Comprehensive Finance Report: Sales, Profit Budget & Analysis

This finance report provides a comprehensive analysis of sales and profit budgets, focusing on key financial management aspects. It includes a sales and profit budget for the years 2011-15, detailing income, expenses, and net profit. The report also computes sales growth rates and presents a GST...Read More

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

1MANAGE FINANCE
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

2MANAGE FINANCE
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)

3MANAGE FINANCE
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)

4MANAGE FINANCE
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:
It is required on the part of the company to pay the taxes due in respect and simultaneously
comply with various other compliances applicable on it. For the purpose of computation of the
tax payable the company needed to follow the provisions laid down in this respect by the Income
Tax Assessment Act 1997. On 30% of the total profits earned by the company income tax is
charged. The same is paid by the company at the time of acquisition of the assets. Company is
eligible to get input tax credit in respect of the amount it has paid to its suppliers. There are
several reports that have to prepare by the company for instance the annual reports and the GST
returns.

5MANAGE FINANCE
Answer to Question 2:
In respect of the registration of Houzit Limited it has to follow the provisions of the Corporation
Act 2001. Various legislations and rules are needed to be followed by the company. As per the
provisions of the act the company is not compulsorily required to have a secretary but it must
have a resident director. The permanent address and the postal address of the company must
accompany the records of its financial statements. The higher authority must be intimidated of
any changes that have occurred in the list of the members of the company.
Answer to Question 3:
The Australian market provides a wide variety of softwares for the purpose of financial
management of the company. MYOB and Quick Book are the two most prominent of the options
available in the market. The softwares have become popular due to the better and easier way
provided by them in respect of preparation and presentation of the financial statements of the
company. The level of security and encryption maintained by Quick Book is at par with the level
maintained by the banks. MYOB on the other hand enables the companies to undertake critical
analysis of the data. The reason being that it is mainly accounting software. MYOB provides the
company with two options in respect of the interfaces i.e. offline and online. Both the softwares
make sure that they are in touch with the ATO, thereby enabling them to make the necessary
changes from time to time.
Answer to Question 4:
Matching concept is one of the concepts of the accounting system. It requires that the all
the expenses corresponding to the revenues are recorded promptly for the same time period.
Following the principle of matching concept enables the company to record all the expenses and
track them simultaneously. The several accounting systems present in the market have been

6MANAGE FINANCE
classified by the accounting groups on the basis of their ability to help in the budgets. The
budgeted data is used to forecast the future performance of the company. The classification made
by the accounting groups has made the accounting systems more effective and useful. Budgets
are made in respect of both the short term period of time and the long period of time.
Answer to Question 5:
It is expected that the duties will be fulfilled with utmost priority, integrity and honesty
especially during the probity term. The budgets are made on the premise that the data taken in
respect of the current and future performance of the company are realistic and can become true in
terms of execution by the company. In addition to this the principle of probity ensures that the
analysis and examination of the budgets are carried out with utmost honesty.
Answer to Question 6:
One of the most important task needed to be achieved by the company is to steady to its growth.
The same can be achieved if the company reduces its gross profit by 1%. Consequently it was
decided on the part of the company to increase the advertisement budget by around 70% and
increase in the wages and salaries was also affected to the tune of $172500. This would bring
two benefits of r the company, one the staffs and employees will be able to get higher
commission in respect of the sale concluded by them and secondly the company will be able to
maintain its growth in terms of sale.
Answer to Question 7:
Some of the items that have been recommended for inclusion in the budget of the Houzit
Pty. Ltd. are as follows:

7MANAGE FINANCE
a) By paying the interests on time the company can reduce its interest expenditures.
b) The method employed by the industry in terms of paying of the wages must also be
followed by the company.
c) Discounts provided by the company should be reduced for its long term economic
interests.
The above mentioned recommendations will come handy when the company will be facing
downturn in performance in the market. They will enable the company to save costs in respect of
salaries and wages.
Answer to Question 8:
The various ways in which the internal control area of the company manages the risk of the
company are as follows:
a) Efforts are being made to secure the existing customers of the company. This has become
more important due to the expanding customer base of the company.
b) It must make sure that the discounts given to the clients are duly reflected in the
corresponding invoices.
c) Along with the generation of cash on a consistent basis the company must make sure to
verify it regularly too.
d) Overtime payment should be authorized by the service manager.
e) The completion of the work assigned to the workers and the signing of the invoice should
be ensured by the company.

8MANAGE FINANCE
f) Each asset should be accompanied with a unique identification code so as to facilitate
proper identification.
g) The workers should be absolutely clear about their jobs and roles.
h) The settlement of debtors should be done on a monthly basis.

9MANAGE FINANCE