Financial Data Analysis: Budgets, Cash Flow, Market Valuation, And Business Plan Essay.

Financial data A thorough analysis requires you to have a good understanding of what to look for. Its not just a matter of flipping through pages and reading the bottom line. You need to have a good understanding of what needs to be reviewed.the icon to find out what you need to review and understand. O Budgets. forecasts and variances O Cash fiow profil and loss reports O Market valuations IO Business plan.

In simple terms, a budget is a detailed financial plan that shows estimated revenue and expenses (glossary) for a given time period. The budget estimates whether the business will make a profit in the future. Click on the icon to find out more. A budget provides a plan for activities to be undertaken in the business and a means of comparing actual figures to budget forecasts to determine if the business, department outlet has performed to expectations.

They can be very simple: for the production or sales of a specific product or service, or for a small business such as a sole proprietor. They can also be very complex, for example. for larger businesses with multiple outlets. or organisations with a number of sites, WC as a hotel chain. 

MCQ

1 A	8 A	15 A
2 D	9 B	16 B
3 A	10 D	17 D
4 C	11 B	18 A
5 B	12 B	19 D
6 B	13 C	20 D
7 C	14 A

Question 1

Balance Sheet

Profit and loss statement

Cash flow statement

Statement of Equity

Question 2

For the purpose of analysing the cost of goods sold, revenue and the expenses the financial budget is referred (Rose, 2016).

Question 3

The economic health of the market

Stability of the market

Competition in the market

The type of customers and suppliers in the market (Stea and Andresen, 2017).

Question 4

What is the ultimate goal of my company?

What are the needs of my company?

What is the cost of production of goods or services?

Question 5

What is the cash flow from the ordinary activities?

What is the cash flow from the investing activities?

What is the cash flow from the financial activities?

Question 6

Corporation Act, 2001

Taxation Administration Act, 1996

Payroll Tax Act, 1971

Workplace Gender Equality Act, 1971 (Hillson and Murray-Webster, 2017).

Question 7

The employer must pay a minimum 9.5% of superannuation to comply with statutory requirements of the company.

Question 8

The employer must refer to the accounts department for the compliance about the FBT, CGT and GST requirements (Stea and Andresen, 2017).

Question 9

It is a digital record keeping software that is used for maintenance of accounts for the company. Such type of software is used in providing a brief analysis of the company. Rosner, Hendrickson and Willett, 2015

Question 10

Bottles	Basic	GST	total amount
12	11929	3459.41	8470
			11929.57746

The GST amount is 3459.41

Question 11

Revenue	882200
GST	80200	9.090909
total Revenue	802000
Expenses	23560
Wages and interest	56640
	721800
GST Liability	65618.18

Question 12

A bilateral trade is an agreement between the countries which is made with an intention to promote trade between the countries by reducing the export and import tax production between the countries (Ren, Qiu, Wang and Lin, 2016).

Question 13

Incoterms is the name of the group

Question 14

The financial data by the software used by the company must be safe and secured.

The user interface of the software must be simple to operate.

The manager of the organisation must go through all the hidden costs that are mentioned in the software.

The manager of the organisation must go through about the after-sale services provided by the company (Subramanian, Gunasekaran and Gao, 2016 ).

Question 15

Is the rate of financial software being according to the budget made by the company?

Is there are any hidden costs of the company?

Does the software provide a high security of the data?

Is the user interface of the software being feasible to operate or not?

Question 1

Question 16

The goals of the company

A brief review about the available resources the company possess

By defining the fixed cost and variable cost of the company

By defining the cost of production of the company (Shkurkin, Sogacheva, Logvencheva and Khramova, 2016).

Question 17

A sales budget is an estimate which is used in the calculation of profits for the company. The budget is a difference between the cost of production and the cost used for selling the product.

Question 18

It is basically a summary of expected incomes and expenses of the company which can be used as method of effective planning for the company.

Question 19

The following are the four reasons which are important for maintain a record of resource allocation:

For the purpose of effective communication in the company

For the purpose of forming and implementing the decision-making process of the company

For the purpose of meeting the organisation goals of the company

For the purpose of meeting the quality needs of the company.

Question 20

By identifying the total number of resources of the company

By identifying the functions of resources of the company

By identify the timing schedule of the company (Wang, and Huang, 2017).By using various tools which helps in identifying the allocation of resources of the company

Question 21

The areas of the budget which are likely to affect are the salaries, research and the development and the training.

Question 22

It is important to circulate the budgets to the other managers and the supervisors so that a different perspective can help the organisation find out the new variances which the preparatory people of the budget forget to make.

Question 23

The cyber risk of data security

Geopolitical risk

IT failure

Frauds

Question 24

Five ways to prevent the misappropriation of funds at the workplace are

Instead of using the normal orders, the purchase orders shall be taken into consideration

Control cash receipts to manage the cash easily

With the assistance of the informal audits on irregular intervals the misappropriation can be controlled.

To keep a track on the business and to perform and manage the inventory and the security system is the best step (Rahimi and Kozak, 2017).

Install the security measures through the digital medium to track the unwanted transactions.

Question 25

It is basically a positive difference between the budgeted expenses and the actual expenses otherwise it will count for unfavourable.

Question 2

Question 26

1. a) Favourable as the expense are low and profit would increase
2. b) If the profit is below then unfavourable otherwise favourable because actual budget shall cater profits
3. c) Unfavourable as the fixed costs would occur despite the sales volume
4. d) Unfavourable as it will increase the expense cost

The review if the cash flow statements is necessary to get an idea of the payment of things which enables the business to run. The monitoring of the expenses such as the raw materials, employees, rent, and other operating expenses need a supervision to cater the variances that can affect the performance of the business (Wang, and Huang, 2017).

Question 28

The two operational issues due to which there is a requirement of the contingency plan are when the payroll clerk suddenly quits in the organisation and when the key suppliers go out of the business and the company loses the major vendors.

Question 29

The budgeted variable cost is $60000 and the actual variance cost is $50000, the discrepancy is due to the company managed to buy at the cheaper rates and used it more efficiently. To analyse the same the company needs to check the purchases bought (Stea and Andresen, 2017).

Question 30

Four principles to follow to ensure the accurate and the reliable audit trail are

Internal audit

External Audit

Segregate the tasks

Communicate to the top level department.

Question 31

Due diligence is a practice or an audit carried out in order to watch the potential investment or the product to confirm the facts and figures with the assistance of the financial records, plans and the reasonable care a person shall undertake before entering into an agreement with the other party (Rosner, Hendrickson and Willett, 2015).

The four qualities that are needed to demonstrate the financial probity are

The knowledge of the organisation’s needs shall be well versed

The qualification if the personnel shall fit with the requirements

The ability to develop the trust factor within the organisation

Impartial and the fairness is also one of the qualities.

Income statement

Balance sheet

Statement of Cash flows

Daily financial Report

Retained Earnings and owner’s Equity statemen

Question 34

The financial report includes the external financial statements such as income statement, balance sheet, statement of the comprehensive income, statement of the cash flows and the statement of the shareholder’s equity. In my response the diagrams reflect a better perspective yet the diagrammatic presentation of these statements is not possible as it carry of factors. Henceforth, it shall be avoided (Ren, Qiu, Wang and Lin, 2016).

Question 35

For prioritising the significant issues the three steps are

Record the issue which is of the relevant nature

Segregate it into the proper heads of the financial statements

Question 3

Communicate the issue to the management along with the previous results.

Question 36

The recommendations that can be given to the senior management are as follows

Short term business loans are approved warily in comparison to the long term loans and therefore the company shall focus on these loans as they total cost of capital can be less expensive in such a case.

A small business line of credit might be better option than a short term loan and dose not required the large cash amount in a go but provides the bolster for future unseen events (Ren, Qiu, Wang and Lin, 2016).

Question 37

The characteristics of an effective financial management is when the internal controls are implemented in a better manner, when the company are complying with the regulatory requirements, when the company has made the financial statements in a proper manner and in accordance with the accounting policies (Luxton, Reid and Mavondo, 2015).

Task 2

Question 1

Particulars				Maximum	Expected
Budgeted nights booked				10950	8760
Tariff Revenues				1314000	1051200
Less variable costs
Room servicing labour				219000	175200
Room servicing supplies				54750	43800
Gross profit				1040250	832200
Less fixed costs
Admin/reception salaries				180000	144000
Grounds and maintenance salaries				100000	80000
General manager salary				85000	85000
Utilities				90000	90000
Depreciation				140000	140000
				595000	539000
Net profit before tax				445250	293200
Less tax 30%				133575	87960
Net profit after tax				311675	205240

Question 2

Reviewing the previous financial data assists in the preparation of the budget helps to gain an understanding of the previous years and it also helps to analyse the variances if any the comparative performance can also be analysed.

Question 3

Yes in preparation of the budgets apart from the makers of the budget the top level management and the head of the different departments shall be involved so that they can give a clear picture of their respective department and the amount of the budget required for each department individually.

Question 4

The four types of information required to share are the financial statements, the sustainability policies that the managers and the supervisors are required to comply with and to also to comply with the accounting policies (Luxton, Reid and Mavondo, 2015).

TASK 2
	Particulars				BUDGETED	ACTUAL	VARIANCE	% VARIANCE	FAVOURABLE/UNFAVOURABLE
	Budgeted nights booked				8760	7665	1095	13%	Favourable
	Tariff Revenues				1051200	919800	131400	13%	Favourable
	Less variable costs
	Room servicing labour				175200	160965	14235	8%	Favourable
	Room servicing supplies				43800	41391	2409	6%	Favourable
	Gross profit				832200	717444	114756	14%	Favourable
	Less fixed costs
	Admin/reception salaries				180000	189000	-9000	-5%	Unfavourable
	Grounds and maintenance salaries				100000	105000	-5000	-5%	Unfavourable
	General manager salary				85000	87500	-2500	-3%	Unfavourable
	Utilities				90000	86000	4000	4%	Favourable
	Depreciation				140000	140000	0	0%	Favourable
					595000	607500	-12500	-2%	Unfavourable
	Net profit before tax				237200	109944	127256	54%	Favourable
	Less tax 30%				71160	32983.2	38176.8	54%	Favourable
	Net profit after tax				166040	76960.8	89079.2	54%	Favourable

Likely causes of variances

The major cause of the variance are due to the number of bookings of the room are low. Majorly the fixed costs have increased from the budgeted plan to the actual plan. The admin and the reception salaries have been increased from 180000 to 189000 due to new members in the staff are hired. Moreover the ground and the maintenance salaries have also been increased either due to any construction of a new room or due to repair of some machinery or any room. The biggest point is still the revenue which falls down by 131400 dollars and in terms of the percentage by 13%. Therefore, these are the major areas because of which the variances have occurred.

Question 4

Recommendations

Cross train the staff: the staff shall be cross trained to handle the different activities so that they are available for different departments when one or two existing staff is already absent.

Day to Day variations: There should not be any fixed schedule for the hourly employees and the overstaffing profits are wasted and therefore the labour standard shall be formed and scheduled and for each position in the hotel (Luxton, Reid and Mavondo, 2015)..

Utilities: Utilities normally account for 6% of the operating costs. So the expenses of the lighting can be solved using the LED lights which consume 75% less energy as compared to the normal lights.

Particulars			Budgeted price per unit	BUDGETED	ACTUAL	VARIANCE	% VARIANCE	Flexible Budget	VARIANCE	% VARIANCE	FAVOURABLE/UNFAVOURABLE
Budgeted nights booked				8760	7665	1095	13%
Tariff Revenues			120	1051200	919800	131400	13%	919800	0	0%	Unfavourable
Less variable costs
Room servicing labour			20	175200	160965	14235	8%	153300	-7665	-5%	Favourable
Room servicing supplies			5	43800	41391	2409	6%	38325	-3066	-8%	Favourable
Gross profit				832200	717444	114756	14%	728175	10731	1%
Less fixed costs
Admin/reception salaries			20.5	180000	189000	-9000	-5%	157500	-31500	-20%	Favourable
Grounds and maintenance salaries			11.4	100000	105000	-5000	-5%	87500	-17500	-20%	Favourable
General manager salary			9.7	85000	87500	-2500	-3%	74375	-13125	-18%	Favourable
Utilities			10.3	90000	86000	4000	4%	78750	-7250	-9%	Favourable
Depreciation			16.0	140000	140000	0	0%	122500	-17500	-14%	Favourable
				595000	607500	-12500	-2%	520625	-86875	-17%
Net profit before tax				237200	109944	127256	54%	207550	97606	47%
Less tax 30%				71160	32983.2	38176.8	54%	62265	29281.8	47%	Favourable
Net profit after tax				166040	76960.8	89079.2	54%	145285	68324.2	47%

Flexed Expenses

Room servicing labour

Room servicing supplies

Non-flexed Expenses

Depreciation

Admin Salary

General Manager Salary

Brief summary

The flexible budget prepared would actually allow the companies to roll back to their performances and this way the managers can easily find out the flex and the non-flex expenses that can be either increased or decreased accordingly. Moreover the budgets help to segregate the costs and improve the areas which needs more help than the potential ones.

			Actual cost	Super9.5%	payroll Tax 2%	Safe Work 1%	Total cost of labour
Room servicing labour			160965	15291.675	3219.3	1609.65	181086
Admin/reception salaries			189000	17955	3780	1890	212625
Grounds and maintenance salaries			105000	9975	2100	1050	118125
General manager salary			87500	8312.5	1750	875	98438

The calculation has been arrived after the calculating the specified rates of the super annuation, payroll tax and safe work on the actual cost and thereafter the sum total of all the costs are taken to determine the total labour cost.

			Number of staff	Gross pay Per annum	Gross pay per month	PAYG Deduction	Take home pay pp/pm	Total monthly net pay to staff	Total monthly PAYG payable to ATO
Admin/reception salaries			3	60000	15000	4508.08	10191.92	10491.92	10491.92
Grounds and maintenance salaries			2	50000	8333.33	2041.42	6125.24	6291.91	6291.91
General manager salary			1	85000	7083.33	1597.67	5343.99	5485.66	5485.66
Monthly total $					30416.66	8147.17	21661.15	22269.49	22269.49

Particulars				ACTUAL
Budgeted nights booked				7665
Tariff Revenues				919800
Less variable costs
Room servicing labour				160965
Room servicing supplies				41391
Gross profit				717444
Less fixed costs
Admin/reception salaries				189000
Grounds and maintenance salaries				105000
General manager salary				87500
Utilities				86000
Depreciation				140000
				607500
Net profit before tax				109944
Less tax 30%				32983.2
Net profit after tax				76960.8
GST COLLECTED			91980
GST PAID			27850
GST LAIBILITY			64130

The GST amount has been calculated using the rates specified in the question on the tariff revenues at the rate of the 10%. The GST paid is calculated on the basis of the expenses except the depreciation, and admin salaries. The GST liability is calculated as the difference of the two.

Impact of GST

GST also known as the goods and the services tax is the tax that is implemented on the goods and the services which needs to be paid to the government. This is the single tax for the entire organisation which helps not only to remove the cascading effect but also helps to remove the concept of the double tax. Earlier there were several other taxes which the customer was required to pay but now with the introduction of the GST, it enhances the profitability of the organisation and also reduces the taxation amount on the business.

The amount of tax paid by the customers will show the transparency among the expense and the income Cassidy, J. and (Cheng, 2017). From the above analysis it can be observed that the GST liability is calculated in the form of the GST collected and GST paid. Not only it improves the profitability it also revamps the cash flows by segregating the activities and assigning the individual amount of the tax to each activity.

References

Cassidy, J. and Cheng, A., (2017) Legislative Responses to GST Tax Avoidance in Australia and New Zealand: Lessons for China?. In 2017 International Conference of Chinese Tax and Policy: The Function of Tax in the New Wave of Economic Development in China.

Hillson, D. and Murray-Webster, R., (2017) Understanding and managing risk attitude. California: Routledge.

Klychova, G.S., Faskhutdinova, ?.S. and Sadrieva, E.R., (2014) Budget efficiency for cost control purposes in management accounting system. Mediterranean journal of social sciences, 5(24), p.79.

Luxton, S., Reid, M. and Mavondo, F., (2015) Integrated marketing communication capability and brand performance. Journal of Advertising, 44(1), pp.37-46.

Rahimi, R. and Kozak, M., (2017) Impact of customer relationship management on customer satisfaction: The case of a budget hotel chain. Journal of Travel & Tourism Marketing, 34(1), pp.40-51.

Ren, L., Qiu, H., Wang, P. and Lin, P.M., (2016) Exploring customer experience with budget hotels: Dimensionality and satisfaction. International Journal of Hospitality Management, 52, pp.13-23.

Rose, S., (2016) Australia loosens grip on third spot in world super rankings. Investment Magazine, (133), p.24.

Rosner, B., Hendrickson, S. and Willett, W., (2015) Optimal allocation of resources in a biomarker setting. Statistics in medicine, 34(2), pp.297-306.

Shkurkin, D.V., Sogacheva, O.V., Logvencheva, E.S. and Khramova, M.N., (2016) Modernization of the sphere of tourist and hospitality industry of the south of Russia as a growth factor of socio-economic stability of the region. International Journal of Economics and Financial Issues, 6(1S), pp.101-106.

Stea, V. and Andresen, J., (2017) The Fixed Budget: Outdated or Underrated?: How Swedish Privately Owned Companies Perceive The Fixed Budget And How It Is Used New York: Springer

Subramanian, N., Gunasekaran, A. and Gao, Y., (2016) Innovative service satisfaction and customer promotion behaviour in the Chinese budget hotel: an empirical study. International Journal of Production Economics, 171, pp.201-210.

Wang, J. and Huang, X., (2017) August. Routing school bus for better student learning. In Geoinformatics, 2017 25th International Conference on (pp. 1-7). IEEE.