Comprehensive Finance Report: Data Analysis, Risk & Planning - CJB

This report provides a detailed financial analysis of a hypothetical coffee and bakery retail establishment (CJB), focusing on evaluating financial data, identifying profit and loss areas, and assessing the effectiveness of existing financial management plans. It addresses issues within the projected cash flow statement and personnel plan, and it proposes improvements to budgeting and financial reporting processes. The report includes a revised financial statement, discusses the implementation of risk management strategies to address potential challenges like fluctuating coffee bean prices, and emphasizes the importance of financial probity and the strategic use of ERP software. Recommendations are provided to enhance the financial viability of CJB, focusing on service quality and effective financial management practices, all while adhering to Australian Accounting Standards Board (AASB) guidelines. Desklib provides access to this and many other solved assignments for students.

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

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Table of Contents
Task 1...............................................................................................................................................2
Answer to Question 1..................................................................................................................2
Answer to Question 2..................................................................................................................2
Answer to Question 3..................................................................................................................2
Answer to Question 4..................................................................................................................3
Task 2...............................................................................................................................................3
Answer to Question 1..................................................................................................................3
Answer to Question 2..................................................................................................................4
Answer to Question 3..................................................................................................................5
Answer to Question 4..................................................................................................................5
Answer to Question 5..................................................................................................................6
Answer to Question 6..................................................................................................................6
Answer to Question 7..................................................................................................................6
Answer to Question 8..................................................................................................................7
Answer to Question 9..................................................................................................................7
Answer to Question 10................................................................................................................7
References........................................................................................................................................9

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Task 1
Answer to Question 1
The issue presented in the question is that the financial data that has been presented in the
case study should be reviewed in order to indentify the areas that have generated a profit or loss
that may have occurred. This means that the sales in relation to the espresso drinks have been the
highest for the three-year sales forecast. Moreover, the pastry items that are sold by the start-up
coffee and bakery retail establishment reflect a declining curve in terms of sales. This may be
because pastry items manufactured by this particular firm may have a compromised quality or
may impose a higher price rate in regards to the market (Andreou, Louca and Panayides 2014).
Answer to Question 2
The financial management plans and the business plans, financial and budget policies,
business objectives and key performance indicators reveal the fact that the sales of the firm has
not been as it should be. To be precise, the proper format in regards to the business plan has not
been followed. Moreover, the payment schedule in regards to the suppliers has not been
described in a proper way. Furthermore, the value of the assets is lower than the accumulated
depreciation. Such errors will not facilitate the proper financial projections in the next financial
cycle (Andreou, Louca and Panayides 2014).
Answer to Question 3
The projected cash flow statement that has been prepared for the three financial years has
not been of the proper format. Cash flows are generally in the nature of investing, operating or
financing activities and compute the inflow or outflow of cash in business. Thus, to be precise

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the projected cash flow statement does not follow the proper format therefore, proper deductions
cannot be inferred from the selected financial statements (Titman, Keown and Martin 2017).
Answer to Question 4
The personnel plan that has been included in the case study displays the payments that
should be received by the managers and the pastry bakers and baristas for the following three
financial years. The plan further reveals the fact that there are a total number of people of 10 who
have been employed as personnel or staff. The total payroll as a matter of fact also increases
from $260,800 to $287,532. However, there has been no information in regards to the PAYG,
GST and other ATO obligations. Moreover, the Australian Taxation Office facilitates a quarterly
notice in regards to the payment of GST and PAYG to the company that shall be paid
accordingly.
Task 2
Answer to Question 1
Direct Cost of Sales:
Espresso Drinks $33,750 $38,981 $45,023 $52,002
Pastry Items $43,000 $49,665 $57,363 $66,254
Others $0 $0 $0 $0
Total Cost of Sales $76,750 $88,646
$102,38
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$118,25
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Personnel Plan:
Year 1 Year 2 Growth Year 3 Growth Year 4
Managers
$100,00
0
$105,00
0 5.00%
$110,25
0 5.00%
$115,76
3
Pastry Bakers $40,800 $42,840 5.00% $44,982 5.00% $47,231
Baristas
$120,00
0
$126,00
0 5.00%
$132,30
0 5.00%
$138,91
5
Total People 10 10 10 10

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Total Payroll
$260,80
0
$273,84
0
$287,53
2
$301,90
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Total Long-Term Assets $53,000
TOTAL ASSETS $504,303
Current Liabilities:
Accounts Payable $17,738
Other Current Liabilities
Total Current Liabilities $17,738
Long-Term Liabilities:
Long Term Loan $60,000
Total Long Term Liabilities $60,000
TOTAL LIABILITIES $77,738
Capital:
Paid-in capital $110,000
Retained earnings $159,216
Asset Revaluation Reserve $157,349
TOTAL CAPITAL $426,565
TOTAL CAPITAL & LIABILITIES $504,303
Assumptions:
 In the first year, the assets are depreciated at the rate 90% approx. In the following years,
the asset value has become lower than the accumulated depreciation.
 It is not acceptable from legal and statutory perspective. Hence, it is assumed that the
assets should be depreciated at the rate 20% p.a. and the accumulated depreciation

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 The payment schedule of the suppliers is not described properly. Hence, it is assumed
that 85% of the purchase, would be paid within the year and 15% of the purchase balance
would remain unpaid.
 The start up expenses should be shown as Preliminary expenses instead of Retained
earnings. In the current budgeting year, the balance of the preliminary expenses would be
written off from the actual retained earnings.
 The tax rate is not fixed and hence, it is assumed that the firm would pay tax at the rate
30% on the profit before tax.
 Sales, marketing and other expenses are expected to be increased at the rate 11% from the
last budgeting period.
Answer to Question 2
The budgets that have been prepared are circulated to all managers and supervisors by the
management of the bakery firm. Each manager or executive like the sales and marketing
executive or the chief financial officer is called and the particulars of the prepared budget is
explained to them and the methods or systems that should be implemented within the
organization for the purpose of achievement of these budgeted goals. Post this activity, the
managers or the respective executives should be delegated with the responsibility of explaining
the budget to the supervisors and their personal duties in the achievement of the same (Barr and
McClellan 2018).
Answer to Question 3
The risk management strategies that should be implemented within the organization
include the strategies that identify the potential risks and further help to avoid them, reduce them
and mitigate them. Moreover, in case of Crane Java and Bakery, the primary risk that the

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business faces is the risk associated with the financing from SBA that is a ten-year loan. The risk
associated with debt financing can be averted by the preparation of a strong budget and deriving
the desired profits. Furthermore, the risk associated with the misappropriation of funds and the
proper recording of the financial transactions should be ascertained by the implementations of
internal control like the segregation of duties and the installation of a proper accounting software
within the business for the proper recording of the financial transactions (Barr and McClellan
2018).
Answer to Question 4
The increase in the price of the coffee beans is a common occurrence and should be taken
into consideration into the risk management strategy. The hike in the price of the coffee beans
should be compensated with the identification of the cost effective processes that will invariably
reduce the cost of production and thus facilitate the incurring of the same amount of profits from
the sale of the products. Moreover, the rise in the price of products is another solution to this
particular contingency. However, in the case of adoption of such a solution, the management of
the firm should make sure that the rise in the price of the product should be supported by proper
advertisements and other marketing strategies so that the total unit sales is not compromised.
Answer to Question 5
Financial probity refers to the financial integrity that should be maintained by the
employees and other staff of the organization. The desired degree of financial probity can be
achieved within the business entity by the proper implementation of a code of conduct that
should be followed by all the employees. Moreover, the implementation of required internal
controls like the segregation of duties and other associated controls should also help to maintain
the desired degree of financial probity (Karadag 2015).

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Answer to Question 6
ERP stands for the term Enterprise Resource Planning. This particular software
essentially utilizes a singular database for recording and storing a wide variety of data. The issue
that has been presented in the question is that the business entity has been using the ERP
software in the departments like the HR, Payroll, inventory etc. However, the implementation of
the software for the purpose of financial management can provide a number of benefits like the
tracking of profit and cost analysis. Moreover, the implementation of the ERP software will
facilitate the effective monitoring of the investments that have been undertaken by the business
entity. The ERP software facilitates the effective management of budgeting and audits therefore
should be implemented within the restaurant business (Attig Caes et al., 2016).
Answer to Question 7
The reporting requirements that are required for CJB as a business for ensuing the
structure and formats of the reports are clear and conform to the organizational and statutory
requirements are that the reporting standards should adhere to the accounting principles as
established by the Australian Accounting Standards Board. The preparation of the financial
statements in accordance to the AASB accounting principles will reduce the chances of
occurrence of errors and other fraudulent activities in the books of accounts. Moreover, the
business entity should also ensure the inclusion of proper disclosures in the financial statements
so that the financial information conveyed by the financial statements holds the desired degree of
clarity (Francis, Hasan, and Wu 2015).
Answer to Question 8
The identification of issues in the financial statements can be carried out by the
considering the services of both external and internal auditors. The auditors review the financial

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statements by carrying out the process of sampling. This means that samples of financial
transactions are reviewed along with tracing back the transactions to the point of generation.
Moreover, the periodic review of the financial performance by the internal auditor will also
facilitate the process of proper decision-making.
Answer to Question 9
The primary recommendation for the financial viability of the business organization CJB
is that the business entity should focus more on the products and services offered by it to its
customers. The business being a part of the service industry, should focus more on the quality of
services provided and aim to offer the best quality food and services in order to ensure financial
viability of the business organization.
Answer to Question 10
The entity being a coffee and bakery retail establishment should have to initially record
and evaluate the incurred sales and other related financial components for the purpose of
determining the fact that whether the financial particulars are occurring in accordance to the
estimated budgets. Therefore, the carrying out of the financial management of the organization
by the accounting software like ERP is a well thought and effective decision.

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References
Andreou, P.C., Louca, C. and Panayides, P.M., 2014. Corporate governance, financial
management decisions and firm performance: Evidence from the maritime industry.
Transportation Research Part E: Logistics and Transportation Review, 63, pp.59-78.
Attig, N., Boubakri, N., El Ghoul, S. and Guedhami, O., 2016. The global financial crisis, family
control, and dividend policy. Financial Management, 45(2), pp.291-313.
Barr, M.J. and McClellan, G.S., 2018. Budgets and financial management in higher education.
John Wiley & Sons.
Francis, B., Hasan, I. and Wu, Q., 2015. Professors in the boardroom and their impact on
corporate governance and firm performance. Financial management, 44(3), pp.547-581.
Irimia-Dieguez, A.I., Medina-Lopez, C. and Alfalla-Luque, R., 2015. Financial Management of
large projects: A research gap. Procedia Economics and finance, 23, pp.652-657.
Karadag, H., 2015. Financial management challenges in small and medium-sized enterprises: A
strategic management approach. Emerging Markets Journal, 5(1), p.26.
Petty, J.W., Titman, S., Keown, A.J., Martin, P., Martin, J.D. and Burrow, M., 2015. Financial
management: Principles and applications. Pearson Higher Education AU.
Titman, S., Keown, A.J. and Martin, J.D., 2017. Financial management: Principles and
applications. Pearson.

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