Comprehensive Finance Report: Houzit Pty Ltd Budget Analysis 2011-2012

This report provides a comprehensive financial analysis of Houzit Pty Ltd, examining its financial performance for the period of 2011-2012. It includes detailed analyses of the sales and profit budget, GST cash flow budget, and aged debtors budget, providing insights into the company's revenue, cost of goods sold, gross profit, and expenditures. The report also interprets the financial data, highlighting key trends and performance indicators, such as total sales, GST payable, and debtor sales percentages. Furthermore, the report discusses the organizational policies and procedures related to budgeting, reasons behind the previous year's profit and losses, effective financial management approaches, and the use of assumptions in budget preparation. It also covers tax liabilities, including income tax, fringe benefit tax, and GST, and discusses the relevant accounting standards and corporate legislation used in preparing the budgets, such as the Corporate Tax Act 2001. The report offers a detailed overview of Houzit Pty Ltd's financial position and provides recommendations for monitoring budget costs and improving financial performance.

MANAGE FINANCES

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
1.A .........................................................................................................................................1
1. Budgets are based on the organisational policies and procedures.................................3
1.B .........................................................................................................................................4
PART 2............................................................................................................................................4
1. ............................................................................................................................................4
2. ............................................................................................................................................6
3. ............................................................................................................................................6
4. ............................................................................................................................................6
5. ............................................................................................................................................7
6. ............................................................................................................................................7
7. ............................................................................................................................................7
8. ............................................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Finance is the requirement in each business sector in context investing in new plans or
the daily operating activities in the premises. Hence, in the present report there will be discussion
based on budgeting tools used by Houzit Pty Ltd. Thus, there will be statements related with the
sales and profit budgets, GST cash budgets as well as the Aged Debtors Budget analysis which
represent financial ability of the firm in each quarters for the period of 2011-2012. However, on
the other side there will be discussion based various corporate legislature used in preparing the
budgets for such entity such as Corporate tax Act which will be implemented over the
preparation of such budgets.
PART 1
1.A
Sales and Profit Budget:
Profit Budget
2011/12
($)
Quarter 1
($)
Quarter 2
($)
Quarter 3
($)
Quarter 4
($)
Revenues
Sales 15714108 3142822 3771386 4085668 4714232
COGS 8887899
2221974.7
5
2221974.7
5
2221974.7
5
2221974.7
5
GP
6845065.9
2 920847.25
1549411.2
5
1863693.2
5
2492257.2
5
GP% 43.56% 29.30% 41.08% 45.62% 52.87%
Expenditures
Accounting fees 10000 2500 2500 2500 2500
Interest Expenses 84508 21127 21127 21127 21127
Bank charges 1600 400 400 400 400
Depreciation 170000 42500 42500 42500 42500
Insurance 12875 3218.75 3218.75 3218.75 3218.75
Store supplies 3500 875 875 875 875
Advertising 350000 200000 50000 50000 50000
Cleaning 6921.6 1730 1730 1730 1730
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Repairs and Maintenance 118656 29664 29664 29664 29664
Rent 2538950 634737.5 634737.5 634737.5 634737.5
Telephone [phone] 6922 6922
Electricity Expenses 49440 12360 12360 12360 12360
Luxury car Tax 40166.4 10041.6 10041.6 10041.6 10041.6
Fringe Benefit Tax 28000 7000 7000 7000 7000
Superannuation 359078 89770 89770 89770 89770
Wages and Salaries 3989760 997440 997440 997440 997440
Payroll Tax 189514 47378 47378 47378 47378
Worker's Compensation 79795 19949 19949 19949 19949
Total Expenses 8060451 2127613 1977613 1977613 1977613
Net profit before tax
-
1215384.6
8
-
1206765.4 -428201.4 -113919.4 514644.6
Income tax 839585.5 83419.13 202600.9 239691.8 313873.6
Net Profit
-
2054970.1
8
-
1290184.5
3 -630802.3 -353611.2 200771
Interpretation: By considering the above listed table based on Sale and purchase budget
for 2011-12 which provides informations related to each quarters in the year. Hence, the total
sales for thee year by considering all the quarters are amounted at $15714108. COGS can be
measured as per the adjustments of the business plan provide by Houzit Pty Ltd which states
that, it will be inverse of the changes incurred in GP. Hence, GP is reducing 1% for such period
then it can be said that the cogs of the product will be increasing 1%. There will be income taxes
levied over the income generated by the organisation in each quarter at 30% of the corporate tax.
Hence, after reducing the taxes form the income generated by the organisation in each quarter the
net profit has been obtained by the 4th quarter is for $200771.
GST CASH FLOW BUDGET
COGS 2011/12 Q1 Q2 Q3 Q4
2

($) ($) ($) ($) ($)
Accounting fees 10000 2500 2500 2500 2500
insurance 12875 3218.75 3218.75 3218.75 3218.75
store supplies 3500 875 875 875 875
advertising 350000 200000 50000 50000 50000
cleaning 6921.6 1730.4 1730.4 1730.4 1730.4
repairs and maintenance 118656 29664 29664 29664 29664
rent 2538950 634737.5 634737.5 634737.5 634737.5
telephone [phone].6 6921.6 6921.6
electricity expense 49440 12360 12360 12360 12360
car 97466 24366.5 24366.5 24366.5 24366.5
3215495
916373.7
5
766373.7
5
766373.7
5
766373.7
5
GST Collected 1571411
GST paid 981626
GST payable 1663680 306145.1 399965 439374.9 518194.8
Interpretation: In accordance with the GST cash flow of Houzit Pty Ltd which stated that
the taxes will be levied over the purchase as well as expenses made by the organisation in the
period of 2011-12. Thus, it can be said that, such implication of taxes must be paid at 110% of
each purchase transaction. Thus, the total GST would be payable at 1663680 for the period 2011-
12. In the 1st quarter the GST was payable for 306145.1, in 2nd quarter it was 399965, in 3rd it is
439374.9 as well as in 4th quarter it is 518194.8.
Aged Debtors Budgets
TOTAL
($)
Q1
($)
Q2
($)
Q3
($)
Q4
($)
Sales 15714108 3142822 3771386 4085668 4714232
% Debtor Sales 6.20% 7.76% 6.46% 5.97% 5.17%
Total Debtors 975000 243750 243750 243750 243750
Current 3142821.6 628564.4 754277.2 817133.6 942846.4
30 Days 1571410.8 314282.2 377138.6 408566.8 471423.2
3

60 Days 785705.4 157141.1 188569.3 204283.4 235711.6
90 Days 157141.08 31428.22 37713.86 40856.68 47142.32
Interpretation: On the basis of above listed it can be assumed that the firm is able to
meet the debtors in the year at 2011-12 for 97500. Hence, it is 6.20% of the debtor sales which
indicates that it can be able to grant the consumers these much of amounts. In the 1st quarter the
debtor sales were 7.76%, in 2nd quarter it is 6.46%, in 4th quarter it is 5.97 and the lowest debtor
sale ratio is in the 4th quarter which is 5.17%.
1. Budgets are based on the organisational policies and procedures
In accordance with the requirement of preparing such budgets which are in the
consideration with making the adequate budgets which will meet the objectives of the firm as
well as such budgets will help the organisation in meeting the favourable targets as well as
having the better growth (Cömert and et.al., 2016). Hence, by considering the sales budgets the
professionals has included the previous years' data and made the assumption that the organisation
is being able to earn the net profit or losses on the basis of various quarterer. Thus, as per Aged
debtor analysis it can be said that the firm is able to meet the debts of the organisation so if they
are planning to expand the business it will be fruitful for them.
1.B
1. Reason behind previous year profit and losses
As per the sales and purchase budget of Houzit Pty Ltd which states that the firm has
faced losses in the first three quarters and have the profit in the 4 the quarter (Chintrakarn,
Jiraporn and Kim, 2017). Hence, it can be said that, such losses are being faced by them as per
the low amount of sale made during such period as well as the large numbers of expenses
incurred by them. However, if there will be increase in the sales than the firm will be able gather
the adequate amount of revenue.
2. Comments over effective financial management approaches.
There has been various approaches which are in consideration with the financial
accounting techniques of Houzit Pty Ltd. Thus, it can be said that, firm will be able to gather the
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large numbers of investors as well as have the increment in the capital gathering if they will
make innovative decisions which helps in enhancing the organisational efficiency.
3. Use of all assumption in preparing the budgets
On the basis of such budgets it can be assumed that the firm is not bale to earn the
adequate amount of net profit in the first 3 quarters. Hence, they need to make changes in the
selling techniques as well as need to lower down the expenses of the firm. However, it
accordance with Aged debtor budget it can be said that the firm will be able to make payments to
its debtors in the long run (John, 2017). Hence, it will create the favourable image of the
organisation in the future so it will be assumed that they will be able gain the better capital
revenue.
4. Relevant notes to monitor the budget costs
To monitor or execute the budgets of Houzit Pty Ltd it can be said that, the firm is need
to make fruitful changes in operational activities such as they would need to implemented
various techniques which will enhances the sales of the organisation (Shank and Vianna, 2016).
PART 2
1.
Taxes were been levied on the overall activities held in the organisation such as income
tax over the revenue gathered by firm after including all the income or expenses. Hence, GST
(General sale tax) were levied over all the goods of company. Thus, the accounting information
system includes that input tax credit must be included in GST for such period. However, the
taxes can be measure and collected over the purchase of assets and stock in context of the
business as well as the amount id being collected from such activities must be paid in accordance
with the assessment year. Hence, as per the federal legislation of ATO there has been various
rules and regulation In context with making the adequate payments of taxes for corporation and
individual. Thus, in Houzit Pty Ltd the taxes will be paid such as 30% of the corporate tax as
well as payroll tax for 4.75% over the wages and salaries paid by organisation. By considering
the tax liabilities of Houzit Pty Ltd which are facilitated for statutory requirements are mentioned
below such as:
Tax liabilities list 2011/12 Q1 Q2 Q3 Q4
5

($) ($) ($) ($) ($)
Car (Luxury car tax) 20920 5230 5230 5230 5230
income TAX 839585.5 83419.13 202600.9 239691.8 313873.6
Fringe benefit tax 28000 7000 7000 7000 7000
GST 1663680 306145.1 399965 439374.9 518194.8
TOTAL TAX LIABILITIES
PAYABLE
2552185.
5
401794.2
3 614795.9 691296.7 844298.4
Interpretation: By considering the above listed table it can be said that the organisation
has paid taxes over the various items as well as the income tax payable by them. Hence, the
luxury car was being taxed in 2011/12 as 20920 for the first quarter it is 5230 which are same in
each year. The corporate tax can e charge 30% over the income gain by Houzit Ltd. Hence, in
the year 2011-12 the income tax was payable by company at 839585.5 which are different in
each quarter such as in Q1 it is 83419.13, Q2 it is 202600.9, Q3 it is 239691.8 and in Q4 it is
313873.6 at the rate of 30% of corporate tax. Fringe Benefit tax of the business for the year
2011-12 is was 28000 and for each quarter it was charged at equal amount such as 7000 in each
quarter. GST was measured over the all purchase f products by the organisation which is the total
payment for the period 2011-12 was 1663680. Hence, GST was measured for all the quarters in
the year such as Q1 it is 306145.1, Q2 it is 399965, Q 3 it is 439374.9 as well as for Q4 it is
518194.8 respectively.
2.
In accordance with considering the Houzit Pty Ltd there has been various standards
which are used for Compliances of the liabilities of the organisation. Hence, there are some
leverages facilitated to the small scale entities as well as in some special cases to not to make the
such reporting in these techniques or accounting standards (Cömert and et.al., 2016).
Hence, by considering the corporate act, 2001 the disclosure reports are must be prepared
by considering the shareholder's requirements such as turnover gain by the organisation,
profitability as well as debt equity of the firm as mentioned in section 293. Thus, such
information helps them in analysing the actual financial position of business in corporate
environment. However, in accordance with section 294A it says that, the reports are being
6

prepared with the proper specification as well as there must be use of authenticate sources of
information which must have the transaction details then such informations will be acceptable
(Tax and Corporate Australia, 2017).
3.
In accordance with Australian legislation there has been use of various kinds of software
which will help Houzit Pty Ltd in preparing financial accounts in an adequate manner. Hence,
there will be implementation of the various rules and regulation which are facilitated as to make
the authenticated reporting of all the accounts of firm (Banerjee, 2017). For instance, if Houzit
made any business transaction with Europe or any other country than such laws and regulations
will help them in preparing the livestock of main exports that transit between Australia and
Europe.
4.
a. Matching principle:
In accordance with these techniques the professionals must measure the current
performance of the firm with the revenant previous operations (Shank and Vianna, 2016). Hence,
it can be said that, such techniques will help them in analysing the loopholes as well as
drawbacks of the firm.
b. Time periods:
There must be regular inspection of the financial accounts of Houzit by the accounting
professionals as well the budgets must be based on the time basis. Hence, it can be said that the
firm is need prepare and execute the budgets on required time period (Mullins and Schoar,
2016).
c. Account groups
There is need to prepare a team of the accounting group which will help the professionals
in making the better execution or audits of the accounts. Hence, they will be able to suggest the
required changes to be made in the operational activities of the firm.
5.
There is need to implement the various principle concepts and models which will help the
firm in enhancing better disclosure techniques. On the other side where compliance is not
7

necessary to be mentioned than it is previous accepted by the users that the reports of
organisation are nit prepared in consideration of such accounting standards (Chintrakarn,
Jiraporn and Kim, 2017).
6.
In accordance with the analysis of such financial data set which brings the ability of the
firm in not an adequate manner (Mullins and Schoar, 2016). Hence, there has been requirement
of various kinds of techniques which will help them in evaluate the efficiency of the
organisation.
7.
There must be increase in sales as well as organisation need to launch innovative
products as well as make scheme in attracting the large numbers of shareholders (Shank and
Vianna, 2016).
8.
It is important that there must be implementation all the norms and accounting standards
which helps in making the reports in the universally accepted format as well as which are easily
understood by all the persons (Banerjee, 2017).
CONCLUSION
On the basis of the report it can be said that, Hozit Pty Ltd need to adopt various changes
in the operational functioning of the business as well as generate ideas to make grasp the
preference or requirements of the employees. Further, while considering the budgets of the
organisation there is need to make reduction in the expenses of the activities that will help them
in gathering the adequate amount of funds.
8

REFERENCES
Books and Journals
Cömert, H. and et.al., 2016. Too big to manage: Innovation and instability from regulated
finance to the megabanking era.
Chintrakarn, P., Jiraporn, P. and Kim, Y. S., 2017. Did Firms Manage Earnings more
Aggressively during the Financial Crisis?. International Review of Finance.
John, S., 2017. Administration of the Public Finance Management Act 1999 in the North West
Provincial Administration in South Africa (Doctoral dissertation, University of Pretoria).
Shank, C. A. and Vianna, A. C., 2016. Are US-Dollar-Hedged-ETF investors aggressive on
exchange rates? A panel VAR approach. Research in International Business and Finance,
38, pp.430-438.
Mullins, W. and Schoar, A., 2016. How do CEOs see their roles? Management philosophies and
styles in family and non-family firms. Journal of Financial Economics. 119(1). pp.24-43.
Banerjee, R., 2017. Financial Analysis of an Urban Local Body in India Chosen under Smart
City Project: A Case Study of Kochi Municipal Corporation. Asian Journal of Research in
Business Economics and Management. 7(6). pp.237-250.
Online
Tax and Corporate Australia. 2017. [Online]. [Available through]
:<https://www.ato.gov.au/general/tax-and-corporate-australia/>. [Accessed on 27th October.
2017].
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