Financial Analysis, Budgeting, and Resource Allocation Strategies

This report provides a comprehensive analysis of financial management practices within a wine brewery, covering key aspects such as financial performance analysis, budgeting strategies, and resource allocation. The report delves into the historical financial data of the firm, highlighting trends in profitability, depreciation, and the utilization of horizontal and vertical analysis techniques. It outlines a business plan timeline with key milestones, discusses cash flow management, including relevant ratios, and explores various types of taxes applicable to the business. Furthermore, the report examines the advantages and disadvantages of using MYOB software for financial management, and it details the steps involved in optimizing resource allocation. The report also covers budget creation processes, departmental goal setting, and potential challenges in financial management, such as falling support, difficulty in scaling up, and weak cash flow. Finally, the report discusses accounts receivable aging and its importance in managing overdue invoices. The content is contributed by a student and available on Desklib, a platform providing AI-based study tools.

Running head: MANAGE FINANCES
Manage finances
Name of the student:
Name of the University:
Author note

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Table of Contents
1A:..............................................................................................................................................2
1B:..............................................................................................................................................2
1C:..............................................................................................................................................3
1D:..............................................................................................................................................3
1E:..............................................................................................................................................4
1F:..............................................................................................................................................6
2A:..............................................................................................................................................7
2B:..............................................................................................................................................7
2C:..............................................................................................................................................8
3A:..............................................................................................................................................8
3B:..............................................................................................................................................8
3C:..............................................................................................................................................9
3D:..............................................................................................................................................9
3E:..............................................................................................................................................9
3F:............................................................................................................................................10
4A:............................................................................................................................................11
4B:............................................................................................................................................11
4C:............................................................................................................................................11
4D:............................................................................................................................................12
Reference:................................................................................................................................14

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1A:
Present business is a wine brewery that has been operating since two decades.
Historically, the brand has well maintained budgeting framework and considering the same it
can be seen that the firm has been making good amount of profit during the present date. As
per the previous data, it can be seen that the firm’s profit is enhancing by a large amount
during the last three years. During 2014, net profit of the firm was 1, 28,258 AUD, whereas
the net profit during 2016 has been enhanced almost 64%, showcasing rapid growth of the
firm. In addition to this, it has also been seen that, net profit, before taxation, it has also
enhanced by a rapid rate depicting good growth of the business. Contrary to this, the firm has
been facing large amount of depreciation as well that has proved to be one of the largest
reason for loss in the profit margin for the firm.
1B:
In order to analyse the financial performance of the firm there are two methods that
are utilized by the accountants. These two methods are trend analysis or horizontal and
vertical analysis. When it comes to horizontal analysis, then it represents the financial
information of the company with its historical information regarding finance of the firm over
various periods. On the other hand vertical analysis is performed on the financial statement of
the firm for a single period. Though these two are the standard measurement of the financial
performance of the firm, there are few drawbacks too. For instance, considering the vertical
analysis it can be seen that, it is beneficial for the analysis of the single period and inter-
department or inter-firm comparison can be done smoothly utilising this (Sarlin 2015).
However, it fails to provide broad picture of the industry wise performance of a firm. On the
other hand, when it comes to the horizontal analysis, then it can be seen that information
presented in the financial statement of a firm, can be changed that lead to misinterpretation of
the trend of the firm. Thus, keeping these drawbacks in mind, in order to analyse the

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performance of the chosen industry for this report, will be based on the horizontal and
vertical analysis of financial information. It will aid the accountants to determine the trend of
financial performance of the firm as well as guide them to frame proper plans for the same
(Post and Byon 2015).
1C:
The above figure represents the timeline of the business plan for the chosen
organisation of this report. From the above figure it can be seen that, there would be 5
milestones that will take place between 2017 and 2027. As per the above timeline, it can be
seen that the business has been operational since 2017 and till next 10 years it would be
growing to gain maturity. The first milestone of the firm was to setup infrastructure and
second milestone of the firm is to allocate resources properly in order to gain economies of
scale so that the performance of the firm can be enhanced. Third milestone of the firm is to
expand the business and fourth milestone of the firm is to increase its earnings. Fifth and
sixth milestone of the firm is related with gaining maturity in a phased manner that as per
expectation will come within next ten years.
1D:
Cash flow of a firm can be explained as the numerical value that appears in the
financial statement as the net cash by operating activities (Gitman et al. 2015). It is important
because it is the record of cash payment and received during all the period through which

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idea regarding the revenues and expenses of the firm can be gained. For instance, if the firm
is making profit, however, it its receivables become past or uncollected owing to the different
reasons, then the firm can go into financial problem (Penman and Yehuda 2015). Thus a strict
measurement on the cash flow is required in order to maintain the performance of the firm.
In order to analyse the cash flow of a firm, several ratio are utilised. Some of them are
as follows:
Net sales or operating cash flow:
It is the ratio expressed as the percentage of a firm’s net operating cash flow to its
revenue that entails how much cash has been generated for every unit currency of sales. The
relation ratio entails the profit probability of the firm and can ensure the future trend as well
(Banker et al. 2016).
Free cash flow:
It is often described as the net operating cash flow subtracted capital expenditures. It
is one of the essential measurements because it depicts how efficient the company is at
producing cash. Utilising this ratio investors makes there decision whether it would be
beneficial to invest in the firm or not. Thus, the firm will utilise this ratio to measure the cash
of itself.
1E:
Different types of taxes that are being charged upon the firms are as follows:
Sales tax:
It is a form of indirect tax that is being charged by the regulatory authority on the
firm. Though it is directly charged on the producer, however, the seller shifts it on the
customer by the means of enhancing the price of the products (Storey 2016). Considering the
business of this report, there will indirect tax on the firm as the form of sales tax.
Property tax:

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The firm of this business possess land, which is expected to have tax by the
government. In addition to this, property such as, building and estate the firm need to pay
taxes to the government.
Excise tax:
For the purpose of certain types of goods and services, business need to provide tax to
the government which is known as the excise tax. These type of taxes are paid to the IRS
either annual frequency or in quarterly manner via the Form 720 (Schenk et al. 2015).
Custom duty:
The selected organisation for this business will export goods and services to different
nations, thus it will attract custom duty as well, which will vary depending upon the rules of
the importing country.
Owner share of business income:
Independent work charges are those paid by sole proprietors and accomplices for
standardized savings and Medicare, in light of the wage of the business. Because
entrepreneurs are not representatives, there is no compensation to withhold these assessments
from, so independent work impose is the option. LLC proprietors additionally should
likewise pay sovereign work assess (Ward 2016). Proprietors of enterprises who function as
workers don't need to pay independent work impose. This article clarifies how independent
work assess functions.
Gross recipient tax:
Some work charges are gathered, announced, and paid. For this situation, the
expenses are paid to the IRS and the Social Security Administration. Employment charges are
those paid by the proprietor of a business for a few kinds of duties in light of the gross pay of
workers. These duties incorporate FICA charges (for government disability/Medicare),

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elected/state joblessness, and elected/express specialist's pay charges. How these expenses
function is clarified in this article (Doerrenberg 2015).
1F:
For the purpose of the selected business MYOB software is used and it has various
benefits as well as the drawbacks too. Some of the advantages of utilising the software is as
follows:
General ledger:
General ledger is essential need for every big business; thus, flexible accounting
structure is available from the MYOB software that aids the firm to keep its financial
management on track.
Financial Reporting Engine in Excel:
MYOB provides reports to generate data in Excel with live access to MYOB
Greentree data that allows the accountants to avail current data.
Accounts receivable:
With the aid of the real time information regarding the enhancement in the collection
rates and debt control utilising the eCRM module, firm can keep its financial accounting
statement on track (Arcega et al. 2015).
Consolidation and Translations:
Utilising the multi-level and multi-currency consolidation, MYOB aids to carry out
consolidation of a business easily.
Disadvantages of the MYOB is as follows:
Security concern:
As per the usage wise, MYOB is one of the great software, however, major issue of
the same lies within the data security. It has been seen that 46% of the users argue that the
software has inefficient data security that has made it problematic for the firm (Patrut 2015).

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Not novice friendly:
MYOB is not an easy software for the novice and it require much amount of expertise
in order to complete the task properly. This has posed problematic situation in front of the
business.
2A:
In order to allocate resources optimally utilising the previous financial report
following steps will be utilised:
 Objectives, priorities and aims of the business are agreed for future implementation
 Alternative course of action are determined and evaluated for the business
 Only those options are chose for further evaluation that meets the organizational
priorities, objectives and aims
 Utilising the previous year budget definition, resources are allocated in such a way
that it enhance the performance of the desired unit or all.
 Utilising the cash flow statement, the business will decide how to allocate the
resource in order to enhance the revenue of the firm
 Taking advantage of the revenue statement, the firm will allocate resources in such a
way that it can generate much amount of profit through it.
2B:
As a new head in the budget, position can be infused in the same. Position will be of
different type. Being a wine brewery, there will be owner/general manager, chef, line cook,
servers, dishwashers, senior server, and bartenders as well. Cost of the same will be as
follow:

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2C:
When it comes to creating budgets, then there are different policies and organisational
requirements that need to be followed. For instance, budget planning hierarchical process
does not match with the standard organisational hierarchy, which is utilised for other
requirements. Due to this hierarchy utilised to aggregate and distribute data, one might want
it to provide different structure (Kibria et al. 2015). At first instance, budget schema is need
to be created and then various other department need to be sketched under the same. policies
that need to be followed must adhere with the expenditure and the revenue cycle of the
budget and update as well as analyse the same for multiple scenarios is essential for the
proper growth of the budget.
3A:
Steps are as follows:
 Share information with the managers
 Define and evaluate the departmental goals
 Implementation process explanation
 Monitoring process explanation
 Adjustments as per requirement

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3B:
Falling support – the operations of the firm need to ensure proper collaboration among the
workers.
Difficulty in scaling up – firm need to bring in well depicted scale up process for the growth
of the same.
Weak cash flow – the firm should ensure cash flow statements are hidden from the
employees and revealed only through the budgeting statement.
Falling cash flow – in this regard, the firm need to bring in proper cash flow through
exploration of the market.
Dwindling cash – firm need to keep their incentive structure lucrative in order to enhance the
performance of the employees and willingness to work as well.
3C:
An accounts receivable aging is an analysis that grades unpaid client invoices and
unexploited credit memos by date varieties. The aging report is the primary tool used by
collections personnel information in order to regulate which invoices are overdue for
payment (Flynn et al. 2015). The reports are organised by customer name, with all invoices
for each customer itemized directly below the customer name, usually sorted by either
invoice number or invoice date. The aging report is also used as a tool for estimating
potential bad debts, which are then used to revise the allowance for doubtful accounts.
3D:
Every contingency plan responses a question about a problematic scenario. In this
instance, the wine brewery requires each Registered Investment Advisory firm to take on
plans that promise that the business move forward and deal justifiably with its customer
investors in the occasion that the head of the firm becomes unobtainable through death,
serious illness or accident.

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3E:
The audit trail gives a basic segment in extortion identification. Strict adherence to the
production of an audit trail gives data demonstrating the authenticity of exchanges. All
business instalments must have a supporting report, for example, buy arranges and affirmed
solicitations. Finance and human asset records give a fundamental audit trail. Government
controls require keeping records in regards to procuring and end, pay and qualification of the
worker to work in this nation. Getting a bank or U.S. Private venture Administration advance
requires giving marketable strategies and budgetary articulations. Moneylenders may require
some confirmation of income and costs to report the substance of the monetary proclamations
(Scoggins and McMasters 2018). An audit trail comprising of cautious record keeping will
give the fundamental documentation. A few moneylenders or speculators may require an
inspected budgetary articulation. Keeping up clear records of all exchanges speeds the
procedure and may lessen the cost of the audit.
3F:
Three compliance in the workplace are as follows:
Occupational health and safety:
It is one of the essential compliance that need to be followed by the selected firm in
order to enhance its performance and make it suitable for the growth of the business. The
firm is expected to work as per the guidelines of the National Occupational Health and Safety
Commission Act 1985, where it will abide by the law passed by the courts regarding the
negligence, defamation, trespass and various other rules are applicable (Al-Azam et al. 2015).
In order to enhance the acceptability of the workers from different cast and culture, the
selected firm will operate under the State and Territory Laws.
Food safety:

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Selected firm is a wine brewery that makes it essential for the firm to ensure food
safety. With better food safety, firm can provide better quality food o the customers and gain
popularity as well. The firm is expected to operate as per the guidelines of the Food
Standards Australia New Zealand and Food Safety Legislation, which would enhance the
performance of the firm and make it widely acceptable.
Human rights:
Human rights is one of the essential compliance that need to be followed by every
organisation for smooth growth of the business and enhance the same with more amount of
hiring. The selected business operates in Australia, where the human right is maintained with
strong observation from the regulatory authority. The firm operates as per the rules of the
Australian human rights commission act 1986 that clearly defines the rules and regulation for
the human rights compliance (Durocher and Kay 2018).
4A:
Being a wine brewery, the selected organisation utilises statue 311.190 along with
11CSR 70-2.110 report for the proper production and sales of the wine. In addition to this,
there is section 311.192 and 311.010.11 report, which is being used by the firm for the
secondary licencing of the firm (Burton et al. 2017).
4B:
In order to highlight significant issues for priority attention there will be well defined
norms for the firm. As per the regulation, if there is issue, then it can be determined through
the organization matrix. Due to the matrix, anyone can inform the higher authority regarding
the issue and bring in the focus of the management on priority basis.