Financial Management Approaches Assignment Help
It has come to the attention of the managing director, Tom Copeland, that due to the current economic climate change, sales volume may be 20% below target this financial year. Tom is worried that this may severely impact profit projections. The company can accept as much as a 10% variance in profit projections; however, more than this could severely affect the company’s ability to pay obligations and invest. Reliable data to determine whether the risk has eventuated should be available by mid Q2, when sales data for the company’s product are in.
As a special project, the managing director has asked you to perform a risk management and develop a contingency plan to manage the risk of sales falling 20%.
As per organisational policy you should use the contingency plan template provided.
Appendix 2 – Budgeting and finance policy
- The business plan will set the key parameters for all cash budgeting.
- Variations to the business plan must be approved by the CEO and senior management strategic committee.
- Prior period results are to be analysed to identify the profit level of cost centres, identify correlations between financial statistics and to set key performance indicators and benchmarks for future budgets.
- The budget planning committee will meet prior to budgets being developed and agree on budget parameters. The committee will consist of all department managers plus the CEO and finance manager.
- A CAPEX budget will be developed from the approved business plan.
- A detailed sales budget must be completed before completing the profit budget for the year.
- A cash-flow budget covering the first three months will be prepared after the profit budget is completed.
- A master budget including profit projections will be completed from which cost centre allocations will be made.
- Budget notes that contain all the assumptions used in the budgets should accompany the master budget or be made available on a separate document. Where possible, the notes should justify the basis on which the estimates were made.
- Overheads (non-direct expenses) will be apportioned across the cost centres equally. Exceptions need to be negotiated with relevant authorities.
- All expenses and income will be spread equally throughout the year unless otherwise required by business needs or business environment.
- The financial cycle for budgeting purposes will be yearly ending 30 June.
Software applications to be used in reporting.
- environment – Windows
- accounting Information System – BRBwill use MYOB AccountRight plus
- data analysis – BRB will use Microsoft Excel 2007.
Actual results will be produced monthly by the MYOB accounting system. Actual variances to budget will be performed by Excel with a report prepared for senior management for significant variances.
- Each manager is responsible for achieving the revenue budgets agreed to in the budget committee.
- Each manager is responsible to approve, by signing the necessary paperwork, all expenditures that fall within their area of responsibility.
- Expenditures must be within the budget guidelines for the individual departments.
Format for budgets and reports
All budgets must include the following details:
- name of the person who prepared it
- cost centre (if applicable)
- name of the budget/report, i.e. sales, expenses, CAPEX, cash flow, budget variation report
- period of the budget.
Appendix 3 – Financial Management Approaches Assignment Help Budgets and templates
Master budget with profit projections
|Big Red Bicycle Pty Ltd|
|Master Budget FY 2011/2012|
|Commissions (2% sales)||60,000||15,000||15,000||15,000||15,000|
|Direct wages fixed||200,000||50,000||50,000||50,000||50,000|
|Cost of Goods Sold||400,000||100,000||100,000||100,000||100,000|
|General & Administrative Expenses|
|Dues & subscriptions||500||125||125||125||125|
|Repairs & maintenance||50,000||12,500||12,500||12,500||12,500|
|NET PROFIT (BEFORE INTEREST & TAX)||938,500||234,625||234,625||234,625||234,625|
|Income Tax Expense (25%Net)||234,625||58,656||58,656||58,656||58,656|
|NET PROFIT AFTER TAX||703,875||175,969||175,969||175,969||175,969|
Financial Management Approaches Assignment Help Sales cost centre expense budget
|Sales Centre A||Sales Centre B||Sales Centre C|
Contingency plan template
Company name: Big Red Bicycle Pty Ltd
Person developing the plan:
|Strategies/activities to minimize the risk||By when||By whom|
Assessment Task 2
Implement financial management approaches
|Candidate’s name||Phone no.|
|Assessor’s name||Phone no.|
The assessment task is due on the date specified by your assessor. Any variations to this arrangement must be approved in writing by your assessor.
Submit this document with any required evidence attached. See specifications below
The candidate will demonstrate the ability to implement financial management approaches.
In response to the scenario provided, you will access and communicate details of budget to a team member (assessor). You will then support the team member to perform their required role with respect to software resources and systems.
- Consider the scenario provided and tasks A and B
- Prepare to meet with your team member(assessor) to communicate budget and then coach and train them in new role:
- access required budget information from assessor
- determine organisational needs
- identify coaching/training needs of team member