Details of Assessment Term and Year 1, 2017 Time allowed 8 weeks Assessment No 2 Assessment Weighting 40% Assessment Type Assignment Due Date Week No. 2 Room TBA Details of Subject Qualification BSBFIM501 Diploma of Leadership and Management Subject Name Managing Finance Details of Unit(s) of competency Unit Code (s) and Names BSBFIM501A Manage Budgets and Financial Plans Details of Student Student Name College Student ID Student Declaration: I declare that the work submitted is my own, and has not been copied or plagiarised from any person or source. Signature: ___________________________ Date: _______/________/_______________ Details of Assessor Assessor’s Name Nadia Chowdhury Assessment Outcome Results Satisfactory Not Satisfactory Marks / 40 FEEDBACK TO STUDENT Progressive feedback to students, identifying gaps in competency and comments on positive improvements: _____________________________________________________________________________________ Student Declaration: I declare that I have been assessed in this unit, and I have been advised of my result. I also am aware of my appeal rights and reassessment procedure. Signature: ____________________________ Date: ____/_____/_____ Assessor Declaration: I declare that I have conducted a fair, valid, reliable and flexible assessment with this student, and I have provided appropriate feedback Student did not attend the feedback session. Feedback provided on assessment. Signature: ____________________________ Date: ____/_____/_____ Purpose of the Assessment The purpose of this assessment is to assess the student in the following learning outcomes: Satisfactory (S) Not yet Satisfactory (NS) Plan financial management approaches Implement financial management approaches Monitor and control finances Review and evaluate financial management processes Assessment/evidence gathering conditions Each assessment component is recorded as either Satisfactory (S) or Not Satisfactory (NS). A student can only achieve competence when all assessment components listed under Purpose of the assessment section are Satisfactory. Your trainer will give you feedback after the completion of each assessment. A student who is assessed as NS (Not Satisfactory) is eligible for re-assessment. Resources required for this Assessment Upon completion, submit the assessment to your trainer along with assessment coversheet Refer to the subject notes on E-Learning prior to responding to the tasks/questions Any additional material will be provided by Trainer Instructions for Students Please read the following instructions carefully This assessment has to be completed In class At home The assessment is to be completed according to the instructions given by your assessor. Feedback on each task will be provided to enable you to determine how your work could be improved. You will be provided with feedback on your work within 2 weeks of the assessment due date. All other feedbacks will be provided by the end of the term. Should you not answer the questions correctly, you will be given feedback on the results and your gaps in knowledge. You will be given another opportunity to demonstrate your knowledge and skills to be deemed competent for this unit of competency. If you are not sure about any aspects of this assessment, please ask for clarification from your assessor. Please refer to the College re-assessment and re-sit policy for more information. Question 1: Metropolitan Furniture (10 mark) Peter works in the accounts unit of the Metropolitan Furniture Manufacturing. He was asked to prepare a proposed budget for the forthcoming quarter. He consults with the sales manager and finds that: Estimated sales are as follows: February $265,000 April $290,000 March $255,000 May $250,000 June $280,000 In consultation with the production manager he estimates that the cost of goods sold is to be budgeted at 45% of the sales figure. The salaries are expected to be $65,000 per month. When sales exceed $260,000 in any one month, the sales team is entitled to an additional 5% commission on the excess sales over this figure. Other expenses are estimated to be $35,000 per month. The owner of the organisation is concerned about the cash flow which was not thought of before. The owner is of the opinion that the collection of cash from sales is slow and this could possibly lead to cash flow problems to the organisation. As Peter has never forecasted cash flow before he sets about collecting information on this. Peter estimates that 80% of the total sales are going to be cash sales where the bill is settled when the goods are purchased or delivered. 10% of the month’s sales settle the accounts owed in the month following sales. Others (i.e. 10% of the month’s sales) settle in the month after. Additional information for Cash Flow Statement: The organisation gets a month’s credit on its purchases. That is, the accounts for the purchases (COGS) made in one month is settled in the following month. All salaries are paid in the month as they are incurred. The additional commission is paid in the month after the month in which it was earned. Other expenses are paid in the month they were incurred. The bank balance at the beginning of the first month is estimated to be $40,000. Show the profit and loss calculations for the April, May and June Show the cash flow projection calculations for April, May and June What Peter is required to advise the owner of the organisation? Will the business adequate financial provision to pay tax? Why? If the cash flow statement and the P & L are productive, then what are the relevant people Peter needs to communicate if he establishes a business plan? If the P & L showing good profit trend and the forecasted cash flow statement returns positive results, then marketing and operational departments may tend to expand theirbudget and therefore the business may have cash shortage in future. How Peter can monitor financial performance on a continuous basis? Does Peter require advising the owner about any immediate change in the financial plan? Why? Answer (1): Profit and Loss calculations April May June $ $ $ Sales Less Cost of Goods Sold Gross Profit Sales Salaries Commission Other expenses Total expenses Net Profit Answer (2): Cash flow projections April May June $ $ $ Opening Cash Plus cash in: This month From last month From two months ago Total Cash available Lesscash out: Salaries Commission other expenses Stock Total cash out Closing cash balance Answer (3): __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ ______________________________________________________________________ Answer (4): __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ Answer (5): __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ Answer (5): __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ Answer (6): __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ Answer (7): __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ Question 2: Preparation of Cash Flow Statement (10 mark) Calculate the total cash inflows and cash outflows and the net cash position at the end of December from the following information: Use the space provided and show all line items. XYZ Pty Ltd. December 2012 Particulars Amount $ Cash receipts from customers 245,000 Cash paid to suppliers and employees 101,570 Interest paid 24,120 Income tax paid 25,910 Purchase of Subsidiary X, net of cash acquired 450000 Purchase of property, plant and equipment 350,100 Proceeds from sale of equipment 120,000 Interest received 22,550 Dividends received 25,654 Proceeds from issue of share capital 250,000 Proceeds from long-term borrowings 250,000 Payment of finance lease liabilities 50,000 Dividends paid 25,700 Cash and cash equivalents at beginning of period 530,750 Instruction for the students: Regular inflow and outflow is recorded under operating activities Cash inflow and outflow related to non-current assets are recorded under investment activities Cash inflow and outflow related to interest bearing transactions are recorded under financing activities. For each section add the inflows and then deduct the outflow. Operating activities: $ Net Cash flow $ Investment activities: Financing activities: Total Cash surplus/deficit Cash and cash equivalent at the beginning of the year Cash and cash equivalent at the end of the year Question 3: GST and Cash Flow Statement (10 mark) A company forecasts the following transactions during the next financial year which willaffect its cash flow. (All ATO dues and ATO credits are expected to be settled during theyear.) $ Cash sales, 10% GST not included Credit sales for year, including 10% GST Cash receipts in respect of credit sales — budget year Cash receipts in respect of credit sales — previous year Cash purchases, 10% GST not included GST payable to ATO GST input credit from ATO Wages Other payments, including 10% GST 90 000 186 000 150 000 11 000 80 000 10 000 20 000 110 000 44 000 Prepare a budgeted cash flow statement assuming that the opening bank balance was $30,200. Workings: Cash Receipts: $ $ Cash sales GST receipts on cash sales Credit sales - budget year Credit sales - previous year Total Cash receipts Cash Payments: Purchases GST payments on cash purchases Wages Net GST payable to ATO Other payments Total Cash Payments: Cash surplus/(deficit) Opening bank balance Closing bank balance Question 4: Cash Flow Statement (10 mark) Suppose, a business estimated its 3rd quarter cash collection i.e. $500,000 and during that time its cash payment for purchase is going to be $340,000, other expenses 150,000. The business will also have to pay back its previous loan of $100,000. The business estimated its cash balance at the beginning of the quarter 50,000 and it desires to maintain a cash balance of 60, 000 at the end. Required: Calculate how much finance it needs to maintain the closing cash balance. (i.e. how much cash it needs to borrow) Cash Receipts: $ $ Total Cash receipts Cash Payments: Total Cash Payments: Cash surplus/(deficit) Opening bank balance Total Cash available before borrowing from lender Money required to be borrowed to arrive at closing balance Closing bank balance 60,000