Financial Analysis Report of ABC Contract Service Business

This report is prepared to get an insight of the business of ABC contract service business for the period of the 2015-16 to 2016-2017. The report includes the calculation of the ratios over the period of the last two years and also defines the changes in the movements. From the overall analysis it can be recommended that the company shall focus on its weak areas and shall make necessary improvement and changes with the help of certain strategies quoted above. This will help in evolution of the overall performance and the company can reap more benefits in near future.

Running Head: MANAGE FINANCES 1
MANAGE FINANCES

Running Head: MANAGE FINANCES
Table of Contents
Task 1: Performance Objective...................................................................................................................3
Task 2: Report on Financial Analysis.........................................................................................................4
Purpose of the report...............................................................................................................................4
Analysis...................................................................................................................................................5
Recommendations...................................................................................................................................6
References...................................................................................................................................................7

Running Head: MANAGE FINANCES
Task 1: Performance Objective
1. Identify four requirements for financial probity.
Officials must act ethically, and follow proper code of conduct.
The participants must be treated fairly and equally
All the processes are auditable
Proactive identification and management of the conflicts
2. Describe at least four principles of accounting and financial systems.
The four principles of accounting are the principle of relevance, the principle of matching,
cost principle and the principle of revenue.
3. Describe three international and local legislation and convention that are relevant to
financial management in the organisation. Hint: consider where you could find that
information.
The three international and local legislation and convention which are relevant in case of the
financial management are Preparation of the programme of work and budget. The Hague
Conference on Private International Law, and Unidroit are few of the examples.
4 Briefly describe the following requirements of the Australia office (min. 30 words
each):
GST
The goods and services tax of Australia is the tax rate that is applicable
on the goods and services. The 10% tax rate is utilized; however there
are some goods and services that are also exempted1.
Company Tax
The company tax is the tax which is required to be paid by the company
according to the category to which it belongs. The rates specified are
30% and 27.5% for small business companies2.
PAYG PAYG is also termed as pay as you go withholding amounts, where the
registration is required before deduction of the amount. Further, once the
individual cease to an employer, PAYG withholding registration is
1 James, Kathryn. "Applying the GST to imports of low-value goods in Australia." Applying the
GST to imports of low value goods in Australia,(2018) 47 (2018).
2 Mintz, Jack, Philip Bazel, Duanjie Chen, and Daria Crisan. "With global company tax reform in
the air, will Australia finally respond?." Minerals Council of Australia, Melbourne, Australia,
March (2017).

Running Head: MANAGE FINANCES
cancelled.
ABN
Australian business number is the 11 digit unique number that identifies
your business to the government and the community. ABN number
cannot replace the tax file number.
Superannuation
Superannuation in Australia is termed as the managements devised by
the government to encourage the individuals to accumulated funds with
an income stream when they retire. It is compulsory partly3.
Task 2: Report on Financial Analysis
Purpose of the report
This report is prepared to get an insight of the business of ABC contract service business for the
period of the 2015-16 to 2016-2017. The report includes the calculation of the ratios over the
period of the last two years and also defines the changes in the movements.
Analysis
In case of the profitability ratios, the net profit margin maintained by the company in the year
2016 was 5.45% whereas the same decreased to 3.15% in the year due to reduction in the net
profit of the business. The advertising and the payroll costs increased and hence, the net profit
reduced. The strategy to improve the net profit is to clear the invoices on an early basis and to
generate more sales by giving nominal discounts. The most significant areas of generating the
profits are lone virtual reception services and market research for business clients4.
3 Riach, Kathleen, Colin O'Hare, Barbara Dalton, and Chelle Wang. "The Future Face of Poverty
is Female: Stories Behind Australian Women's Superannuation Poverty in Retirement." (2018).
4 Lim, Ji Young, and Wonjung Noh. "Key components of financial‐analysis education for clinical
nurses." Nursing & health sciences 17, no. 3 (2015): 293-298. Lim, Ji Young, and Wonjung
Noh. "Key components of financial‐analysis education for clinical nurses." Nursing & health
sciences 17, no. 3 (2015): 293-298.

Running Head: MANAGE FINANCES
The position of the gross profit is somewhat constant with respect to the previous year at
68.57%. The company shall maintain the consistency and the trading costs shall not hamper the
performance of the company. In house manufacturing could be a great option to increase the
gross margins5.
In terms of liquidity the current ratio of the company was 3.71 times whereas the same increased
to 4.47 times. The current ratio has increased and this reflects that the company is able to pay
back the liabilities on time and without much hassle. The working capital ratio has also improved
in reference to the previous years from $1698266 to $2138112. Thus implies the current assets
are sufficient to pay the contractual obligations6.
The significant variances that have been identified in this report are in legal fees and the amount
of the payroll tax, wages, superannuation, rent expenses. The major changes are observed in
decrease in the expenses. Also the actual net profit tends to be negative whereas the budgeted net
profit tends to be positive. This implies that the actual results are not fruitful for the company in
the financial year 2017.
Recommendations
From the overall analysis it can be recommended that the company shall focus on its weak areas
and shall make necessary improvement and changes with the help of certain strategies quoted
above. This will help in evolution of the overall performance and the company can reap more
benefits in near future.
5 Uechi, Lisa, Tatsuya Akutsu, H. Eugene Stanley, Alan J. Marcus, and Dror Y. Kenett. "Sector
dominance ratio analysis of financial markets." Physica A: Statistical Mechanics and its
Applications 421 (2015): 488-509.
6 Nessa, Kazi Zannatun. "Financial Performance Analysis of Bangladesh Krishi Bank." (2019).

Running Head: MANAGE FINANCES

Running Head: MANAGE FINANCES
References
James, Kathryn. "Applying the GST to imports of low-value goods in Australia." Applying the
GST to imports of low value goods in Australia,(2018) 47 (2018).
Lim, Ji Young, and Wonjung Noh. "Key components of financial‐analysis education for clinical
nurses." Nursing & health sciences 17, no. 3 (2015): 293-298. Lim, Ji Young, and Wonjung
Noh. "Key components of financial‐analysis education for clinical nurses." Nursing & health
sciences 17, no. 3 (2015): 293-298.
Mintz, Jack, Philip Bazel, Duanjie Chen, and Daria Crisan. "With global company tax reform in
the air, will Australia finally respond?." Minerals Council of Australia, Melbourne, Australia,
March (2017).
Nessa, Kazi Zannatun. "Financial Performance Analysis of Bangladesh Krishi Bank." (2019).
Riach, Kathleen, Colin O'Hare, Barbara Dalton, and Chelle Wang. "The Future Face of Poverty
is Female: Stories Behind Australian Women's Superannuation Poverty in Retirement." (2018).
Uechi, Lisa, Tatsuya Akutsu, H. Eugene Stanley, Alan J. Marcus, and Dror Y. Kenett. "Sector
dominance ratio analysis of financial markets." Physica A: Statistical Mechanics and its
Applications 421 (2015): 488-509.