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Incentive Program in Business

Added on -2019-09-24

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Task-1- Incentive Program Incentive for staff members differ from organization to organization, business to business.Normally incentive is provided from some common criteria such as-Job categoryLength of serviceClassification of jobGoalFor a small organization who is doing business like carpentry, the workforce are not muchqualified and they do very skilful work with a high level of physical risk. This type of organizationare not normally listed or traded in stock exchange nor does their turnover go into 8 digitfigures. Considering these factors into consideration, the incentive plans that can suit to suchorganization is discussed below- Monetary Incentives-1.Annual Incentive Plan- It is a plan which is based on overall results achieved by the companybetween the beginning and end of financial year. This plan is applicable to all workforcedespite their individual performance. For ex- Suppose company has achieved 2% growththis year, each workforce will be given incentive from that 2% growth on sales will bedistributed equally.2.Discretionary bonus plan- This plan is for individual performance given by the workforce.Each workforce is given a target. If the worker achieves the target, he or she will be given1% of the value of work done. If the worker achieves more than target, then on additionalwork, he/she will be given 2% of his/her basic compensation+1% on value of work done.3.Team bonus- It will be a team work bonus on accomplishment of carpentry project. Thisbonus rate is 2% of total project value distributed equally among team member.Non-Monetary Incentives-
1.Family care- If any worker passes away during work tenure, his/her family will receivegratuity and pension on monthly basis until one of the family member gets employment. 2.Vacation trip- On successful accomplishment of work in a year, top-10 employees will getchance to take his/her family on vacation sponsored by company. The best performingemployee will get chance to go abroad location.3.Celebration- Every quarterly each and every personnel will be given party organized bythemselves where executives will come and join to celebrate growth. Best employee of thequarter will be awarded and a thanks-giving and handshaking with all employees will bedone by CEO. 4.Sports and cultural event- Every year a sports and cultural event will be organized foremployees and their family member to keep them relax, sportive and energetic to relivetheir interest and passion. Task-2 Q.1. Venture Capital is not a debt financing from the options given as it is the initial capitalcontribution done by the promoters to start the venture. It is a part of equity.Q2. (I) Yes, Debt finance cost must be repaid irrespective of profit or loss. (II) Yes, cost of equity financing continues until debt is repaid fully.Q.3. Current Ratio which is not profitability ratios. Current ratio is a liquidity ratio.Q.4. All the three points must be inserted in a customer credit policy. Q.5. Net profit ratio doesn’t provide information about short term solvency or long termsolvency rather it gives the information about the percentage of profit earned on sales in thiscurrent financial year. Q.6. Current Ratio (Working Capital ratio) = Current Assets/Current Liabilities $(93000/79000) = 1.18 times Liquidity Ratio- Liquid Assets/Liquid Liabilities
Liquid Assets- Current Assets- Stock in hand= $(93000-19550) = $73450As no other information given, so current liabilities become liquid liabilities.Liquid Ratio- $(73450/79000) = 0.92 timesProprietary Ratio- Owner’s equity/ Total Assets $(133000/262000) = 0.51 timesNet profit margin- [Net Profit (Before tax)/ Sales] X 100 $(47940/295000) X 100= 16.25%Gross Profit margin- [Gross Profit/Sales] X 100 $(74000/295000) X 100= 25.08%Asset Turnover ratio- Sales/ Average Total Assets Average Total Assets- (Opening +closing) Total Assets Balance/2 $(0+262000)/2= $161000 Assets Turnover- $(295000/161000) = 1.83 timesQ7. Taxation Requirements for Pradeep and Jenny partnership businessTotal employees-4 Full time-2 Part time-2Assets- Business premises- On lease Car- provided by owners Trading income- $76000Taxation required-1.Goods and Services Tax-10% 2.PAYG-3.Land Tax-

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