Analyze the profit and loss statement

Task 1

Activity 1. From case study

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Question 1.

· Analyze the profit and loss statement.

· Identify profit and loss

Question 2

· Reason for profit or loss

 

Question 3

· Critical dates

· How Houzit pty ltd can manage slow periods

 

Question 4

· Analyze cash flow

· Operation activity (day to day activity)

· Investment activity

· Financial activity

Question 5

· Statutory requirements for company

· Tax liabilities need to identify

 

Question 6.

· Find out the existing software

· Recommend new software

· Benefit of new software

· Why it is suitability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Activity 2. No need to do

Sale and profit budget

PROFIT BUDGET 2016/17 Quarter1 Quarter2 Quarter3 Quarter4
Revenue 100% 20% 24% 26% 30%
Sales $16971237 $3394247 $4073097 $4412521 $5091371
-Cost Of Good Sold $9673605 $1934721 $2321665 $2515137 $2902081
Gross Profit $7297632 $1459526 $1751432 $1897384 $2189290
Gross profit % 43% 43% 43% 43% 43%
           
Expenses          
-Accounting Fees $10000 $2500 $2500 $2500 $2500
-Interest Expenses $84508 $21127 $21127 $21127 $21127
-Bank Charges $1600 $400 $400 $400 $400
-Deprecation $170000 $42500 $42500 $42500 $42500
-Insurances $13390 $3348 $3348 $3348 $3348
-Store Supplies $3749 $750 $899 $975 $1125
-Advertising $350000 $87500 $87500 $87500 $87500
-Cleaning $ 16282 $3257 $3908 $4233 $ 4884
-Repairs &maintenance $64272 $16068 $16068 $16068 $16068
-Rent $2640508 $660127 $660127 $660127 $660127
-Telephone $14997 $2999 $3599 $3899 $4500
-Electricity Expenses $26780 $5356 $6427 $6963 $8034
-Luxury Car $11000 $11000
-Fringe Benefit Tax $28000 $7000 $7000 $7000 $7000
-Superannuation $171495 $34299 $41159 $44588 $51449
-Wages & salary $1905500 $381100 $457320 $495430 $571650
-Payroll Tax $90511 $18102 $21723 $23533 $27153
-Workers compensation $38110 $7623 $9147 $9910 $11430
Total Expenses $5640702 $1305056 $1384752 $1430101 $1520795
Net Profit (Before Tax) $1656930 $154470 $366680 $467283 $668495
Income Tax $497079 $46341 $110004 $140185 $200548
Net profit $1159851 $108129 $256676 $327098 $467947

 

 

 

Notes: – Assumption

· Cost of good sold is the inverse of the gross profit rate and is determined by the quarterly sales budget.

· Gross profit rate reduce by 1 % on the 2016/17 to getting result for hope that lower price of the products would help to maintain or increase sales even in difficult trading conditions. 2015/16 gross profits are 44%.

· Accounting fees have been negotiated foe the year at a fixed amount of $10000 divided equally each quarter.

· Interest charges on the bank loans accepted to a reduced amount of $84508 equal amount for each quarter.

· Whatever bank charges in 2016 as it for 2017 as well, but equal for each quarter.

· For store supplies in 2014/15 result was $3500 of the cleaning expenses we assumed. For 2015/16 was $3605. Store supplies we assume same as cleaning expenses and add with 4% of inflation rate.

· Depreciation from 2016 will it for 2017 and allocated equal amount each quarter.

· Advertising budget increased by $70000 over 2015/16 to added for total advertising cost in 2015/16 as a result of hope that Houzit can secure a grater market share in a constricting.

· Following expenses are expected to increase by the determined inflation rate in the business plan summary: –

· Insurance- apportioned in equal amounts each quarter.

· Store supplies- is calculated for each quarter using same % determined by the sales for each quarter.

· Cleaning- is calculated for each quarter using same % determined by the sales for each quarter.

· Repaired and maintenance- apportioned in equal amounts each quarter.

· Rent- apportioned in equal amounts each quarter.

· Telephone- is calculated for each quarter using same % determined by the sales for each quarter.

· Electricity- is calculated for each quarter using same % determined by the sales for each quarter.

· Fridge benefit tax is calculated same as 2016 and total amount distributed equally for each quarter.

· Income tax is 30% of net profit before tax calculates for each quarter.

· Same % determined by sales for each quarter, which calculate wages and salaries for each quarter.

· Superannuation is 9% from wages and salaries for each quarter.

· Payroll tax is 4.75 from wages and salaries from each quarter.

· Workers’ compensation is 2% from wages and salaries from each quarter.

· As per Australian Luxury car tax 33%. As per our case study there are 2 types of cars: –

 

· Efficient car

· Inefficient car

For 2016 threshold is $64132

$97466-$64132

=$33334*33%

=$11000

 

 

GST cash flow budget

CASH FLOW ANALYSIS-GST 2016/17 Quarter1

(20%)

Quarter2

(24%)

Quarter3

(26%)

Quarter4

(30%)

GST Collected (10%) $1697124 $339425 $407310 $441252 $509137
Less GST Paid $1291106 $258221 $309865 $335687 $387332
GST Payable $406018 $81204 $97445 $105565 $121805

 

Note: – Assumptions

· In GST collected is 10% from total sales. Is calculated for each quarter using same % determined by the sales for each quarter

· In GST paid where we including 10% of total cost of good sales.

· Capital purchase planned for the year is the luxury car for chairman 10% from a new car-costing $97466.

 

 

 

 

 

 

 

Aged debtors

AGED DEBTORS BUDGET TOTAL Quarter1

 

Quarter2

 

Quarter3

 

Quarter4

 

Sales $16971237 $3394247 $4073097 $4412522 $5091371
% Debtors Sales (20%) 20% 20% 20% 20% 20%
Total Debtors $3394247 $678850 $814619 $882504 $1018274
Current (84%) $2851168 $ 570233 $ 684280 $741303 $ 855350
30 Days (10%) $339425 $ 67885 $ 81462 $88250 $ 101827
60 Days (5%) $169712 $33942 $40731 $44125 $50914
90 Days (1%) $33942 $6789 $8146 $8825 $10183

 

Note: – Assumptions

· Total sales are calculated for each quarter using same % determined by the sales for each quarter.

· Debtor’s balance at the end of each quarter is usually about 20% of the quarter’s sales.

· Debtors balances 1% of the total debtors is overdue 90 days and over.

· Debtors balances 5% of the total debtors is overdue 60 days and over.

· Debtors balances 10% of the total debtors is overdue 30 days and over.

· A current debtor is 84%.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Activity 3. From case study

1. Reporting on financial activity from activity 2

· Sales & profit budget

· GST cash flow

· Aged debtors

 

2. Identify & priorities issues

 

3. Recommendation

 

 

4. Circulate budget

· How you circulate budget.

 

· When you circulate budget

· To whom you circulate budget

· Report requirements

 

Task 2. Pg. 22, 24, 25 case study

a) Introduction

b) Body part

· Financial management software

 

· Managing risks of misappropriation of funds from case study need 5 risks from there.

Risks Risk treatment Time frame Contingencies
       
       
       
       

· Ensuring systems are in place

· Internal control system

· 1 system they can implements to control finance

· Maintaining an audit trials

· Compliances with due diligences

c) Conclusion

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