Financial Management Approaches Assignment Help
It has come to the attention of the managing director, Tom Copeland, that due to the current economic climate, 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.
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Financial Management Approaches Assignment Help
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

Budget preparations

  • 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.

Reporting requirements
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.
Financial delegations

  • 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
FY Q1 Q2 Q3 Q4
REVENUE
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
Sales 3,000,000 750,000 750,000 750,000 750,000
Cost of Goods Sold 400,000 100,000 100,000 100,000 100,000
Gross Profit 2,340,000 585,000 585,000 585,000 585,000
EXPENSES
General & Administrative Expenses
Accounting fees 20,000 5,000 5,000 5,000 5,000
Legal fees 5,000 1,250 1,250 1,250 1,250
Bank charges 600 150 150 150 150
Office supplies 5,000 1,250 1,250 1,250 1,250
Postage &printing 400 100 100 100 100
Dues & subscriptions 500 125 125 125 125
Telephone 10,000 2,500 2,500 2,500 2,500
Repairs & maintenance 50,000 12,500 12,500 12,500 12,500
Payroll tax 25,000 6,250 6,250 6,250 6,250
Marketing Expenses
Advertising 200,000 50,000 50,000 50,000 50,000
Employment Expenses
Superannuation 45,000 11,250 11,250 11,250 11,250
Wages &salaries 500,000 125,000 125,000 125,000 125,000
Staff amenities 20,000 5,000 5,000 5,000 5,000
Occupancy Costs
Electricity 40,000 10,000 10,000 10,000 10,000
Insurance 100,000 25,000 25,000 25,000 25,000
Rates 100,000 25,000 25,000 25,000 25,000
Rent 200,000 50,000 50,000 50,000 50,000
Water 30,000 7,500 7,500 7,500 7,500
Waste removal 50,000 12,500 12,500 12,500 12,500
TOTAL EXPENSES 1,401,500 350,375 350,375 350,375 350,375
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
Commissions $20,000 $20,000 $20,000
Wages $100,000 $100,000 $100,000
Telephone $3,000 $3,000 $3,000
Office supplies $1,000 $1,000 $1,000

Contingency plan template

Contingency Plan

Company name: Big Red Bicycle Pty Ltd

Person developing the plan:

Name                                    Position

Risk identified:
Strategies/activities to minimize the risk By when By whom

Assessment Task 2

Implement financial management approaches

Submission details

Candidate’s name Phone no.
Assessor’s name Phone no.
Assessment site
Assessment date/s Time/s

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
for details.

Performance OBJECTIVE

The candidate will demonstrate the ability to implement financial management approaches.

Assessment description

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.

Procedure
  1. Consider the scenario provided and tasks A and B
  2. Prepare to meet with your team member(assessor) to communicate budget and then coach and train them in new role:
    1. access required budget information from assessor
    2. determine organisational needs
    3. identify coaching/training needs of team member
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