Analyzing HLW Club's Financial Issues: A Case Study on Cash Flow

This case study analyzes the financial challenges faced by the HLW Club, focusing on inefficient cash flow, adverse impacts on sales revenue, and inadequate cash receipt management. The assignment evaluates a new membership and fees structure, comparing the impact of different fee structures on revenue generation, considering factors like occupancy rates and the number of new members. It includes a financial analysis using liquidity ratios, cash flow statements, and budget preparation, emphasizing cash management practices and the importance of revenue collection. The study also highlights the benefits of the new membership plan and the allocation of costs using the ABC method, ultimately aiming for profit maximization through optimal cash flow utilization and pricing policies. The analysis concludes with recommendations for improved cash flow management and revenue enhancement strategies, supported by references to relevant literature on management accounting and financial analysis.

MANAGEMENT
ACCOUNTING
HLW CASE STUDY

INTRODUCTION:
 Club facing several issues.
 Required to write a letter to managing director
addressing the issues faced.
 Improving the ability to plan the management of cash

ISSUES IDENTIFIED
Some of the issues oh HLW are as follows:
 Inefficient operations of cash flow
 Adverse impact on sales revenue of HLW
 Inadequate plan in managing the cash receipts.

EVALUATING THE NEW MEMBERSHIP
AND FEES STRUCTURE
 The ability to plan the management of cash receipts
would improve (Thomas, 2016).
 Court fee and annual membership are the two sources of
revenue
 Instead of using individual program, the money cab be
used on an unrestricted basis for general operations of
funds (Ax & Greve, 2017).

 Assist in structuring the scheme that would
results in producing constant stream of
revenue for the period of one year.
 Providing benefits to the top management
level as they are required to make the
payment only once in a year (Shields, 2015).
 Utilizing the fees effectively that would assist
in making effective decision.

EVALUATING THE IMPACT OF SALES
REVENUE
Assumptions made in the computation of the
revenue-
• Off-season occupancy- 30%
• Prime time occupancy- 90%
• Non-prime time occupancy- 50%
Total number of new members are 1200
((2,000 * 70%)
Total amount of receipts from two different fee
structure is $301,500 .

Particulars Calculations Amount ('000)
Individual 500 * 45 22.5
Student 500 * 30 150
Family 1000 * 100 100
Total - 137.50

RECEIPT FROM NEW PLAN
IMPLEMENTATION

TOTAL RECEIPTS
GENERATED FROM NEW
PLAN

Under new implementation plan-
 Total amount of receipts
With campaign- $220,500
Without campaign- $308,000
Total amount of receipts comes to $528,500.

From the analysis of the proposed plan, it can be inferred
that
 The overall processing will be positively impacted by the
change in the new membership and fees collection plan
 Generating positive impact on the sales revenue

FACTORS TO BE
CONSIDERED IN
EVALUATION
Some of the key factors that are taken into account are as
follows:
• Identification of the factors resulting in the cost
management.
• Regularly recording of the collection of revenue by the
members.
• Considering the issues that results in making the advance
payment from the members.

 Impact on the total amount of payment made due to the
adverse impact of one time payment.
 Benefits provided by new membership plan due to the
free service from members (Chenhall & Moers, 2015).

FINANCIAL ANALYSIS FOR
COMPLETE EVALUATION
 Computation of liquidity ratios
 Utilizing the liquid funds optimally
 Controlling the available liquid funds
 Managing the cash flow statement
 Creating adequate balance between the flow
of cash

 Cash budget preparation
 Preparation of flexible budget
 Creation of operational level of budget

CASH MANAGEMENT PRACTICES OF
HLW
 Changing revenue recovery period based on
new membership plan
 Emphasizing collection of revenue due to
effective management of cash
 Preparation of cash flow statement
 Managing and controlling cash activities in
relation to cash and cash equivalent at the
end of period.

CONCLUSION:
 The reliable method of allocation of cost for HLW has
been identified as ABC method.
 Developing pricing policy based on the volume and cost
analysis
 Focusing on the factors that results profit maximization
(Malmi, 2016).
 Utilizing the cash flow optimally.

 Preparation of cash flow management by utilizing the
cash flow that results from the implementation of plan.
 Increase in the level of profits due to the under no
campaign as the receipts under the no campaign is more
than campaign.

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