This document provides information on managing budgets and financial plans. It includes topics such as cash flow statements, financial activities reporting, creating action plans, and more. The content offers insights and recommendations for effective budget management. Subject: Finance, Course Code: N/A, Course Name: N/A, College/University: N/A
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Manage Budgets & Financial Plans
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Task 1: Cash Flow Statement for Metropolitan Furniture Answer (1): Profit and Loss calculations AprilMayJune $$$ Sales290000250000280000 Less Cost of Goods Sold (COGS)130500112500126000 Gross Profit159500137500154000 Sales Salaries650006500065000 Commission150001000 Other expenses350003500035000 Total expenses101500100000101000 Net Profit580003750053000 Answer (2): Cash flow projections AprilMayJune $$$ Opening Cash40000109250131750 Plus cash in: This month232000200000224000 From last month255002900025000 From two months ago265002550029000
Total Cash available284000254500278000 Less cash out: salaries650006500065000 Commission1500 Other expenses350003500035000 COGS114750130500112500 Total cash out214750232000212500 Closing cash balance109250131750197250
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Answer (3): Overall net profits' figure of corporation are less than closing or year ended cash balances. Thus, company can pay-off taxes on profit out of its available cash balance. Answer (4): For implementing a new-business plan, Peter should communicate with following people: ï‚·Investors or Shareholders ï‚·Other Departmental/divisional Heads ï‚·Owners ï‚·Suppliers Onlybusinessplannotassurethatreportedoutcomesareattainable,preciseand comprehensible, for this Peter should provide any analysis report, expert's view and other factual data which act as evidence that figures stated in business plan are attainable. Answer (5): Financial performance may be effectively monitored by following below processes, as below on continuous basis: ï‚·Financial Statement Analysis ï‚·Ratio Analysis ï‚·Cash Flow Analysis ï‚·Market Performance Analysis Any business entity's owner spends capital in business to earn profits by doing business. They use to provide financing for business expansion. Also this is quite important to warn ownersofmodificationsinfinancial-plan,sothattheycanexaminechangeseffecton profitability. However, if plan requires extra capital, owners can manage capital funds through personal source or, if needed, collect them through loans from outsiders.
Task 2: Report Financial Activities Email Communication Metropolitan furniture xx/xx/2020 Subject: Reporting of Daily Financial Position. To: Owner of Metropolitan Furniture Dear Director/Owner, At First, from three-month review – April, May and June, I would like to tell you that organization should strengthen existing credit collection mechanism and seek to raise the sum of credit selling faster than existing scenario. Secondly, overall net profits of organisation are below the level of losing cash-balances. Thus, it is able to pay-off taxes onprofitsthoughutilisationofcurrentcashavailability.Sothisisessentialto communicate you, for making changes in existing financial plan, such that business-owner can assess modifications with respect to profitability. Further, in case plan needs any additional capital-funds, you may need to effectively arrange capital-funding from your individualised-personal sources or can raise it via loan-funding from outsiders/lenders. Thanks! With Regards, Peter Account Manager Task 3: Create Action Plan Job TitleSuggestedSupportfor achieving goals (e.g give accesstoresourcesand systems,disseminate relevantdetailsofthe agreed budget/plans, sales Time frameKeyPerformance Indicators(e.g. monitorexpectedand actualsalesand expenditure,identify costvariationand
coach,contingencyplan) Determineandaccess resources and systems to managefinancial managementprocesses within the work team expenditureoverruns etc) Jenny (Sales Officer)Sales officer has access to salesregisterandalso provideany recommendations.Create strategyforachieving budgeted sales. 1 monthï‚·Salesandcost ofsales variations. ï‚·Grossprofit margin ï‚·Netprofit margin John(Accounts receivable officer) Accesstoaccount receivable register. Ensure timely collection of all the receivables.Coordinate with sales officer. 1.5 monthï‚·Receivable turnover period ï‚·Average collection period Adam(Accounts payable officer) Accesstoaccounts payableregisterand coordinatewithsales officer.Ensuretimely payments of all payables and bills, further recognise possiblesettlementsfor business benefits. 1.5 monthï‚·Average payable period ï‚·Accounts payable turnover ratio
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George(Payroll officer) Accesstoallemployees dataincludingpayment details,attendanceand relevant pay-roll details. 2 monthsï‚·Employee turnover ratio ï‚·Employee feedbacks Recommendation: From analysis of facts and data on above presented processes with reference to Task 1, it has been recommended that organisation should implement action plan strictly to improve their existing processes. Also to improve cash collections, organisation should provide offers on early payment and discounts. Further by effective funds and inventory management as well as focusing on cash generating activities can improve cash-balances. Task 4: Preparation of Cash Flow Statement Operating activities:$ Net Cash flow $ Cash receipts from customers245000 Cash paid to suppliers and employees101570 143430 Interest paid24120 119310 Income tax paid2591093400 Investment activities: Purchase of Subsidiary X, net of cash acquired-450000 Purchase of property, plant and equipment-350100 Proceeds from sale of equipment120000 Payment of finance lease liabilities-50000 Dividends paid25700-704400
Financing activities: Interest received22550 Dividends received25654 Proceeds from issue of share capital250000 Proceeds from long-term borrowings250000548204 Total Cash surplus/deficit-62796 Cash and cash equivalent at the beginning of the year530750 Cash and cash equivalent at the end of the year467954 Task 5: Change Analysis and Decision Making From above presented cash flow statement it has been analysed that cash from operating activities is $93400, cash outflow from investment activities is $704400 and cash flow generated from financing activities are $548204. From all the activities net cash flow is negative $62796 which indicates that company is not efficient to generate cash flows from its business operations. After considering opening cash balance, net cash flow for year ended is $467954. It is advisable for company that it should optimise their capital expenditures to maintain a positive cash-flow. Task 6: GST and Cash Flow Statement Cash Receipts:$$ Cash sales90000 GST receipts on cash sales9000 Credit sales - budget year186000 Credit sales - previous year150000 Total Cash receipts435000 Cash Payments: Purchases80000
GST payments on cash purchases8000 Wages110000 Net GST payable to ATO10000 Other payments44000 Total Cash Payments:252000 Cash surplus/(deficit)183000 Opening bank balance30200 Closing bank balance213200 Task 7: Cash Flow Outcome Analysis: ï‚·Through analysis of above table it has been evaluated that closing balance of bank balance is positive also there is cash surplus thus there is no need to worry. ï‚·Preparation of contingency plan:In case there is any circumstances or events exists whichrequire change in originalcontingencyplan, then concerned person should evaluate the effect of such event on contingency plan and find out the ways through which contingency plan can be modified with least modifications. For effective revised contingency plan, all the feedbacks of management and owners should be considered. After preparation of revised contingency plan, it should be circulated among responsible individuals. ï‚·In order to implement and monitor contingency plan, responsibilities of personnel should be fixed. Time to time review and internal check can act as effective monitoring systems on contingency plan as per financial targets and objectives. Any further modifications should be done only if it is not as per the predetermined financial objectives. ï‚·Forreportingbudgetsandexpendituresaccordingtoorganisationalprotocol, management should consider the organisation's current business scenario, environment and business policies. Also management should take into account any historical data which is relevant for compliance with organisational protocols.
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Task 8: Petty Cash Petty Cash Book IncomeExpenditure DateDescrip tion Amou nt DateDescr iption RefTot al Mil k Clean ing Suppl ies Off ice Su ppl ies Ta xi Far e Stati onar y Expe nses News pape r Notes 01/10/2 017 Balance B/F 0.0003/0 1/20 20 Office Suppl ies 122. 00 22. 00 02/01/2 0 Cheque 111400.00 04/0 1/20 20 Milk2105 .00 30. 00 09/0 1/20 20 Clean ing Suppl ies 3135 .30 135.3 0 10/0 1/20 20 Taxi Fare452. 80 52. 80 13/0 1/20 20 Taxi Fare566. 00 66. 00 16/0 1/20 20 Statio nary Expen 633. 00 33.00
ses 17/0 1/20 20 Milk782. 00 82 19/0 1/20 20 Statio nary Expen ses 810. 00 61.6Calcu lator 23/0 1/20 20 Taxi Fare944. 00 44 30/0 1/20 20 News paper10105 .60 105.6 0 Total Total 655 .70 112 .00 135.3 0 22. 00 162 .80 94.60105.6 0 Balan ce c/fBal ance c/f 255 .70 400.00400 .00 10/10/2 017 Balance B/F255.70 Recommendation: As per analysis of petty cash and other related facts it has been recommended to define the maximum limit for expenses and authorities for approval of each petty transaction. Alsoorganisationshouldforcontrollingoverprocessesformasystemforpetty-cash
disbursement policy for making it necessary with respect to petty-cash claims through specific receipts.