as to what is the best option to
take. He stresses that funds are tight and he wants to ensure he receives the
maximum profit for the minimum amount of outlay as the business currently
has a cash flow problem. He also requires advice with respect to obtaining
short and long term funding and overcoming his cash flow problems.
CSX1 Letter of advice for Maxwell
To
Maxwell Lewis
Maxwell Lewis Freight Company
400 Wangaratta Road, Coopers Plains Qld 4108
Respected Sir,
First of all, I would hereby like to thank you for writing to me. I am also
thankful to you for providing me the details of the business scenario and the
decisions that need to be made. May be I would be able to present certain
advices based on the verbal instructions provided and I think things would
get better very soon. I do also hereby affirm the instruction as regards the
initial outlay of the two different projects and flows of cash for following
years, essentially 5 years for the Freight line 2500 and 6 years for the Ford
E350. Additionally, I also hereby acknowledge the rate of discount instituted
for the current case.
The facts and figures of the case reveal that there is an initial cash flow of
50000 in case of Freight line 2500 and 80000 in case of Ford E350. However,
in the subsequent years, the flow of cash for the project Freight Line 2500
was 20000 in year 1, 15000 in year 2, 10000 in year 3, 12000 in year 4 and
6000 in year 5. On the other hand, the cash flow for the subsequent years for
the project Ford E350 was 30000 for year 1, 25000 for year 2, 15000 for year
3, 10000 for year 4 and 8000 for year 5 and 6000 for year 6. The cash flow
was discounted at the rate of 8%. The flows of cash after discount help in
understanding the present value of the flows of cash and finally arriving at
the net present value of two different projects. A graphical presentation of
the flow of cash over the pertinent period can help in understanding the
expected flow of cash for the two different periods. Based on the calculation
of the net present value calculated for the two different projects, it can be
hereby stated that Freight line 2500 is the most viable as NPV for the same is
positive. Thanking You.
Regards,
XYZ
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Assessment Workbook X: Provide Financial and Business Performance Information
Freight Line 2500
Period
Discoun
t Rate
Cash
Flow
Discounted
Cash Flow Cash Flow
Discounted
Cash Flow
0 1 -50000 -50000.00 -80000 -80000.00
1
0.92592
6 20000 18518.52 30000 27777.78
2
0.85733
9 15000 12860.08 25000 21433.47
3
0.79383
2 10000 7938.32 15000 11907.48
4 0.73503 12000 8820.36 10000 7350.30
5
0.68058
3 6000 4083.50 8000 5444.67
6 0.63017 6000 3781.02
NPV 2220.78 -2305.29
1 2 3 4 5 6
-100000.00
-80000.00
-60000.00
-40000.00
-20000.00
0.00
20000.00
40000.00
Cash Flow
Freight Line 2500
Ford E350
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Assessment Workbook X: Provide Financial and Business Performance Information
CSX2
To further assist Maxwell with his decision making, you are required to amend
the original letter of advice and include further information as follows:
CSX2A Perform a profitability index (“PI”) for each project to ensure
that Maxwell is receiving the maximum profit for the minimum
amount of outlay and advise Maxwell accordingly on the most
preferable option.
CSX2B Advise Maxwell on his options with respect to overcoming his
cash flow problem including:
● the types, cost and advantages with respect to obtaining sources
of finance e.g. short term and long term (two (2) of each are
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Assessment Workbook X: Provide Financial and Business Performance Information
required).
● with respect to the funding include any tax advantages and the
options available with respect to acquiring the required vehicle.
CSX2C To assist with his future planning needs advice Maxwell on the
appropriate depreciation method he should use to record the
depreciation on the vehicle he may purchase.
CSX2D Perform an acid test (current ratio) to determine the liquidity
soundness of Maxwell’s business and advise accordingly.
Maxwell informs you the current assets of the business are
$150,000 and the current liabilities are $120,000.
Note: You are required to produce both letters of advice e.g. the
original and the amended version.
Particulars
Freight Line
2500 Ford E350
Initial Investment 50000 80000
NPV 2220.78 -2305.29
Profitability Index 1.044415613 0.971183922
Particulars Amount
Current Assets $150,000
Current Liabilities $120,000
Acid Test Ratio 1.8
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Assessment Workbook X: Provide Financial and Business Performance Information
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Assessment Workbook X: Provide Financial and Business Performance Information
COURSE REVIEW
Provide a short overview of what you have learnt in “course X - Provide financial and
business performance information” and how it will assist you in your role as a
bookkeeper. (Your response must be at least 250 words).
The current unit has helped me to understand various skills as well as
knowledge that are required for analysing as well as reporting on a wide
range of financial along with business performance. In addition to this,
this unit that essentially encompasses assessment of different needs of
the client, evaluating data and preparing a specific advice. Thus, this has
helped me to acquire understanding as regards the analysis of financial
information and data that can be used for arriving at financial decisions.
The skills along with competence gained from this unit can also be
implemented to different authority level, specialised system of
knowledge, systematic tactics along with analytical mechanisms for
conducting research and preparing diverse customised and important
information for targeted clients. Essentially, the work functions in
different occupational areas in which specific units might possibly be
used are necessarily subject to different regulatory requirements.
Additionally, this unit has also assisted me in comprehending different
legislations for financial services in Australia, Australian standards
applicable for enhancement of financial information and satisfactory flow
of cash. Furthermore, the study has also helped me to gain insights
regarding effective communication processes and team work for
enhancement of overall operations. Apart from this, application of
financial management techniques (particularly capital budgeting
mechanisms) has assisted me to understand information as regards
capital spending of firms and identification of feasibility of diverse
projects. Thus, this aids in acquiring financial along with business
performance information that can help in arriving at feasible and rational
business decisions. Therefore, these insights on capital budgeting
techniques, learning on legislations, financial planning, budget
preparation and analysis of financial statements can help in
understanding different ingredients of finance and develop as a
bookkeeper.
FEEDBACK
To help us improve this assessment process for future learners please let us know
what you thought about it. What did you like about this assessment? What' didn't you
like about this assessment? How could we improve this assessment?
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Assessment Workbook X: Provide Financial and Business Performance Information
I would hereby like to mention that the course could have included more
number of practical questions that can derive the overall perception of
the students and lesser stress on theoretical questions. In addition to
this, I would also like to hereby mention that there could be more time
allocation for each specific unit allotted for the study.
Page 42