Diploma of Leadership and Management Assignment
Purpose of the Assessment - The purpose of this assessment is to assess the student in the following learning outcomes:
- Plan financial management approaches
- Implement financial management approaches
- Monitor and control finances
- Review and evaluate financial management processes
Question 1: Metropolitan Furniture
Peter works in the accounts unit of the Metropolitan Furniture Manufacturing. He was asked to prepare a proposed budget for the forthcoming quarter. He consults with the sales manager and finds that:
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February
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$265,000
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April
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$290,000
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March
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$255,000
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May
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$250,000
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|
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June
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$280,000
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In consultation with the production manager he estimates that the cost of goods sold is to be budgeted at 45% of the sales figure. The salaries are expected to be $65,000 per month. When sales exceed $260,000 in any one month, the sales team is entitled to an additional 5% commission on the excess sales over this figure. Other expenses are estimated to be $35,000 per month.
The owner of the organisation is concerned about the cash flow which was not thought of before. The owner is of the opinion that the collection of cash from sales is slow and this could possibly lead to cash flow problems to the organisation. As Peter has never forecasted cash flow before he sets about collecting information on this.
Peter estimates that 80% of the total sales are going to be cash sales where the bill is settled when the goods are purchased or delivered. 10% of the month's sales settle the accounts owed in the month following sales. Others (i.e. 10% of the month's sales) settle in the month after.
Additional information for Cash Flow Statement:
The organisation gets a month's credit on its purchases. That is, the accounts for the purchases (COGS) made in one month is settled in the following month.
- All salaries are paid in the month as they are incurred.
- The additional commission is paid in the month after the month in which it was earned.
- Other expenses are paid in the month they were incurred.
- The bank balance at the beginning of the first month is estimated to be $40,000.
1. Show the profit and loss calculations for the April, May and June
2. Show the cash flow projection calculations for April, May and June
3. What Peter is required to advise the owner of the organisation?
4. Will the business adequate financial provision to pay tax? Why?
5. If the cash flow statement and the P & L are productive, then what are the relevant people Peter needs to communicate if he establishes a business plan?
6. If the P & L showing good profit trend and the forecasted cash flow statement returns positive results, then marketing and operational departments may tend to expand their budget and therefore the business may have cash shortage in future. How Peter can monitor financial performance on a continuous basis?
7. Does Peter require advising the owner about any immediate change in the financial plan? Why?
Question 2: Preparation of Cash Flow Statement
Calculate the total cash inflows and cash outflows and the net cash position at the end of December from the following information:
Use the space provided and show all line items.
XYZ Pty Ltd. December 2012
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Particulars
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Amount $
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Cash receipts from customers
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245,000
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Cash paid to suppliers and employees
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101,570
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Interest paid
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24,120
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Income tax paid
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25,910
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Purchase of Subsidiary X, net of cash acquired
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450000
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Purchase of property, plant and equipment
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350,100
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Proceeds from sale of equipment
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120,000
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Interest received
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22,550
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Dividends received
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25,654
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Proceeds from issue of share capital
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250,000
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Proceeds from long-term borrowings
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250,000
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Payment of finance lease liabilities
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50,000
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Dividends paid
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25,700
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Cash and cash equivalents at beginning of period
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530,750
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Instruction for the students:
- Regular inflow and outflow is recorded under operating activities
- Cash inflow and outflow related to non-current assets are recorded under investment activities
- Cash inflow and outflow related to interest bearing transactions are recorded under financing activities.
- For each section add the inflows and then deduct the outflow.
Question 3: GST and Cash Flow Statement
A company forecasts the following transactions during the next financial year which will affect its cash flow. (All ATO dues and ATO credits are expected to be settled during the year.)
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$
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Cash sales, 10% GST not included
Credit sales for year, including 10% GST
Cash receipts in respect of credit sales - budget year
Cash receipts in respect of credit sales - previous year
Cash purchases, 10% GST not included
GST payable to ATO
GST input credit from ATO
Wages
Other payments, including 10% GST
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90 000
186 000
150 000
11 000
80 000
10 000
20 000
110 000
44 000
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Prepare a budgeted cash flow statement assuming that the opening bank balance was $30,200.
Question 4: Cash Flow Statement
Suppose, a business estimated its 3rd quarter cash collection i.e. $500,000 and during that time its cash payment for purchase is going to be $340,000, other expenses 150,000. The business will also have to pay back its previous loan of $100,000. The business estimated its cash balance at the beginning of the quarter 50,000 and it desires to maintain a cash balance of 60, 000 at the end.
Required: Calculate how much finance it needs to maintain the closing cash balance. (i.e., how much cash it needs to borrow).
Need it as per the guidelines.
Attachment:- Assignment File.rar