I - ASSESSMENT: Managing business finance
Case Study: ZOOM COFFEE SHOP - Applying the theory
You have recently purchased a small Cafe called Zoom Coffee Shop located in Brisbane. You have developed a new business plan and appointed a new manager. You want the new manager to look after day-to-day operations and financial management of the Café. You need to prepare the manager to take over this role, by giving an overview of the business- its past performance, and current financial position, over the last 12 months. More details about Zoom Café's financials are provided in Assessment 3.
Zoom Coffee Shop currently uses Excel spreadsheets to keep its accounts. You want your manager to identify proper accounting software for the Cafe
Answer the following questions and develop financial reports to enable your new manager to run the business effectively.
1. Your new manager will need to monitor the success of the business. What financial information do you think the manager would need to interpret in managing the finances of the business?
2. For each of the following explain why a Cafe manager should monitor these statistics
a. Sales
b. Cost of Materials
c. Labour Cost
3. There are a number of procedures you can have in place to make sure that the manager was operating in accordance with the agreed allocations in the budget and managing risk?
|
Procedure
|
What steps would you include
|
|
Ordering stock
|
|
|
Handling money to ensure all transactions are recorded
|
|
|
End of day
|
|
4. Zoom Café wants to introduce proper accounting software that is very easy to use, can run very fast reports and where staff can access their own records without paying extra money.
Compare the two accounting software: MYOB and XERO (Hint: You can use the comparison table at: https://www.etaxlocal.com.au/blog/xero-vs-myob/).
Which one would be better for Zoom Café? Tick the correct answer below:
-MYOB
-XERO
II - Assessment - Analysing financial statements
Case Study: ZOOM COFFEE SHOP - Practical application
This assessment has THREE parts
PART A: ZOOM COFFEE SHOP PROFIT & LOSS STATEMENT & BALANCE SHEET
The following income statement (Profit & Loss Statement) for the last two financial years
|
|
|
FY 2015
|
FY2014
|
|
|
Income
|
|
|
|
|
|
|
Revenue / Sales
|
$189,076
|
$160,000
|
|
|
|
Other Income
|
$0
|
$0
|
|
|
|
Investments
|
$0
|
$0
|
|
|
Total Income
|
$189,076
|
$160,000
|
|
|
|
|
|
|
|
Cost of Goods Sold
|
$64,133
|
$23,040
|
|
|
Gross Profit
|
|
$124,943
|
$136,960.0
|
|
|
Expenses
|
|
|
|
|
|
|
Overheads
|
$24,000
|
$23,280
|
|
|
|
Advertising
|
5000
|
$4,850
|
|
|
|
Book keeping
|
1000
|
$970
|
|
|
|
Rent
|
10000
|
$9,700
|
|
|
|
Office expenses
|
5000
|
$4,850
|
|
|
|
Staff wages
|
$59,098
|
$57,325
|
|
|
|
Superannuation
|
|
|
|
|
Total Expenses
|
$104,098
|
$100,975
|
|
|
Net Profit before Tax
|
$20,845
|
$35,985
|
|
|
Tax
|
|
$6,254
|
$6,255
|
|
|
Net Profit after Tax
|
$14,591
|
$29,730
|
|
The following is the balance sheet for Zoom Coffee Shop as at the end of the last financial year in preparation to assess business performance.
|
ASSETS
|
|
|
|
Current Assets
|
|
|
|
Cash
|
$ 1,200
|
|
|
Debtors
|
$ 28,701
|
|
|
Stock
|
$ 8,273
|
|
|
Total Current Assets
|
$ 38,174
|
|
|
|
|
|
Non-Current Assets
|
|
|
|
Plant and equipment
|
$ 45,753
|
|
|
Building
|
$ 150,000
|
|
|
Investments
|
$ 4,950
|
|
|
Land
|
$ 100,000
|
|
|
Total Non-Current Assets
|
$ 300,703
|
|
|
|
|
|
TOTAL ASSETS
|
$ 338, 877
|
|
|
|
|
|
Current Liabilities
|
|
|
|
Creditors
|
$ 24,221
|
|
|
Bank overdraft
|
|
|
|
Credit card debt
|
|
|
|
Tax liability
|
|
|
|
Total Current Liabilities
|
$ 24,221
|
|
|
|
|
|
Non-Current Liabilities
|
|
|
|
Bank loan
|
$ 30,135
|
|
|
Long term business loan 2
|
|
|
|
Total Non-Current Liabilities
|
$ 30,135
|
|
|
|
|
|
TOTAL LIABILITIES
|
$ 54,356
|
|
|
|
|
|
NET ASSETS
|
$ 284,521
|
|
|
|
|
|
OWNERS EQUITY
|
$ 284,521
|
|
|
|
|
AGEING SUMMARY REPORT- DEBTORS
|
Customer Name
|
0-30 days
|
31-60 days
|
61-90 days
|
91+ days
|
TOTAL
|
|
R Smith
|
5000
|
|
|
|
5000
|
|
A Banes
|
|
5432
|
|
|
5432
|
|
T Usha
|
1320
|
|
|
|
1320
|
|
C Kyu
|
|
|
7654
|
|
7654
|
|
J Wang
|
|
|
1343
|
|
1343
|
|
P Castillo
|
|
|
|
5651
|
5651
|
|
N Hurtas
|
|
|
|
2301
|
2301
|
|
|
|
|
|
|
28701
|
Complete the tasks below:
1. Assign each of the following accounts into one of the five groups of account categories - Assets, Liabilities, Owner's Equity, Revenue or Expenses?
Then identify account sub categories:
- Current or Non-Current - Assets & Liabilities
- Fixed and/or Variable - Expenses
|
Item
|
Category
|
Sub Category
|
|
Cash
|
|
|
|
Employee Wages
|
|
|
|
Bank Loan
|
|
|
|
Creditors
(bills to be paid)
|
|
|
|
Sales or Revenue
|
|
|
|
Debtors
(people who owe you money)
|
|
|
|
Cost of Goods Sold
|
|
|
|
Equipment
|
|
|
|
Building
|
|
|
|
Stock
|
|
|
2. Zoom Café's policy is to write-off debts if the debts haven't been paid for more than 91 days. How much money needs to be written off as bad debt?
3. Using Zoom Coffee Shop Profit & Loss & Balance Sheet, calculate the following ratios, and compare to the previous year's results. Explain what the ratios are showing in regards to the business's performance.
a. Sales Growth ($)
b. Gross Profit Margin %
c. Net profit $ shows the overall success of the business. Compare the results for the two years, and explain what the ratio tells us about Zoom Café's financial position and performance. Has it improved or deteriorated from the previous year?
d. Current Ratio % (In FY2014, the current ratio was 2 times or 200%)
PART B: SALES PROJECTIONS, BUDGETING & CAPITAL EXPEDITURE
Both yourself, and your manager are considering three new products that can increase the café's total revenue in the future. The three products options being considered are: Orange Juice, Ice Cream, or Hot Dogs.
1. Complete the sales and cost estimates table below to assist with your decision.
|
|
Est number unit sales (PA)
|
Sales Price
Per unit
$
|
Cost of Stock (per unit)
$
|
Est Total Cost
$
|
Est. total sales
$
|
Cost of Equipment
|
Est. Maintenance Cost (PA)
|
Return on Investment
|
|
Orange Juice
|
15,000
|
3.00
|
2.00
|
|
|
$3,000
|
$6,000
|
|
|
Ice Cream
|
7,000
|
6.00
|
3.00
|
|
|
$4,000
|
$10,000
|
|
|
Hot Dogs
|
6,800
|
3.50
|
1.00
|
|
|
$1,000
|
$4,000
|
|
2. Which item has the highest number of unit sales?
3. Which item will generate the highest estimated total $ sales?
4. Which item has the largest profit margin?
5. Work out the return on investment in $ and % and then explain to your new manager which product and machine should be purchased.
PART C: CASHFLOW BUDGET
Now that you have given your new manager an overview of the business, it is important to plan for the next 12 months. Cash flow management is key to running a successful business.
1. Using a cash flow template provided by your trainer, you are to complete a Cash Flow budget for the new financial year. In your budget you are to include the following changes/items. (Since these are annualized figures, for the purpose of the exercise, divide by 12 to get monthly figures. The spread sheet provided is based on a monthly cycle)
- Sales are to increase 20%
- Other operating income is $0
- COGS increase 40%
- Wages are to decrease 10%
- Overheads are to increase 20%
- You are to include the cost of your new equipment purchase from question 5, above (place this purchase in the month of January)
III - ASSESSMENT: Evaluating international marketing opportunities
Read the Case Study on 'Australian Fine Foods' (AFF) below:
Australian Fine Foods wasestablished in 1989. Today they are a leading exporter of quality Australian cheese, meat, beverages and branded grocery products to customers throughout Asia and beyond.
Their success has grown from their ability to meet their customers' needs. They continually win their trust and respect and have earned a reputation as an honest and capable supplier.
No Fuss Approach
Australian Fine Foods are experts at sourcing and exporting fine foods in a global marketplace. They pride themselves on their ability to meet their customers' needs - without fuss or bother - from the moment the initial enquiry is made through to delivery of the order. This includes providing expert assistance with the completion and provision of all necessary Australian export clearance and customer market entry documentation.
Flexibility
Australian Fine Foods team strives to understand local market requirements and every customer's individual needs and then goes out of its way to satisfy them. They have key staff strategically positioned throughout the Asia/Pacific region to help meet the needs of our customers.
Orders are tailor made based on a single product or a multitude of brands and can be delivered by air or sea. Regardless of the delivery method, they guarantee that meat and dairy products are delivered with the maximum available shelf life, and that beverages and branded grocery lines arrive in first class condition.
Accuracy
Australian Fine Foods' significant investments in computer hardware and specialised industry software ensure the highest rates of accuracy are achieved with all order processing and deliveries. These result in a streamlined process for their customers and all transactions are completed with speed and accuracy
Current markets: The following image shows the current markets for Australian Fast Foods.
Part A: Analyse Myanmar as a potential market for Australian Fine Foods
For this section, you need to conduct research on Myanmar as a potential international market for Australian Fast Foods
Now answer the following questions about Myanmar
Use the above fact sheet and answer questions 1-2
1. What is the size of Australian exports to Myanmar?
2. Which countries are the major sources of imports into Myanmar?
3. Go to https://dfat.gov.au/Travel/Pages/travel.aspx what is the Australian government's advice about traveling to Myanmar?
4. Go to: https://www.transparency.org/country#MMR. What is Myanmar's position on the 'International Corruption Perceptions Index'?
Go to https://dfat.gov.au/geo/pages/countries-and-regions.aspx and find Myanmar read the country brief then answer the following questions
5. How stable is the current economic climate of Myanmar?
6. Are Australia's current bilateral relations with Myanmar good or bad? Give reasons for your answer
Go to https://www.austrade.gov.au/Australian/Export/Export-markets/Countries and find Myanmar then answer the following questions
7. Which internationaltrade alliances is Myanmar a part of?
Go to 'Doing Business'
8. What are the main export opportunities, besides education and training and oil and gas extraction, for Australian exporters in Myanmar?
9. What are the key points to remember about business culture in Myanmar?
10. Is it easy to make payments in and out of Myanmar? Why or why not?
11. What can exporters do to avoid business risks in Myanmar?
Part B: Analyse UAE as a potential market for Australian Fast Foods
For this part, you need to conduct research on United Arab Emirates (UAE) as a potential international market for Australian Fast Foods
Now answer the following questions about UAE
Use the above fact sheet and answer questions 1-2
1. What is the size of Australian exports to UAE?
2. Go to https://dfat.gov.au/Travel/Pages/travel.aspx what is the Australian government's advice about travel to the UAE?
Go to https://dfat.gov.au/geo/pages/countries-and-regions.aspx and find UAE read the country brief then answer the following questions
3. Do Australia and UAE have good bilateral relations? Give examples to support your answer.
4. Does UAE have a healthy economy? Give reasons for your answer
5. What are the main products and services that Australia exports to the UAE?
6. What are the future prospects for Australian exporters in the UAE?
Go to https://www.austrade.gov.au/Australian/Export/Export-markets/Countries and find Myanmar then answer the following questions
7. List 5 key points to remember about business culture in the UAE?
8. What business risks should you consider when doing business in UAE?
Attachment:- Assignment.rar