BSBSMB406A - Manage Small Business Finances - Finance Assignment Help

Assignment Task

Brief
There are 2 parts to this assessment:
Part 1 is made up of 2 tasks:
Task A: Completing projected financial reports and relevant business ratios
Task B: Providing background information on the preparation of the reports and ratios
Part 2
Preparation for a meeting with the two owners of Sullivon Constructions discussing the implementation of the financial plan and the monitoring of financial performance.
Work Placement Logbook
For students who undertook their work placement with a host organisation (not their employer), you must submit your work placement logbook together with this assessment. This assessment will be graded as incomplete if you fail to include your logbook. Refer to the “Instructions to the Learner” section above for the file naming convention.

Part 1
Task A: Completing projected financial reports and recording financial procedures
Identifying financial information requirements is vital in order for Sullivon Constructions to profitably operate and extend the business according to their business plan. With the two owners already investing capital into the business we need to figure out if more working capital is required for future works
The two owners of Sullivon Constructions, Rob and Jake, have asked you to develop financial procedures and prepare projected financial statements for a new build to commence in July. Based on the information provided below, you are to complete:
A Statement of Cash Flow projected for the month of July
A Projected Profit & Loss Statement for the 3 months ending 30 September
Calculate the break-even sales point and profit for the build
The Balance Sheet forecast as at end of September
Relevant business ratios for September
The build is ready to commence in July has a total cost of $540,247.00 to the customer.
Click this link for the list of payments from the customer and other relevant information.
1A.1 Statement of Cash Flow for the month of July
Complete the Cash Flow statement below for the month of July using the information supplied in Task 1 Information.
Cash Flow for JULY
OPENING BALANCE $350,000.00
Cash incoming
Receipts from customers $81,037.05
GST collected $7,900.00
Loan amount $250,000.00
Total incoming $688,937.05
Cash outgoing
Purchase of new vehicle $40,000.00
Payments to suppliers $38,640.00
Payments to employees $26,000.00
Interest payments $720.00
Taxes paid $1,300.00
GST paid $11,500.00
General expenses $38,305.00
Total outgoing $156,465
Monthly cash balance $182,472.05
CLOSING BALANCE $532,472.05
Office use only – Assessors feedback
JH 29/09/2021- An excellent evaluation of the information to accurately complete the statement of Cash Flow projected for the month of July.
1A.2. Projected Profit & Loss Statement for July, August and September
Profit and Loss Statement for JULY, AUGUST and SEPTEMBER
CASH FLOW July August September TOTAL
REVENUE
Cash incoming
Progress claim $86,701.66 $99815 $154,215 $340,731.66
Total incoming $688,937.05 $278,337.05 $410,600.00 $1,377,874.10
Costs of Construction
Preliminaries $10,000.00     $10,000.00
Hire items $3,200.00 $3,200.00 $3,200.00 $9,600.00
Temporary Services $600 $600 $600 $1,800.00
Surveyors $3,000.00   $3,000.00 $6,000.00
Site preparation $15,000.00     $15,000.00
Concrete slab $14,000.00     $14,000.00
Termite protection $2,500.00     $2,500.00
Bricklayer   $15,000.00   $15,000.00
Frame carpenter   $6,000.00   $6,000.00
Structural steel   $5,000.00   $5,000.00
Roof plumber   $3,000.00   $3,000.00
Roof tiler   $3,000.00   $3,000.00
Windows   $8,000.00   $8,000.00
Skylights     $2,000.00 $2,000.00
Electrician   $3,000.00 $3,000.00 $6,000.00
Plumber   $5,000.00 $5,000.00 $10,000.00
Mechanical services     $5,000.00 $5,000.00
Insulation     $2,500.00 $2,500.00
Plasterer   $8,000.00   $8,000.00
Renderer     $7,500.00 $7,500.00
Tiling & Flooring   $6,500.00 $6,500.00 $13,000.00
Carpentry     $18,000.00 $18,000.00
Joinery     $35,000.00 $35,000.00
Painter   $14400 $16000
Garage door     $1,500.00 $1,500.00
Glazing     $1,500.00 $1,500.00
Fixtures & fittings     $5,000.00 $5,000.00
Appliances     $12,000.00 $12,000.00
TOTAL COST OF CONSTRUCTION $238,900.00
Gross Profit $111,100
         
Fixed costs
Postage $50 $50 $50 $150
Office supplies $200 $200 $200 $600
Motor vehicle expenses $400 $400 $400 $1200
Depreciation of vehicles $550 $720 $720 $1,990
Depreciation of equipment $4000
Depreciation of furniture & fittings $1000
Telephone $300 $300 $300 $900
Freight $2000 $3000 $3000 $8,000
Staff amenities 2520 $2520
Superannuation 2470 $2470
Wages (including Site Supervisor) $6500 Per week x $26,000.00 per month $26,000.00 $26,000.00 $78,000.00
Rent $1,800.00 $1,800.00 $1,800.00 $5,400.00
Insurance $1,066.66 $3,200.00
Electricity $325 $325 $325 $975
Interest $720 $720 $720 $2160
TOTAL FIXED COSTS $112,595
NET PROFIT / LOSS $337,442.05
         
Office use only – Assessors feedback
JH Please Resubmit: 29/09/2021 - Unfortunately, you have not correctly completed the projected Profit & Loss Statement for the 3 months ending 30 September – Appendix B.
General Feedback:
Please note that the items I have highlighted in yellow are incorrect figures.
Please refer back to Part 1 Task Information.
Please express all of the figures in full. I.e., $203,823.50
REVENUE – Cashing Incoming:
Please review your progress claim amounts by reviewing Part 1 Task Information.
The total incoming is the same amount as the progress claims.
Please amend and recalculate your total Costs of Construction and Gross profit for each month and the fixed Costs and Net Profit/(Loss) for each month.
Costs of Construction:
Please complete the Total Costs of Construction and Gross profit for each month.
Please review the amount that you have allowed for the painter. $16,000.00 x 90% paid in September.
Fixed Costs:
Please complete the Total fixed Costs and Net Profit/(Loss) for each month. The Net Profit/(Loss) total is the Gross Profit - Total Fixed Costs.
Please note that the Fixed Costs are negative figures. As these are costs to the company.
The Net Profit is the Gross Profit under the construction costs minus the Total Fixed Costs under the fixed costs.
Depreciation of equipment10% on cost. Accumulated depreciation is $4,000.00. $4,000.00 ÷ 3 = $????.??Depreciation of furniture & fittings5% on cost. Accumulated depreciation is $1,000.00. $1,000.00 ÷ 3 = $???.??
Please show the expenses in each month for Depreciation of equipment, Depreciation of furniture & fittings, Staff amenities, Superannuation and Insurance
1A.3. Break-even sales point and profit for 3 month ending 30 September
Break-even sales point
Complete the break-even analysis for 3 months ending on 30 September. The contribution margin (ratio) is calculated later in number 5. Break Even Sales Point
Break even sales point Amount
Total Fixed Costs 112,595
Total cost of construction $238,900
Total wages for all owners $100,000
TOTAL COSTS $451495
   
TOTAL PROGRESS CLAIMS UP TO SEPTEMBER $340,731.66
   
TOTAL PROFIT / LOSS $110,763.34
Office use only – Assessors feedback
JH Please Resubmit: 29/09/2021 - Unfortunately, you have not correctly calculated the break-even sales point and profit for the build – Appendix C. Please check your calculations after you have completed the revision of the P&L Statement. Fixed costs + Total Costs of Construction Variable costs + Total wages for each owner = Break-even. Break-even - Price of build to September = Profit.
Please note that the items I have highlighted in yellow are incorrect figures.
Please refer back to Part 1 Task Information.
Please express all of the figures in full. I.e., $203,823.50
1A.4 Balance Sheet projected as at 30 SeptemberComplete the Balance Sheet below for months leading up to and including all of September.
ITEM Projected as at 30 September
Current Assets
Cash at Bank $410,600.00
Inventory at Hand $3,250.00
Trade Debtors$648,296.40
Total Current Assets $1,062,146.40
Non-Current Assets
Vehicles $80,000.00
Vehicles (Less Accumulated Depreciation) $1,990.00
Equipment $40,000.00
Equipment (Less Accumulated Depreciation) $4,000.00
Furniture & Fittings $20,000.00
Furniture & Fittings (Less Accumulated Depreciation) $1,000.00
Total Non-Current Assets $146,990.00
Total Assets $1,209,136.4
Current Liabilities
Credit Cards $24,450.00
Trade Creditors $54,420.00
GST Paid $21,500.20
GST Collected $12,822.31
PAYG Tax Payable $6,400.00
Total Current Liabilities $119,592.31
Non-Current Liabilities
Bank Loan $250,000.00
Total Non-Current Liabilities $250,000.00
Total Liabilities $369.592.31
Net Assets $839,544.10
Shareholders Capital
Rob $100,000
Jake $100,000
Retained Profits$337,442.05
Retained profits is the amount of Net Profit as per the Projected Profit and Loss Statement Office use only – Assessors feedback
JH Please Resubmit: 29/09/2021 - Unfortunately, you have not correctly completed the Balance Sheet forecast as at end of September – Appendix D.
General Feedback:
Please note that the items I have highlighted in yellow are incorrect figures.
Please refer back to Part 1 Task Information.
Please express all of the figures in full. I.e., $203,823.50
Current Assets
Trade Debtors = Total Cost of Build $540,247.00 – Total of Build Up to September $459,209.95
Non-Current Assets
The Total Non-Current Assets is the sum of the Vehicles, Equipment and Furniture & Fittings. Less the Accumulated Depreciation. Recalculate the Total Assets.
Non-Current Liabilities
Total Liabilities is the Total Current Liabilities + the Total Non-Current Liabilities
1A.5 Business Ratios
Complete the table below indicating the Ratio’s for each of the sections.
Ratio Formula Answer
Current Ratio Current Assets ÷ Current Liabilities = Current Ratio 8.88 : 1
Liquid Ratio Current Assets – Inventory – Prepayments ÷ Current Liabilities = Liquid Ratio 9.62
Gross Profit rate Gross Profit ÷ Sales = Gross Profit rate 6.52
Net Profit Rate Net Profit After Tax ÷ Sales = Net Profit rate 9.76
Return on Assets Net Profit After Tax ÷ Total Assets = Return on assets 5.32
Return on Equity Net Profit After Tax ÷ Owners Equity = Return on Equity 8.67
Total Debt to Equity Total Debt ÷ Owners Equity = Total Debt to equity 7.76
Total debts to Total assets Total Debt ÷ Total Assets = Total debt to total assets 8.62
Office use only – Assessors feedback
JH Please Resubmit: 29/09/2021 - Unfortunately, you have not correctly completed the relevant business ratios in September – Appendix E. Due to errors in the other tables. Without your calculations it is difficult to see where you went wrong.
Please note that if you do not show your calculations. It is very difficult for me to give you feedback on what needs to be done to correctly complete the calculations.
Incorrect answers without showing the calculation process will result I you having to resubmit. If you show the calculation process and I can see that you have the right idea and come up with the incorrect answer may be awarded as satisfactory. As I can see that you have a comprehension of the ratios and the calculation process.
Please note that the items I have highlighted in yellow are incorrect ratios.
The owners’ equity is the Shareholders Capital + Retained Profits = Owners Equity.
A stock or any other security representing an ownership interest. This may be in a private company (not publicly traded), in which case it is called private equity. 2. On a company's balance sheet, the amount of the funds contributed by the owners (the shareholders) plus the retained earnings (or losses).
Therefore, the owners’ equity is Owners Equity + Retained Profits = Equity
Please express all of the figures in full. I.e., $203,823.50
Please note that some of the answers are expressed as ratios and some of the answers are expressed as percentages. Please ensure that you express the answers in their correct format.
Please refer to 16.4.3 Calculating and evaluating financial ratios to benchmarks.
1A.6 Sullivon Constructions must have financial procedures to facilitate implementation of the business plan. In the templates below, outline the procedures to be followed for cash management and accounts payable.
Cash Management Procedure
-Invoice asap and set clear payment terms
-Online invoicing
-Long term financial plan
-Create charts to monitor cash flow
-Be smart when it comes to debt
-Asses your expenses
-Credit control procedures
-Sale forecasts
-Stock control measures
-Control spending
-Reduce unnecessary costs
-Look how your spending and receiving money.
-Produce and read financial reports
-Goal review
Office use only – Assessors feedback
JH Please Resubmit: 29/09/2021- There are some good points. However your responses does not address the procedures to be followed for cash management. Please refer to the attachment I have provided.
Accounts Payable Procedure
-Completing an income tax return
-Business activity statement
-ASIC annual report (companies)
-Taxable payments reporting for those building and construction industry
-PAYG withholding payment summary annual report
-Group certificates for employees
-Workers compensation insurance
-Superannuation payments
-fringe benefits tax return
-Staff salaries and award conditions
Office use only – Assessors feedback
JH Please Resubmit: 29/09/2021- There are some good points. However your responses does not address the procedures to be followed for accounts payable. Please refer to the attachment I have provided.
1A.7 After completing the statements and procedures, you will now e-mail them to Rob and Jake so that they can do their review. Draft the e-mail below and ensure that you:
indicate the names of all documents you prepared and attached in the e-mail.
identify at least one specialist service to be obtained to ensure Sullivon meets the different financial and regulatory requirements.
negotiate or list at least two (2) strategies with the Rob and Jake you could use for sourcing financial backing for the company based on the financial outcomes.
Email
Send To: Rob
Cc… Bcc... Jai Sullivon
Subject Statements and procedures

Greeting Rob, I have prepared all documents and informed ASIC to help you meet the different financial and regulatory requirements, you can also use equity and debt financing to source your financial backing. Equity financing the business through investors, an advantage of equity financing is that you do not need to make monthly payments which accounts for more cash on hand, therefore can be used as operating expenses. Debt financing is as the name suggest financing your business through debt. An advantage of debt financing is that the interest you pay can be used as a tax-deductible business expenses, furthermore, the lending institution has no control over how the company is run and does not participate in any form of ownership of the company.
Documents attached below are:
-Business activity statement (BAS)
-ASICS annual report
- PAYG withholding payment summary annual report
-Group certificates for employees
-Workers compensation insurance
-Superannuation payments
-fringe benefits tax return
-Long term financial plan
-Create charts to monitor cash flow
-Be smart when it comes to debt
-Asses your expenses
-Credit control procedures
-Sale forecasts
-Stock control measures
-Produce and read financial reports
Thank you.
Office use only – Assessors feedback
JH Please Resubmit: 29/09/2021 - Unfortunately, your email has not addressed all the items that were asked for. Please address and include the following items in your email.
indicate the names of all documents you prepared and attached in the e-mail. Please refer to Part 1: Task A: Completing projected financial reports and recording financial procedures for the list of 5 documents you prepared.
identify at least one specialist service to be obtained to ensure Sullivon meets the different financial and regulatory requirements.
Task B: Providing background information on the preparation of the reports and ratios
The owners would like you to explain the background to preparing the projected financial statements and business ratios. Specifically, they would like answers to the following questions:
1B.1 What is the purpose of preparing the financial statements?
The general purpose of the financial statements is to provide information about the results of operations, financial position, and cash flows of an organisation. This information is used by the readers of financial statements to make decisions regarding the allocation of resources. At a more refined level, there is a different purpose associated with each of the financial statements.
Office use only – Assessors feedback
JH 29/09/2021- Great work on your on your response to the purpose of preparing the financial statements.
Please use the follow feedback for future reference:
The objective of financial statements is to provide information about the financial position, performance and changes in financial position of business that is useful to a wide range of users in making financial decisions.
Financial Statements provide useful information to a wide range of users:
Managers
Shareholders
Financial institutions
Suppliers
Customers
Government bodies
Potential investor
1B.2 Identify at least two (2) principles involved in preparing the following:
balance sheets,
profit and loss statements.
Identify at least 2 principles in preparing budget/actual reports Identify at least 2 principles in preparing profit and loss statements
-Determine the Reporting date and period
-Identify assets
-Current assets (accounts receivable, money in the bank, inventory, etc.)
-Non- current assets
-Current labilities (accounts payable, credit card balances, loan repayments, etc.)
-Owners’ equity (for most small businesses, this is just the owners’ equity, but it could include investors shares, retained, earnings, stock proceeds, etc) -Revenue
-Cost of Construction
-Overheads
-Other income and expenses
-Income tax
Office use only – Assessors feedback
JH 29/09/2021- An excellent outcome on your response to the purpose of preparing the financial statements.
1B.3 List two (2) other benchmarking tools other than ratios and describe each.
1. Horizonal analysis - Horizontal analysis involves comparing a base year with future years and measuring the percentage change
Vertical Analysis - Vertical analysis involves comparing expenses against sales and measuring he percentage change.
Office use only – Assessors feedback
JH 29/09/2021- Excellent research listing two (2) other benchmarking tools other than ratios and providing a description of each.
1B.4 Describe the Economic Order Quantity (EOQ) model of stock or inventory control. (at least 30 words)
Economic Order Quantity (EOQ) is a mathematical model that is used in inventory control. EOQ is the ideal order quantity a company should purchase to minimize inventory costs such as holding costs, shortage cost, and order costs. In other words Economic order quantity is a technique used in inventory management. It refers to the optimal amount of inventory a company should purchase in order to meet its demand while minimizing its holding and storage costs.
The model is based on following assumptions which are:
-Demand is known and distributed uniformly throughout the periods.
-Supply is instantaneous when the inventory level is zero and lead time demand is constant.
-Both carrying and ordering cost are variable costs.
-Lead time is known.
-Carrying costs are constant.
-Quantity discounts are not available.
-Ordering costs are constant.
-Fixed costs are irrelevant.
Office use only – Assessors feedback
JH 29/09/2021- Excellent work accurately describing the Economic Order Quantity (EOQ) model of stock or inventory control.

Part 2
You have been asked to attend a meeting with the 2 owners. The items on the Agenda that you are required to address are listed below (A-F). Prepare your responses to these items before you meet with the owners.
2A. Based on the different taxation legal requirements (click the link), what strategies should be implemented to ensure that Sullivon Constructions remains compliant with the law? Provide at least 5 strategies.
1. Lodge and pay tax
2. PAYG
3. Proof of income
4. Payroll Tax
5. Business activity statement (BAS)
6.Paying minimum wage
Office use only – Assessors feedback
JH 29/09/2021- Excellent work listing 5 strategies that should be implemented to ensure that Sullivon Constructions remains compliant with the taxation laws.
2B. What credit policies or guidelines could the business implement to maximise cash flow and address potential credit issues? Provide at least 5.
1.Mointor spending
2.Caculate risk and proceed accordingly
3. Work smart
4. Tender smart
5.Miniumuse money wastage
Office use only – Assessors feedback
JH Please Resubmit: 29/09/2021- It appears that you have misunderstood the question. The question is asking you to list at least 5 credit policies or guidelines could the business implement to maximise cash flow and address potential credit issues. Please refer to 16.3.1 Develop, monitor and maintain client credit policies.
2C. Identify three (3) financial key performance indicators for the business and briefly explain how these help the financial performance of the business.
Performance Indicators Briefly explain how the KPIs help the financial performance of the business.
Gross profit margin KPIs help us improve financial performance to serve overall organisational success. ... The KPIs we choose or create to measure the results in our relationship map will have the same relationships to one another as their results do.
KPIs specifically help determine a company's strategic, financial, and operational achievements
The outcome you need to measure that have the most impact moving your organisation to towards success.
Gross profit margin is a profitability ratio that measures what percentage of revenue is left after subtracting the cost of goods sold.
Working Capital is a measure of the businesses available operating liquidity, which can be used to fund day-to-day operations
The debt-to-equity ratio is a solvency ratio that measures how much a company finances itself using equity verses debt. This ratio provides insight into the solvency of the business by reflecting the ability of shareholder equity to cover all debt in the event of a business downturn
Working Capital Debt-to-equity Office use only – Assessors feedback
JH 29/09/2021- Well done some great financial key performance indicators for the business and briefly explain how these help the financial performance of the business.
2D. The owners are very keen to know how they compare to the industry average. You have been able to get the following information on the industry averages. Prepare a brief to the owners commenting on the comparison between Sullivon’s results (that you completed in Part 1 Task A.5) and the industry averages.
Ratio Industry Average How does Sullivon’s ratios compare to the industry average?
Current ratio 3:1 Good
Liquid ratio 3:1 Good
Gross profit rate 50% Average
Net profit rate 25% Good
Return on assets 20% Good
Return on equity 40% Good
Debt to equity 70% Average
Total debt to total assets 50% Average
Office use only – Assessors feedback
JH Please Resubmit: 29/09/2021- Unfortunately, due to the errors in Part A: (5): Business Ratios. Your response to the comparison between Sullivon’s results and the industry averages is incorrect. Please revise your responses and ratios. Once you have completed the revision of the errors in Part A: (5): Business Ratios. Please give some more descriptive comments. I.e. Current ratio: 3:1 - Sullivon is doing very well compared to the industry average. Its current assets are 4 times more than its current liabilities

2E. How can Sullivon Constructions monitor their marketing and operational strategies for their impacts in the financial plan?
Strategies to monitor marketing strategies for their impacts in the financial plan (at least 3) Strategies to monitor operational strategies for their impacts in the financial plan (at least 5)
1.Use of resource
2.External environment
3.Performance
1.Conduct performance reviews on staff
2.Review suppliers contracts term of trade
3.Review your insurances
4.Review your cybersecurity
5.Establish, review, and update your document policies and procedures.
Office use only – Assessors feedback
JH 29/09/2021- An excellent assessment of how Sullivon Constructions monitor their marketing and operational strategies for their impacts in the financial plan.
2F. Assume that the actual Gross Profit was $200,327.96 and the actual Net Profit was $119,046.72. Using these financial data:
calculate any variances (both $ and %),
explain to the owners the benefits of completing a variance report,
decide and explain whether variations and changes are required to the General Budget allocated in the Sullivon Constructions Business Plan.
Calculation of variances
$81,281.24
51%
Explain the benefits of completing a variance report.
The Benefits of completing a variance report would be having an competitive advantage but helping Sullivon construction achieve their goals and helps identify protentional risks. Identifying the changes required in the business strategy by comparing budget with actual results which may point out re valuating the target point and customer base. Other benefits of a variance report would be identifying managerial concerns, managing risks and creating shareholder value into the organisation.
Decide and provide a brief explanation whether variations and changes are required to the General Budget allocated in the Sullivon Constructions Business Plan.
Suvllion construction business plan is average and operating decent but some changes that could better the company would be more stock control measures, control spending and reduce unnecessary costs. After this has been applied Sullivon can regularly set goal review

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