ACC81210 - Evaluate The Working Capital Management & Cash Conversion Cycle - Accounting Assignment Help

Assignment Task -                
 

Part 1 

This section requires you to use information on your allocated company for Assessment 2

a) Evaluate the working capital management of your allocated company. Start your analysis bycalculating the company’s cash conversion cycle (CCC) for the three years 2018, 2019 and 2020using relevant ratios you calculated in Assessment 2 and additional ratios available to you in yourcompany’s folder in the ACC81210 MySCU site. Using these figures, evaluate the CCC and each ofthe areas that make it up with a view to identifying areas of strength and/or weakness. Give briefsuggestions for actions the company could take to make improvements, noting any potentialbenefits and costs.Approximately 350 words.

b) Briefly describe the types of external financing used by your allocated company for the 2020 financial year. What are some of the issues that the company may need to consider when it is using a combination of short and long term financing arrangements? 
 

Part 2
Home and Gather manufacture soy-based wax candles and reed diffusers. Both of their products aremanufactured and warehoused on the Gold Coast in Mudgeeraba and sold to various wholesalers andretail outlets throughout Australia The business has experienced significant growth over the last year and the owner of the business hasdecided that now is an opportune time to start forward planning and have a more sophisticated control system put in place to ensure that the business remains profitable.

Part 3 
a) The owner of Home and Gather (Part 2) is concerned that the Reed Diffuser product is not generating enough sales and its gross profit margin is below expectations. The owner is considering removing this line of product from its product mix and is exploring an alternative product to replace the reed diffusers. Before they do this, they have asked you to provide ananalysis and recommendation as to the continuation of this product. 
Which costs of the business would not be relevant in making your decision? Please provide an explanation as to why. 
 

b) Home and Gather are currently investigating an alternative product to add to their product mix,electric oil diffusers. The business has conducted its market research and has estimated that it could sell these products for $70 each. 
Home and Gather have explored purchasing the product overseas, but would ideally like to buy locally manufactured products to support local small businesses. Home and Gather do not currently have the manufacturing capability to produce this product themselves.

The estimated variable costs per unit to outsource the production of these diffusers are as follows;
Cost of product $32.40
Freight cost $10.20
Taxes and Duties $ 5.50
It is estimated that the business will spend an additional amount of $15,000 on a marketing
campaign to promote the product. This campaign will focus on the existing customer base initially.
 

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