Finance Assignment: Financial Analysis and Budgeting for Sam's Travel

This finance assignment provides a comprehensive analysis of financial statements, including balance sheets, profit and loss statements, and cash flow statements. It explores the importance of financial records, profit versus cash flow, and the key areas of financial information for monitoring business performance. The assignment includes practical tasks such as preparing profit and loss statements, analyzing variances in expenses, and creating a sales budget for a travel agency. The solution demonstrates calculations of averages, variances, and percentage variances, offering insights into financial performance and providing recommendations for cost reduction and improved profitability. The assignment covers various aspects of financial reporting, analysis, and budgeting, providing a detailed understanding of financial management principles.

Running head: FINANCE
Finance
Name of the Student
Name of the University
Authors Note
Course ID

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Table of Contents
Answer to Task 1:......................................................................................................................3
Answer to A:..............................................................................................................................3
Answer to B:..............................................................................................................................3
Answer to C:..............................................................................................................................3
Answer to D:..............................................................................................................................4
Answer to E:...............................................................................................................................4
Answer to Task 2:......................................................................................................................5
Answer to Task 3:......................................................................................................................5
Answer A:..................................................................................................................................6
Answer B:...................................................................................................................................6
Answer C:...................................................................................................................................6
Answer D:..................................................................................................................................6
Answer E:...................................................................................................................................6
Answer to Task 4:......................................................................................................................7
Answer to Task 5:......................................................................................................................8
Reference List:...........................................................................................................................9

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Answer to Task 1:
Answer to A:
A balance sheet can be defined as the statement of financial position of a business that
provides assets, liabilities and equities of owners during a particular point of time (Scott,
2015). Alternatively, the balance sheet demonstrates the net worth of business. These
segments of balance provide the investors with the idea regarding what is owned and owed
along with the amount invested by the shareholders. The balance sheet is vital in
demonstrating the financial health of the organization.
Answer to B:
The financial report comprises of the information on standard reports such as balance
sheet, income or profit and loss statements and cash flow statement. They are regarded as one
of the most important components of business information and the principle mode of
communicating financial information regarding an organization external parties (Schaltegger
& Burritt, 2017). The financial report comprises of information regarding earnings and its
components. Information regarding earnings from accrual accounting with the better
reflection of business current and future ability of generating positive cash flows.
Answer to C:
Profit Cash Flow
Profit can be referred as revenue less
expenses
Cash flow is defined as cash inflow and
outflow from the business
Profit signifies the revenue from the sale of
goods and services.
Cash flow represents the difference between
actual cash received and actual use of cash
in the business process (Schipper et al.,

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2017).
Profit is vital in understanding whether the
company is generating sufficient income
(Williams, 2014).
Cash flow provides the actual measure of
assessing how the company is performing.
Answer to D:
An up to date financial records is useful in planning the resources for new marketing
and sales strategies. Properly maintaining the daily financial records offers the business with
the real time advantage in competition in several ways (Warren & Jones, 2018). Additionally,
it assists in managing the records, interests, taxes and working out the cost effectively.
Maintaining financial records provides owners about the cash in hand and discovering
solutions for business issues. Maintaining financial records acts as resources for new
strategies.
Answer to E:
According to Downs (2017), ten areas of financial information and reports that is
required to monitor the performance of business are as follows;
a. Preparation of the financial statements
b. Preparation of the debtor’s trial balance
c. Preparation of inventory records
d. Preparation of the financial ratios and statements of working capital
e. Preparation of the cash flow statement and fund flow statement
f. Preparing the reports of overheads
g. Preparation of marketing expenditure reports
h. Preparation of HR reports

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i. Preparing competitive analysis reports
j. Preparing dashboards for stakeholder’s reports
Answer to Task 2:
Rent Paid Expenses
Sales of Tours Revenue
Motor Vehicle Asset
Motor Vehicle Expenses Expenses
Interest Received Revenue
Loan from ABC Pty Ltd Liabilities
Answer to Task 3:
Profit and Loss Statement
For the year ended 2016
Particulars Amount ($) Amount ($)
Net Sales 379500
Cost of Goods Sold
Purchase 128259
Freight 1258
Cost of Goods Sold 129517
Gross Margin 249983
Selling, Administrative and General Expenses:
Wages 85000
Rent 96000
Electricity 9896
Office Supplies 2489
Bank Charges 987
Telephone 5982
Advertising 11650
Insurance 12250
Total Administrative and General Expenses 224254
Profit from Operations 25729
Service Income 25987
Profit for the year 51716
Profit and loss statement when amount increase by 15%
Profit and Loss Statement
For the year ended 2017

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Particulars Amount ($) Amount ($)
Net Sales 436425
Cost of Goods Sold
Purchase 147498
Freight 1447
Cost of Goods Sold 148945
Gross Margin 287480
Selling, Administrative and General Expenses:
Wages 97750
Rent 110400
Electricity 11380
Office Supplies 2862
Bank Charges 1135
Telephone 6879
Advertising 13398
Insurance 14088
Total Administrative and General Expenses 257892
Profit from Operations 29588
Service Income 29885
Profit for the year 59473
Answer A:
In the year 2017 the company has earned in sales $437,425.
Answer B:
In advertisement the company during 2016 spent $11,650 while in 2017 the
advertisement cost stood $13,398. Therefore, more amount was spent on advertisement
compared to last year.
Answer C:
The total administrative expenses stood $257,892 this year.
Answer D:
The organization has performed better this year as the profit for the year increased
from 51,716 in 2016 to 59,743 in 2017.

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Answer E:
The cost per unit for 2016 stood:
Units Sold 50000
Price per unit 7.59
The cost per unit stood 2017:
Units Sold 50000
Price per unit 8.73
Answer to Task 4:
Computation of average and variances:
Computations of Average and Variances
EXPENSE January February March April May June
Stationary 165 168 157 173 160 172
Electricity 175 179 166 184 170 182
Telephone [phone] 154
Courier 121 123 115 127 117 126
Internet 135 138 128 142 131 140
Subscriptions 120 122 114 126 116 125
Brochures 119 121 113 125 115 124
Printing 152 155 144 160 147 158
Petty Cash 141 144 134 148 137 147
Rental of equipment 123 125 117 129 119 128
Average Expenditure 139.90 142.60 132.90 146.90 135.60 145.60
Variances 397.21 422.49 357.43 439.21 381.38 429.38
Determination of % variance if the budgeted expenditure is $900:
Computations of Average and Variances
EXPENSE January February March April May June
Stationary 165 168 157 173 160 172
Electricity 175 179 166 184 170 182
Telephone [phone] 154
Courier 121 123 115 127 117 126
Internet 135 138 128 142 131 140

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Subscriptions 120 122 114 126 116 125
Brochures 119 121 113 125 115 124
Printing 152 155 144 160 147 158
Petty Cash 141 144 134 148 137 147
Rental of equipment 123 125 117 129 119 128
Total Monthly Expenses 1399 1426 1329 1469 1356 1456
Budgeted Expenditure 900 900 900 900 900 900
Variances 36% 37% 32% 39% 34% 38%
On being the finance manager for Sam’s Travel Agency it is necessary to investigate
the month of April since the expenditure reported in this month is very high. A
recommendation can be provided to Sam Travel Agency to undertake the measures of
reducing the monthly cost in order to increase the profitability of the firm.
Answer to Task 5:
The sales budget for the next year is stated below:
Restaurant open for (Days) 6
Total Weeks 52
Percentage Increase 25%
Seats 175
Daily Seat Turnover 1.2
Average Daily Seat Turnover 210
Average Check (25% Increase) $ 21.25
Daily sales $ 4,462.50
Weekly Sales $ 26,775.00
Budgeted Sales 52 Weeks $ 13,92,300.00

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Reference List:
Downs, L. C. (2017). Financial Accounting.
Schaltegger, S., & Burritt, R. (2017). Contemporary environmental accounting: issues,
concepts and practice. Routledge.
Schipper, K., Francis, J., & Weil, R. (2017). Financial Accounting: Introduction to Concepts,
Methods and Uses. Cengage Learning.
Scott, W. R. (2015). Financial accounting theory (Vol. 2, No. 0, p. 0). Prentice Hall.
Warren, C. S., & Jones, J. (2018). Corporate financial accounting. Cengage Learning.
Williams, J. (2014). Financial accounting. McGraw-Hill Higher Education.