Financial Management for Houzit Pty Ltd

This assignment focuses on the financial management of Houzit Pty Ltd. It includes tasks such as creating a sales and profit budget, analyzing cash flow, understanding Australian taxation laws (Income Tax Assessment Act 1997), and complying with corporate regulations (Corporation Act 2001). The student must also evaluate popular accounting software, suggest risk management strategies, and propose initiatives to improve Houzit's financial performance.

Running head: MANAGE FINANCE
Manage Finance
Name of the Student:
Name of the University:
Authors Note:

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Table of Contents
Sales and Profit Budget...................................................................................................................1
Answer to Prompt Questions...........................................................................................................4
Answer to Question 1:.....................................................................................................................4
Answer to Question 2:.....................................................................................................................5
Answer to Question 3:.....................................................................................................................5
Answer to Question 4:.....................................................................................................................6
Answer to Question 5:.....................................................................................................................6
Answer to Question 6:.....................................................................................................................7
Answer to Question 7:.....................................................................................................................7
Answer to Question 8:.....................................................................................................................8
Reference.........................................................................................................................................9

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Sales and Profit Budget
– Insurance $13,390 $3,348 $3,348 $3,348
– Store Supplies $3,749 $937 $937 $937
– Advertising $350,000 $200,000 $50,000 $50,000
– Cleaning $16,282 $3,256 $3,908 $4,233
$64,272 $16,068 $16,068 $16,068
– Rent $2,640,508 $660,127 $660,127 $660,127
– Telephone $14,997 $2,999 $3,599 $3,899
– Electricity Expense $26,780 $5,356 $6,427 $6,963
– Luxury Car Tax $12,000 $12,000 $0 $0
– Fringe Benefits Tax $28,000 $7,000 $7,000 $7,000
– Superannuation $187,020 $37,404 $44,885 $48,625
– Wages & Salaries $2,078,000 $415,600 $498,720 $540,280
– Payroll Tax $98,705 $19,741 $23,689 $25,663
$41,560 $8,312 $9,974 $10,806
Total Expenses $5,841,371 $1,458,676 $1,395,209 $1,444,476
Net Profit (Before Tax) $1,456,261 $851 $356,222 $452,908
Income Tax $436,878 $255 $106,867 $135,872
Net Profit $1,019,383 $596 $249,356 $317,036
Computation of Sales Growth Rate
Year Sales Sales growth % growth
2011-12 12,474,336
2012-13 13,472,315 997,979 8%
2013-14 14,550,100 1,077,785 8%
2014-15 15,714,108 1,164,008 8%
AVG 8%
– Repairs &
Maintenance
– Workers’
Compensation
Table 1: Sales and Profit Budget
(Source: Created by Author)

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GST Cash flow budget
Table 2: Cash Flow Analysis
(Source: Created by Author)
Aged debtors
TOTAL Qtr 1 Qtr 2 Qtr 3
Sales 16971236 3394247.632 4073096.726 4412521.2736
% Debtors Sales 20% 20% 20%
AGED
DEBTORS
BUDGET
Table 3: Aged Debtor Schedule
(Source: Created by Author)

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Sales and Profit Budget
2011/12
Revenue 100%
Sales $16,971,236
– Cost of Goods Sold $9,673,604
SALES and PROFIT
BUDGET
Table 4: Sales breakup
(Source: Created by Author)
Answer to Prompt Questions
Answer to Question 1:
The company is required to pay tax and have to follow various compliance requirements.
The Income Tax Assessment Act 1997 is an important legislation that the company follows and
the various provisions of this act is applied to calculate the tax payable. During the time of
purchasing the assets, the tax is being paid by the company as a part of income tax that levied on
30% of the company’s profit. GST becomes important as it can claim input tax credit on
payments that are made to the suppliers inclusive of GST (Wood 2016). Income tax is also a
compulsion as it indicated income and deductions. There are many other reports that company
has to prepare like GST, annual returns etc.

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Answer to Question 2:
The Corporation Act 2001 is applicable for the registration of the proprietary company
Houzit limited. The company is required to comply with the various legislations and rules. The
rules provide that it is not compulsory to have secretary but there should be a resident director of
the company. The registered office and postal address should be there along with the records of
the financial statement and if any changes took place in the members of the company then it
should be informed to higher authority.
Answer to Question 3:
There are many software’s related to financial management are available in the
Australian markets. Two popular soft wares are mainly found that are MYOB and Quick book.
These software are popular due to its lower price and ease in presentation and preparation of
financial management software. Quick book maintains security and encryption level same that of
bank. And MYOB being an accounting software helps in the business to take decisions by
critical data analysis. MYOB has both offline and online interfaces. These two software are
complied with ATO so that the company receives regular updates on the latest development
taxes.
Answer to Question 4:
There is a principle called matching principle. This is required so that expenses and
related revenues becomes same at a particular period of time. If organizations follows guidelines
of matching principle then expenses of the company would be recorded and track. During

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budgets it is used to forecasts future expenses. Accounting groups generally classifies several
accounting systems in organized sequence that helps in the budgets. Thus it becomes more
effectiveness and successful. Long terms and short terms budgets are made as time periods
provides a targets for which the budgets is being prepared (Dubauskas 2016).
Answer to Question 5:
During the term of probity the task should performed with complete priority, intergrity
and honesty. As budgets requires the analysis of current situation that are assumed to be realistic
so true and analysis is required during its formation. Here principle of probity assures that every
estimation regarding g the budgets is been made accordingly and there should not exits any such
figures which is stated ambitiously or deliberately (McNeil et al. 2015). Additional to this
process honest analysis and examination of the budget is ensured by the principle of probity.
Answer to Question 6:
The most important initiatives for Houzit ptv Ltd. is the reduction in the rate of gross
profit by 1% so as to maintain a steady growth. As it was decided to rise the advertisement
budget by 70%. At the same time, the salaries and wages must be raised by $172,500 to get
higher number of staffs to earn decent sales commission in turn would help in keeping Houzit’s
growth in sale.
Answer to Question 7:
Many items are recommended for the inclusion in the budget of Houzit pty Ltd. The
followings are:

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 The company interest expenditures of the company can be reduced if the company pays
the loan in time.
 The payments methods of the wages should in the same level as of the industry.
 The company should reduce discounts as it provided long-term interest of the company.
 There are many recommendations that are given in order to improve the situation of the
company.
These followings are applied when the company is facing down turn in the market. As it helps to
save expenditure in salaries and wages of the employees. Financial viability is important as it
analyses the financial budget of the company.
Answer to Question 8:
The risk management that are controlled by the modified internal control area as follows:
 The customers should be secured as the customer’s base of the company is increasing
so effective measures should be taken to secure customers.
 Then discounts should be reflected in the invoice as it would be re given to the
clients.
 Along with the cash registered the cash balance should also be verified.
 The service manager should authorize overtime amount.
 It is necessary to confirm that work has been completed as given to the workers and
invoiced should be signed.

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 A unique code should be given so that proper identification of the assets is done.
 Job roles should be clear to the workers and rosters.
 Settlement of the debtor’s balance should be done on the monthly basis.
 Individual should done reconciliation of cash balance.

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Reference
Dubauskas, G., 2016. THE MANAGEMENT OF PUBLIC FINANCE LITERACY FOR
SUSTAINABLE ECONOMICAL ENVIRONMENT. Journal of Security & Sustainability
Issues, 5(3).
McNeil, A.J., Frey, R. and Embrechts, P., 2015. Quantitative risk management: Concepts,
techniques and tools. Princeton university press.
Wood, D.A., 2016. Comparing the publication process in accounting, economics, finance,
management, marketing, psychology, and the natural sciences. Accounting Horizons, 30(3),
pp.341-361.