Financial Management Assessment Week 2: Short Answer Responses

This document presents a completed finance assignment, addressing key concepts in financial management. The assignment covers a range of topics, including an analysis of a profitable business, reasons for potential business failures, and explanations of fundamental accounting concepts such as the business entity concept, dual aspect concept, money measurement concept, objectivity concept, going concern concept, periodicity concept, cost concept, conservatism concept, materiality concept, realisation concept, matching concept, and full disclosure concept. Additionally, the assignment provides examples of investment and financing decisions. The student's responses demonstrate an understanding of financial principles and their application in various business contexts. The assignment is a valuable resource for students studying finance and accounting, and Desklib provides additional resources for academic success.

Student Name: Student ID:
Assessment Type: Project Other:
Assessor’s Name:
Assessment
Outcome:
☐ Satisfactory ☐ Not Yet Satisfactory
Student
Declaration:
By submitting this assessment via Moodle, I declare that this is my own work and had
not been copied or plagiarised from any other source. Please refer to the Student
Handbook for more information.
Assessment
Conditions:
Each assessment criteria is recorded as either Satisfactory (S) or Not Yet Satisfactory
(NYS). A student can only achieve a ‘Satisfactory’ Assessment Outcome for the entire
assessment when all assessment Criteria listed below are ‘Satisfactory’. A student who
is assessed as ‘Not Yet Satisfactory’ is eligible for re-assessment with their trainer.
All assessment answers must be typed, include this assessment cover sheet and
uploaded in ‘WORD’ version to module.
Assessment Criteria
Element Performance Criteria S
Develop and use emotional intelligence
1 Plan for financial
management 1.1 Review and analyse previous financial data to
establish areas which have generated a profit or loss
☐
1.2 Undertake research to review reasons for previous
profit and loss
☐
1.3 Review business plan to establish critical dates
and initiatives that will require or generate resources
in the next financial cycle
☐
1.4 Analyse cash flow trends
1.5 Review statutory requirements for compliance and
liabilities for tax
☐
1.6 Review existing software and its suitability for
financial management
☐

2 Establish budgets
and allocate
funds 2.1 Use previous financial data to determine
allocations for resources
☐
2.2 Make informed estimates of new items for
inclusion in budget
☐
2.3 Prepare budgets in accordance with organisational
requirements and statutory requirements
☐
3 Implement
budgets 3.1 Circulate budgets and ensure managers and
supervisors are clear about budgets, reporting
requirements and financial delegations
☐
3.2 Manage risks by checking there are no
opportunities for misappropriation of funds and that
systems are in place to properly record all financial
transactions
☐
3.3 Review profit and loss statements, cash flows and
ageing summaries
☐
3.4 Revise budgets, as required, to deal with
contingencies
3.5 Maintain audit trails to ensure accurate tracking
and to identify discrepancies between agreed and
actual allocations
3.6 Ensure compliance with due diligence
4 Report on
finances 4.1 Ensure structure and format of reports are clear
and conform to organisational and statutory
requirements
S
4.2 Identify and prioritise significant issues in
statements, including comparative financial
performances for review and decision making

4.3 Prepare recommendations to ensure financial
viability of the organisation
☐
4.4 Evaluate the effectiveness of financial
management processes
☐
☐
☐
☐
FINANCIAL MANAGEMENT: ASSESSMENT
WEEK 2 (20 marks)
ASSESSMENT ACTIVITY: SHORT ANSWER RESPONSES
1. Describe at least one (1) business that is profitable and explain why you think it is enjoying
financial success.
NAB (National Australian Banking): it is one of the successful banking and financial industry in
Australia.

It is 41st largest bank in the world operating financial and banking sector across the world.
It has a large capital structure which is helpful to enhance the scope the of NAB across the globe.
It has a large revenue share too. In Australia it has 74%, in Europe it has 12% in New Zealand it
has 10% in USA 3% and in Asia it has 1%.
Capital Structure: Organisation is enjoying its financial success with its strong financial and capital
structure. It is seen that the company is capable to build its market share at optimum level.
Technology: NAB uses late test technology and advanced tools. The Siebel and Teradata CRM
(Customer Relation Management) system is one of the technology used by the organisation.
It has launched “NextGen” program also to deal the financial problems and challenges.
2. While the evidence suggests otherwise, there is a common view that many new businesses fail
within the first year of operation. Why do you think a new business might not succeed?
There are some reasons that new business get fail to attain profit at initial stage.
Lake of goodwill
Low capital structure
Low number of investors and financiers
3. Explain the following fundamental accounting concepts:
 Business Entity Concept
Concept of business is considered as separate from the owner. It is considered as simple that there
must be septate accounts to be recorded from the owner.
It is also considered as separate entity concept and economic entity concept.
Final accounts of the business are prepared separate from the owner.
 Dual Aspect Concept
Dual concept indicates towards the double entry accounting system.

It is a fundamental convention of accounting which is considered as essential accounting principle.
As per this transaction a transaction effect both side of account such as debit side and credit side.
 Money Measurement Concept
This concept tells that only those transactions must be recorded in the books which are measurable
in money.
There should be a separate accounting system adopted by the organisation subject to record non
monetary transactions and events.
4. Explain the following fundamental accounting concepts:
 Objectivity Concept
As per this concept the financial statements of an organisation must be prepared on the basis of
relevant and accurate information.
Estimated and assumption based information and dare are avoided while preparing financial
accounts
 Going Concern Concept
It is considered that the business and organisation is established in subject to operating regular
working.
Operations and functions are deemed to be consistent for long term perspective.
 Periodicity Concept
This concept defines the time duration of recording the transactions in books.
Accounts period are considered as quarter, month and year.
This concept is also known as the time period assumption concept.
31st march, 31st June, 31st September and 31st December are considered in periodicity concept.

5. Explain the following fundamental accounting concepts:
 Cost Concept
This concept provides a path to record the assets and liabilities in books.
As per this concept the assets and liabilities must be recorded on their original cost.
Depreciation and deficiency must be deducted from the cost of the assets while recording the
transactions.
This concept is basically implemented on fixed assets.
 Conservatism Concept
This concept is based upon actual scenario and assumptions.
As per this concept estimated and predicted cost should not be considered in profit and loss
accounts.
There must be a provision made for losses and expenses.
 Materiality Concept
As per this concept the all the important figures and material information to be recorded in the
books of accounts.
Irrelevant and non material information and data are not considered in books and records while
preparing financial statements.
6. Explain the following fundamental accounting concepts:
 Realisation Concept
Realisation concept is related to goods and services.
This concept tells that the amount should be recorded in books when the services and goods are
rendered or provided to customers.
It is also called as accrual basis accounting system.
 Matching Concept

This accounting concept defines the relationship between revenues and expenditures.
It is also considered as matching concept which is depended upon expressive.
Non recognised expenses and incomes are not considered in accounting
Expenses and income of current financial years are only considered in books of accounting.
 Full Disclosure Concept
This is one of the basic concept adopted by the organisation and business entities.
It indicates towards defining the accounting principles and accrual concepts related to business
and organisation. It is important to define the concept focused upon presenting the essential
information related to making financial statements and final accounts.
Earnings and expenditures are recorded on Monmouth, quarterly and annual basis.
7. Provide four (4) examples of investment decisions
Investment decisions indicate towards providing effective and optimum option for financial growth
and development.
Investment decisions helps to determine the best options for purchasing of productivity capacity
and capital expenditure.
Working capital investment: Working capital is known as current assets less current liabilities. It
states for compensating the short term liability with the liquid assets.
Investment made in inventories, cash, saving accounts and inveiglement made for enhancing
current assets are considered as working capital investment.
Financial Investments: these type of investment decisions are remain focused upon capital
investments, small business enterprises, capital markets.
It is considered as decision making in respect of capital investments, experts to trade.
Capital expenditure: There are some expenses considered as capital expenditure which
contributes profitability for further years. There are various type of investment done by the
organisation such as purchase of new plant and machinery, investment made for bonds and
investments.
Investment in new business: this is also one of the capital expenditure. Investment decision
remain associated to establish new business entity and organisation.
Replacement Investment: these are the type of investment which are intended to replace existing
investment.
Strategic investment decision: investment which are made in skills and expertise subject to

achieve core competence are considered in these type of investment decision.
8. Provide five (5) examples of financing decisions
Short term financing: Decisions which are made to respond short term finance problems are
considered as short term financing. Bank overdraft, short term credits, borrowings are the type of
short term financial resources.
It helps managers to find out best and effective option to generate short term finance requirement.
Long term financing: Long term investments such as purchase of fixed assets, investment made
in purchasing long term financial statements. Financing decisions are helps managers to determine
the better and effective long term decisions.
Working capital decision: these decisions are made to make a optimum structure of current
assets and liabilities. It helps the management to keep a minimum amount of cash and stock in
organisation to repay its liabilities. Devotes, cash, inventories and creditors are the essential
elements of working capital requirement.
Decisions related to debts and equity: it helps the managers of organisation that which option is
better to generate finance such as debts and equities. It helps to make relations between the debts
and equity.
9. Provide three (3) examples of financial management decisions.
Cost control
Identify investment opportunities
Improving accounting standards
10. Explain the difference between financial accounting and management accounting.
Financing accounting Management accounting
This accounting system remain focused to make
financial statements.
This accounting system provides helpful
information to managers subject to decision
making.
It provides only monetary information to
departmental managers and senior level
management.
It provides all the monetary and non monetary
informations to managers to make strategies
and plans.
Financial statements are prepared in the end of
financial year.
These reports are prepared monthly, quarterly
and yearly basis.
Financial information remain essential for both In this accounting system information remain

the internal and external parties. essential subject to internal partied such as
management level.
These are the summarised information in
respect of classification of transactions.
These provides completed reports to purse the
decision making process.
All the information remain relevant to the
subject.
Projected information and details also remain
essential in this section.
11. Provide five (5) examples of ratios that can be used for analysis and what they mean
12. Provide the formulas for the following ratios:
 Gross Profit
Formula = Gross profit * 100
Turnover
= 75000 / 500000 * 100 = 15%
Gross profit ratios are used to determine the gross profit margin on sales and turnover.
 Net Profit
Formula = Net profit after * 100
Net Sales
= 65000 / 500000 * 100 = 13%
It helps to determine the net profit margin on sales.
 Inventory Turnover Ratio
Formula = cost of good sold
Average inventory
Example: COGS = 125000
Average inventory = 50000
ITR = 125000 / 50000 = 2.5
It helps to determine the the inventory to be retained in stock.
 Debt to Assets Ratio
This is the ratio analysed by evaluating the debts to assets

Total debts to total assets = Short term debts + long term debts
Total assets
Example
Short term debt = 30000
long term debts = 90000
total assets = 100000
total debts to total assets = 120000 / 100000 = 1.2
Debt to assets ratio should be more than 1 which shows the favourable figures subject to total
assets and liabilities.
 Return on Investment
Return on investment = Net profit / total investment
This analysis helps to determine the rate of return on investments.
Example: net profit = 70000
Total investment = 250000
Return on investment = 70000 / 250000 * 100 = 28%
WEEK 3 (20 marks)
ASSESSMENT ACTIVITY: RESEARCH
1. Research the following website http://ato.gov.au/ and summarize the services, facilities and
products the Australian Tax Office provides for individuals and business.
There is a tax executive committee is formed to produce policies, facilities and products to
individuals and business in Austria. Various type of information provided by the tax office such as:
For individuals For business
Lodging tax return Registration services
Income tax deductions
Tax file number services
Business activity statements
Super services Online support services
Solutions subject to tax issues Provide the procedure to pay the ATO
Online services regarding filing the return Services to small business and enterprises
Provides tax topics and rules for individuals Provides tax topics for business

2. Explain and find one (1) example of a Bilateral or Regional Trade Agreement
World trade organisation is the forum which operates the nations to negotiate and enforce
agreements related to bilateral trade agreements.
This agreement was formed in the year 2005. this agreement generated approx $26.7 billion in
2009.
It enhanced the capacity and capability of trade in Australia by 23%.
Percentage of goods exports was recorded up to 33%
Imports get rose by 3.5 percent.
3. Explain the Trade Practices Act. What is it? Who does it apply to?
Meaning Trade practice act was firstly introduced in 1974. this act no. 54 covers the
amendments. It is divided in three volumes
Volume first contains the sections from 1 to 119
Volume second contains the section from 10.01 to 178.
Volume third includes the notes, table of amendments
Where it is applied: this act is levied on commonwealth and commonwealth authorities. Sections
44AC, 44E, and 95D covers the rules related to commonwealth rights.
This act also levied on states and territories part IV and part XIB covers the rules related to leivied
the legislation on states and territories.
4. Explain the following key Australian Taxation requirements:
 PAYG Withholding
It is considered as a instalment or order of pay tax liability. PATG states for Pay As You Go. It is a
system of regular payments towards expected annual income.
This act is applied upon the business, entities and individual which earns interest and income from
further investments.
There are dew things need to remember by the payee such as registration for PAYG to with hold
and amount from a payment.

 Company Tax
Tax rates varies in Austria every financial years.
Tax rates for the financial year 2017-18 are 27.5 for base rate entities and 30% for the normal
organisation.
For life insurance companies tax rate is classified in three parts such as ordinary class 30%,
Complying superannuation class 15% and additional tax on no- TFN contributions income were the
company is retirement saving account.
 Goods and Services Tax (GS.)
There is 10% slab rate charged by the government of Australia on most of the goods and services.
Goods and service tax return are filed monthly, quarterly, annual.
This act covers the rules related to filing GST return, registration for GST and clamming procedure
for GST.
 Financial Probity
Probity decisions are based upon flowing principle
Helpful
Tailored
Inclusive
Sensible:
 Australian Business Number (A.B.N)
Australian business number (ABN) is known as unique business number issued by the Australian
business register (ABR).
It is operated by the the Australian taxation office (ATO).
It is a component of the system implemented by John Howard's liberal government on 1 July 2000.
 Business Activity Statement (B.A.S)

Business activity statement contains
Goods and services tax (GST)
Pay As You Go (PAYG) instalments
PAYG withholding tax
Other taxes
 Superannuation
These are considered as an agreements put in place by the government of Australia.
Australian government held the superannuation assets of $2199 billion.
It is forth largest holder of pension fund assets in the world.
 Fringe Benefits Tax (F.B.T)
This is one of the legislation covers the rules related to additional benefits given to employees.
This act covers the fringe benefit liabilities paid by the employee or associated member of
employee.
This legislation is levied on new business, sole trader, partnership firms, company, trust and joint
ventures
 Income Tax
Income tax rates are levied on individual and residents of Australia.
Resident tax rate for the financial year 2017-18
Taxable income Tax on this income
0 - $18200 NIL
$18201 - $37000 19c for each $1 over $18,200
$37001 - $87000 $3,572 plus 32.5c for each $1 over $37,000
$87001- $180000 $19,822 plus 37c for each $1 over $87,000

$180001 and over $54,232 plus 45c for each $1 over $180,000
5. What does International Commercial Terms (INCOTERMS) mean?
These are considered as a terms which contains the following points
Cost and freight (CFR)
Cost insurance and Freight (CIF)
Carriage paid to (CPT)
Carriage and insurance paid To (CIP)
Delivered duty Paid (DDP)
Delivered at place (DAP)
Delivered at terminal (DAT)
Ex works (EXW)
Free alongside ship (FAS)
Free carrier (FCA)
Free on board (FOB)
6. Explain what the role of the following: World Trade Organisation (WTO)
Make flexible trade reforms and policies
To reduce trade barriers between nations
Resolving the trade issues and problems
To set the framework of Trade negotiation
Organising and administration of multilateral trade
Monitoring the actions of GAAT members.
Review of national policies

Proving monetary and non monetary help to underdeveloped economies.
7. What is GST(Goods and Services Tax and how is it calculated )?
Goods and service tax is levied in Australia subject to goods and services. The tax rate is levied of
10%. this act was introduced in 2000.
Calculation of GST in Australia
The amount of GST is added in the price of goods and services. For example the price of product is
300 (Exclusive GST) then the total price would be (300 + (300*10%)) = 330.
If it is not clear whether the GST is included or excluded in the price of product then (Price of
product /100+rate)*100
WEEK 4 (20 marks)
1. Prepare a Profit & Loss Statement and Balance Sheet using the information given below.
2. Explain how the business is affected by the completed Profit and Loss Report.
From the following financial Information Prepare a Profit & Loss Statement and Balance Sheet;
Food Sales $25 000
Beverage Sales $42 000
Rooms Sales $33 000
Conference Sales $45 000
Opening Food Stock $10 000
Food Purchase $20 000
Closing Food Stock $20 000
Opening Beverage $25 000
Beverage Purchase $40 000
Closing Beverage Stock $25 000

Advertising $1 200
Rates (Council Fees for emptying Rubbish Bins, Landscaping and Street
Cleaning)
$1 500
Decorations (Christmas Trees or Flowers for Table Centre Pieces) $700
Repairs & Maintenance $2 300
Laundry $2 900
Office Supplies (Pens, Stationary) $2 500
Insurance $1 500
Wages $58 000
Cash in Bank $38 866
Retained Earnings for Previous Year -$41 790
Linen & Glassware $510
Liquor $2 558
Food $4 996
Equipment $5 200
Accounts Payable $10 000
Capital $70 000
Accounts Receivable (A/R) $480
3. Referencing the Accounting equation, for the following figures complete a Balance Sheet
Inventory: Food $25,000

Inventory: Beverage $23,800
Bank Loan $15,500
Furniture & fittings $12,000
Trade Debtors $18,300
Bank Account $7,500
Computers $8,000
Petty Cash
$1,200
GST payable $895
Buildings & Improvements $9,500
Trade Creditors $9,500
1. Profit and loss account
Particular Amount Particulars Amount
To opening stock By Food sales 25000
Food 10000 By Beverage Sales 42000
Beverage 25000 35000 By Rooms sales 33000
To Purchase By Conference sales 45000
Food 20000 By Closing stock
Beverage 40000 60000 Food 20000
To wages 58000 Beverage 25000 45000
To gross profit 37000
190000 190000
To Advertising 1200 By Gross profit 37000
To Rates 1500
To Decoration 700
To Retain and 2300

maintenance
To laundry 2900
To Office supplies 2500
To insurance 1500
To liquor 258
To food 4996
To net profit 19146
37000 37000
2. BALANCE SHEET TEMPLATE
Assets $ Liabilities $
Furniture & fittings $12,000 GST payable $895
Trade Debtors $18,300 Trade Creditors $9,500
Bank Account $7,500 Bank Loan $15,500
Computers $8,000
Petty Cash $1,200
Buildings & Improvements $9,500 Accounts Payable $10 000
Equipment $5 200
Cash in Bank $38866
Inventory: Food $25,000
Inventory: Beverage $23,800 Total Liabilities
Proprietorship/Owner’s
Equity
Capital – retain earnings +
profit
47356

(70000-41790+19146)
Total Total

Week 5: (10 marks)
ASSESSMENT ACTIVITY: RESEARCH
Q1. Professional ethics is the application of ethical principles by professionals who have an obligation
to those who rely on their services. Give examples of professional care:
Answer: Professional ethics are considered as a principles, values which helps the members to
perform the job functions in effective manner. Below are some examples of professional care:
 Peer review
 Auditor conduct
 Communication
 Training and development
 Standards
 independence
 Continuous reassessment
 High ethical standard
Q2. Codes of ethics are the most concrete form of communication by which professions acknowledge
their obligations to society. The role of a financial manager involves discharging one’s responsibilities
while ensuring compliance with all the obligations espoused in the code of ethics. Give an example
how a financial manager can apply code of ethics on making decisions.
Answer: Employer code of ethics is considered as a framework which contains policies and
procedures. Code of ethics can be implemented by the managers with in an organisation by following
ways such as
 Assigning role and liabilities
 following ethical practice
 by maintaining confidentiality at workplace
 regulatory framework.
 By implementing professional development plan
Q3. What are “Business Ethics” and Professional “Ethics”?
Business ethics: It is knows as a study of business structure, practices and policies applied in
general business context. Business ethics contains CSR, Discrimination, bribery, insider trading and
corporate governance.
Professional ethics: A code of professional ethics defines the mission and vision statement and
moral values of an organisation. Professional ethics are made of ethical principles and the core value
of fundamental principles.
Q4. What is Integrity?
Integrity: it is considered as a quality of human being in profession form. This is the quality of
honesty, strong moral principles, ethics and professionalism. It is majority regarded by honesty and
truthfulness and accuracy in actions.

Q5. How often does an organisation need to perform an audit trail to make sure all transactions are
recording with due diligence? How does integrity play a big role in this section?
Due diligence is known as an investigation and analysis of a business prior to signing the contracts.
Integrity plays a vital role in due diligence. This section represent the compliance structure of an
organisation which helps to correlate the information in professional manner.
 Integrity helps to maintain and building ethical compliance structure with in the organisation.
 Diligence is considered as the time period between the acceptance of an offer and the close
of escrow
 Civil law and diligence is considered as the reasonable care.
Q6. CASE STUDY:
You have been the finance director of a clothing retailer for ten years. The company’s year end is 30Th
June, and you are finalising the year end accounts. You have recently been advised by the
warehouse manager of a significant level of slow moving stock. The stock in question is now more
than nine months old and would normally have been written down some months previously. The
shareholders are trying to sell the company, and the managing director (the majority shareholder) has
told you that it is not necessary to write down the stock in the year end accounts. You are sure that
the managing director wants the financial statements to carry an inflated stock valuation because he
has found a prospective buyer. The managing director has indicated to you that, if the proposed deal
is successful, all employees will keep their jobs and you will receive a pay increase.
What would you do?
As per the manager perception it is right decision because company is not able to sale out the old
stock which are held in warehouse for nine months. It is require to follow the legislation related to
valuation of stock. Net present value or realisable value method would be preferable to managers to
sell out the stock.
Week 6: Cash Budget and Debt Collection (10 marks)
TASK 1: Cash budget: service industry

Dr Healer is the manager of a medical clinic and is concerned about the cash flow shortages which
arose somewhat unexpectedly recently in the practice. At 30 June the bank account showed an
overdraft of $50 000. Dr Healer believes that the cash flow problems stem from lack of attention to
outstanding patient accounts and the purchase of expensive medical supplies in large quantities at
irregular intervals.
The good doctor has asked you to help design a spreadsheet to investigate the cash flow problems.
You discover the following data:
Revenue:
May $120 000 (actual)
June $145 000 (actual)
July $50 000 (budget)
August $150 000 (budget)
September $140 000 (budget)
Past experience shows that 40% of the consultation revenue is collected in the month of the visit, 30%
in the following month, 20% in the second month after the visit, and 10% was never collected.
From July new credit policies are expected to result in a collection pattern of 60%, 20%, 10% and
10% respectively.
The cost of medical supplies was $40 000 in June and is budgeted for $60 000 in August. Half of the
suppliers’ accounts are paid in the month incurred and half in the following month. Salaries of $40 000
per month and other costs of $25 000 per month are paid in the month incurred.
Required:
11 Prepare a cash budget for the 3 months, July to September to examine the cash flows projections
(Use the spreadsheet template to prepare the cash budget).11 You are aware that there are some suppliers’ payment due in July and August. What relevant
personnel you are required to discuss/negotiate the possible cash shortfall?11 What possible contingency plan you can implement to avoid the foretasted cash flow shortfall
solution:
Cash budget as per the current situation
Particulars July August September
Revenues -50000 -137500 -118500
Cash sales 20000 60000 56000
Collected from last month 67500 44000 55000
Total cash inflow 37500 -33500 -7500
Expenditure
salaries -40000 -40000 -40000
other cost -25000 -25000 -25000
Paid to suppliers -110000 -20000 -75000

Total cash outflow -175000 -85000 -140000
Cash balance in the end of
month -137500 -118500 -147500
Cash budget as per the alternative strategy
Particulars July August September
Revenues -50000 -137500 -118500
Cash sales 30000 90000 84000
Collected from last month 41000 34000 25000
Total cash inflow 21000 -13500 -9500
Expenditure
salaries -40000 -40000 -40000
other cost -25000 -25000 -25000
Paid to suppliers -110000 -20000 -75000
Total cash outflow -175000 -85000 -140000
Cash balance in the end of
month -154000 -98500 -149500
TASK 2: Alternative debt collection policies
As the manager of Corby and Danes Ltd, you are concerned about the current collection
policy from credit customers. The current policy is that all sales are to be made on credit, with the
expectation that 70% of all accounts receivable are collected in the month immediately following the
sale: 20% in the second month, 8% in the third month, and the balance written off as bad.
The actual sales for the four months January to April were as follows:
January $40 000; February $50 000; March $60 000; April $60 000
The forecast sales for the next four months are:
May $70 000; June $80 000; July $80 000; August $80 000
You need a report that will show how much cash you can expect to collect each month from accounts
receivable for the period February to August. You also like to know what the cash flow patterns would
be if either of the two policies below were to be adopted from now (ie from May) on.
Alternative policy:
80% of the accounts receivable to be collected in the month following the sale, 10%
in the second month, 8% in the third month and the balance written off as bad.
Required:
1. Show what the existing report on cash collection from accounts receivable looks like.

2. Show how the additional reports revealing the cash flow situation under the proposed alternative
policy would look.
3. After analysing the data which policy you would recommend to improve the collection process for
the month of May, June and July?
Current policy:
Collections from accounts receivable
Feb Mar Apr May June July Aug
$ $ $ $ $ $ $
From sales in:
Jan ($40 000)
Feb. ($50 000)
Mar. ($60 000)
Apr. ($60 000)
May ($70 000)
June ($80 000)
July ($80 000)
AS per current situation
Particulars May June July
Revenues Nil -85000 -54000
Cash sales 49000 56000 56000
Collected from last month 41000 60000 21600
Total cash inflow 90000 31000 23600
Expenditure
salaries -40000 -40000 -40000
other cost -25000 -25000 -25000
Paid to suppliers -110000 -20000 -75000
Total cash outflow -175000 -85000 -140000
Cash balance in the end of
month -85000 -54000 -116400

Alternative policy
Particulars May June July
Revenues Nil -108200 -117400
Cash sales 56000 64000 64000
Collected from last month 10800 11800 13600
Total cash inflow 66800 -32400 -39800
Expenditure
salaries -40000 -40000 -40000
other cost -25000 -25000 -25000
Paid to suppliers -110000 -20000 -75000
Total cash outflow -175000 -85000 -140000
Cash balance in the end of
month -108200 -117400 -179800

Week 7: Business Plan (20 marks)
TASK. RESEARCH & CREATE AND WRITE A FORMAL BUSINESS PLAN
You are required to research, identify and evaluate available financial management software
applications for implementation in a small business or enterprise.
As a foundation to support your research and evaluation you are to prepare and deliver a written
response addressing the following key criteria:
 Price
 Usability
 Features and Functions
 Suitability
 Compatibility with other Software Applications
 Technical Support
 Training Opportunities
 Pros and Cons
 Your own personal Recommendations
Develop a formal but brief business plan (within 1500 word limit) for a small business or enterprise. To
demonstrate competency, you will need to consider in your analysis the capabilities and resources of
the new enterprise, vision, mission, trends and developments in the marketplace, comparative market
information, and legal and ethical restraints on the proposed business activity.
BUSINESS PLAN REQUIREMENTS
For this report, it is essential that you develop something more than a common-sense approach.
Your plan will need to be supported by wide-ranging research, providing a strong rationale for
changes proposed.
The business plan or project plan must present a comprehensive and logical position which is
followed through with control measures for implementation and review.
Key benchmarks to address and include in your presentation and business plan are as follows:
 Analyse and interpret business vision, mission, values and objectives
 Analysis of the strengths and weaknesses of a range of business plans
 Implementation of a business plan including evaluation of performance against documented
indicators in key results areas
 Consult with key stakeholders to develop performance objectives and measures through
consultation with key stakeholders
 Review market requirements for the product or service, profile customer needs and research
pricing options
 Identify financial, human and physical resource requirements for the business

 Consider any permits or licenses that may be required for new activity
 Knowledge of performance measurement approaches and benchmarking
 Your business plan will need to cover all core aspects of business planning, including marketing,
financial, human resource, risk management and operational planning.
 Legal and insurance issues should be reviewed and corresponding recommendations made for
legal compliance embedded in your plan.
 Finally, the business plan should provide a forecast for the long-range direction of the business
and its strategic success.
RELEVANT INSTRUCTIONS
1. The analysis and strategy demonstrates a knowledge and understanding of relevant business,
management or industry theory.
2. Evidence of critical thinking in preparing the responses for the Business Plan
3. The strategy is incisive and includes a concise, relevant treatment of the issues and addresses
the assessment criteria.
4. The strategy critically discusses and analyses the topic, range statement, performance criteria
and foundation skills of the unit descriptor
5. All sources are referenced consistently and comprehensively using the recommended referencing
system as prescribed in the subject description/outline.
6. Use of language is appropriate to academic writing, the industry context, Business Planning,
Marketing, Human Resource Management principles, Financial Planning, Risk Management
themes and the assessment criteria
7. The responses are succinctly and clearly written or presented in English
8. Overall presentation is professional including spell and grammar checked judicious use of
headings, font size, layout etc.