hi, please read the case study about Bang on bikes which is the 2nd file and understand it properly. then you will be able to work on the assignment.i,ve attached the assignment and the file name...

Bang on Bikes Assessment
Assessment 1: Written Activity
Task 1
1. What methods would you use to plan for financial management including:
A. How will you review and analyse in order to find information on previous profit/loss?
This entails doing a quality research work on the cause of Bang-on-Bikes is generating profit or a loss. You have to check where the profit is determined from so that you can replicate this and where the loss is so you can ensure the same error is not made the next year.
Finding the losses is crucial to ensure the ongoing viability of the business.
Profit may occur for various reasons. All you will need to do is a thoroughly research, these may include:
· Market monopoly
· Prices lower than competitors
· Competitor business closures
· High profit on each goods and services
· Current economic climate
The reasons for profit will depend on your product/service, on the industry you are in and the market in which you are trading.
The reasons for a loss in revenue can also vary greatly. This too will require extensive research and may include the following:
The poor managing of cash flow arising from:
· Considerable rise in inventory levels
· Poor credit control
· Increase in debtor period
· Bad and doubtful debts
· Poor accounting standards like late invoice submission
· Incorrect forecasting by management
· Unable to map the capital expenditure properly.
Lack of organization control resulting from:
· Unsuccessful business planning
· Unable to understand markets, costs and key target customers
· Unable to submit returns, consequential penalties, investigations and allowing customers superfluous discounts
· Wastage of time fending off creditors
· Wasted promotional expenditure
· Use of short term overdrafts facilities for long term capital possessions.
· Failure to take corrective measures when sales are significantly increasing
· Insufficient shareholder’s capital contributing to cash inflow problems
The loss of key trade accounts which causes reduction in turnover
Inadequate or inappropriate financing, including:
Thorough research into the reasons the organisation is in profit or loss can assist you in the future. Researching your profits will allow you to see what is working or is favourable for the organisation in its current market. Whereas, researching your losses will allow you to see any shortcomings or downfalls the organisation is facing and will allow you to rectify them before they become a major issue.
B. How would investigate the reasons for previous profit/loss?
The previous profit and loss can be investigated on the basis of the following:
1. Sales: Review of sales figure is the best way to improve and decide on the profitability. The sales for have increased on Y-O-Y basis. We can observe from the Bank on Bikes Pty Ltd sales figure that the sales have increased gradually from 2012/13 onwards till 2015/16. The rate of increase was (15174108-12474336)/12474336 * 100 = 21.64%.
2. Seasonality: There is no seasonality in sales as cycle sales in Bang-on-Bikes Pty Ltd is not seasonal but throughout the year.
3. Cost of goods sold: The COGS has increased considerably from 2012/13 till 2015/16. The rate of increase in COGS was (8799900-6860901)/6860901*100 = 28.26%. Therefore, we can observe that the rate of increase in cost incurred on manufacturing goods and services was much higher as compared to the rate of increase in sales. This must be reduced.
4. Gross Profit: The gross profit rate was (6914208 – 5613465)/5613465 *100 = 23.17% when compared with the gross profits of Bang-On-Bikes for the year 2012/13 to 2015/16.
5. Net Income: Net profit or Income is one of the factors to determine the success and sustainability of your business overtime. The increase in net income for 2015/16 compared to 2012/13 was (1019449 – 590254)/ 590254 *100 = 72.71%.
C. How would you Review business plan to establish critical dates and initiatives that will require or generate resources in the next financial cycle?
Research the data in the business plan to autonomously authenticate that its claims are in resonance.
Ensure that you note the dates and initiatives that will necessitate additional funds for resources so that you are prepared for extra outlays in the business.
For example:
There may be World Sports day coming up on 6th April’2020, so it means that your venue is booked out. This requires decorations, food and drinks arrangements, and gifts and discount offers and vouchers for the cycle shop, flower arrangements and advertising through newspaper, media and hoardings throughout Brisbane. Whilst it will generate more income it will cost more to set it up in the first place.
Always ensure you have no surprises as far as expenditure goes. You will be prepared for anything if you can predict your costs in advance.
Cash Flow is the evaluation of money flowing in and out of your business during a given time period. In an organisation, there are 2 ways those cash flows – Inflows and Outflows. In an perfect business cycle, the company should generally have more inflow than outflow.
Cash inflows are acceptance of cash within a business and can include:
· Compensation for goods or services
· Bank loan receipt
· Interest on savings account and other investments
· Shareholder investments in the form of debt and equity capital
· Tax returns in the form of refund
Cash outflows are cash disbursement and can include:
· Purchase of raw materials or equipments for making finished goods.
· Payment of wages, daily operating expenses and rents
· Loan repayments in the form of principal and interests
· Income tax, Goods and service tax and payroll tax and other taxes
· Purchase of assets
D. How would you analyse cash flow trends?
In the cash flow analysis we will check the following:
1. Cash flow from operations: Here we will observe whether the cash flow from operating activities is positive or negative. A positive cash flow from operation is expected for its smooth functioning.
2. Cash flow from investing activities: This will help us to determine the amount of investments being done in the purchase of long term assets and the amount which the company will get from sales.
3. Cash flow from financing activities: This reflects the amount of investments made in debt and equity by the investors of the company. This also includes the payment of dividend by the company and the redemption of shares and debentures on its maturity.
Therefore, after analysing the above factors from the cash flow statements, we should check the free cash flow from all the activities to distinguish whether the company’s cash flow is reflecting positive or negative. A positive cash flow means inflow of cash and will create a good impression in the minds of the stakeholders and will ultimately lead to increase in the profitability of the company.
E. What requirements might you have in relation to for compliance and liabilities for tax?
The below are the requirements for compliance and liabilities for tax:
1. A business activity statement must be submitted to the Australian tax office by Bang-on-Bikes to check the monthly, quarterly and annual (including GST return) financial transactions.
2. The business activity statement (BAS) is used to pay the Goods and service tax, withholding tax and other tax obligations. Hence, a BAS is automatically generated and provided by the Australian tax office as you register your business for an Australian business number and GST.
3. In Australia the financial year starts from 1st July to 30th June. Hence, Bang-on-Bikes are expected to file an income tax return statement within this period.
F. What types of software might you need for financial management?
MYOB (Mind your own business) is a software system used to input financial data, to generate reports and to interact directly with your accountant or financial planner for Tax related issues.
Xero is SaaS (Software as a Service) software. It can be used with the help of internet cloud through a standard browser. Xero provides free reporting and practice management software to partners that make organization’s accounting practice and bookkeeping transactions easily. It also helps to collaborate with the customers online through the single ledger which establishes a new type of working connection that goes past meeting compliance requirements.
QuickBooks: It is book keeping software that merges many accounting processes into a user friendly system. QuickBooks main function is to improve the use of multiple tables, tracking sheets and spreadsheets, necessary to document and preserve accounting tasks of a company. Accounting figures are also easily reconciled for tax purposes with QuickBooks.
2. Then discuss the steps involved in creating a budget including how you will:
A. Use previous financial data to determine allocations for resources
The budgeted plan of ‘Bang-on-Bikes’ states that there are 50 full-time and 50 part-timer staffs. 10 are permanent staffs who will access to the financial management system. The company plans to recruit more staffs within the next 3-5 years. They have an estimation to recruit around 200 full timers and 20 permanent staffs that will have access to the financial system.
B. Make informed estimates of new items for inclusion in budget
The sales breakup of the Bang-on-Bikes as budgeted are:
1. Road racers to be increased to 30%
2. Domestic flat bars by 25%
3. Kids bikes by 15%
4. Trick by 10%
5. Newly added E-bikes and trikes by 20%
C. Prepare budgets in accordance with organisational requirements and statutory requirements
Preparing a budget is an important task to base the requisite assumptions and predictions on actual data. Budgets for segments of the business's activities can be used to inform overall budgets.
When setting a budget for a workgroup ensure that:
· They belong to the same physical and organisational unit
· There is a team leader who is responsible for the entire unit
· The group is responsible for attaining the goal of a particular revenue or expense.
3. Then you will need to discuss the methods you will use to implement a budget including:
A. Circulation methods, including how you will make managers and supervisors clear about budgets, reporting requirements and financial delegation.
The below will be the methods through which the managers and supervisors will be made aware of budgets, reporting requirements and financial delegations:
1. Budgeting: The Bang-on-Bike’s individual department should focus on its core expenditure strategy and on how the financial resources will be deployed to deliver the budgeting strategy. Also it should focus on the income targets and the expenditure required. Check whether there is any outstanding expenditure commitment. Prioritization of activities in each department.
2. Allocating Budgets: The budgets must be allocated to the individual cost centers and also must be communicated to the relevant staffs. They department’s budget must be headed by a single staff and he must be made accountable and responsible for attaining the same.
3. Use of the budget and carry forward of the surplus balances: Close monitoring must be done by the various departments whether the allocated budget is utilized properly or not and if there is any surplus that should be carried forward towards non staff expenditure and non allocated projects.
4. Monitoring expenditure: Close monitoring must be carried on to verify the budgeted expenditure against the actual and also to identifying and adapting to the technological changes which has lead to the variations.
B. Risk management and check there are no opportunities for misappropriation of funds and that systems are in place to properly record all financial transactions.
Internal audit conducted by Klark Kent who is one of the boards of directors of Bang-on-Bikes Pty Ltd observed the below related to misappropriation of funds:
1. Discounts provided to customers are not correctly entered in the invoices.
2. The cash in drawer is not matching with the cash registers.
3. The timesheets overtime (OT) amounts were not properly signed by the concerned line manager.
4. Debtors’ reconciliation which will help to determine the company’s debt from the debtors is not done monthly.
5. Job roles and responsibilities are not clearly defined and planned and it is very difficult to identify the individual’s responsibility and liability.
C. Review profit and loss statements, cash flows and ageing summaries
Reviewing the profit and loss statements will help to depict the payment received and the expenses incurred at a particular point of time. This report must be prepared and monitored on a weekly or monthly basis to check whether there’s any discrepancy and take the remedial measures to overcome it. It should be arranged in harmony with the standard accounting guidelines of Australia and must be supported by correct invoices and documents.
Cash flow is the statement of inflow and outflow of cash from the business. The review must be done on the sudden rise in inventories, increase in receivables, bad debts, late invoicing, improper forecasting by the management and bad planning of the capital expenditure.
The ageing summaries should include the report of the outstanding money from the debtors and towards your suppliers. It consists of the list of owing customer invoices to determine which invoices are due for disbursement by the customers.
D. How to deal with contingencies
1. Setup a contingency planning committee who should have a plan to handle the disaster and a deadline to complete the project during and after the disaster.
2. Setting up meeting with the employees and discussing on how to properly deal with the disaster.
3. There must be plans prepared to make the business up and running even during disasters.
4. If any disaster strikes then, the committee should arrange to get shifted to a different premise with all amenities and facilities.
5. Request the committee to report throughout the planning process.
E. Maintain audit trails to ensure accurate tracking
The audit trials would include:
1. Signing of the timesheets of all the employees for overtime by the line managers.
2. Maintaining a cash book with properly numbered.
3. Using cheques in a sequential pattern in relation to the payments made by the company to its debtors.
4. Maintaining the invoices with proper discount rates marked in it.
5. Ensuring that the books of accounts and the third party bank statements are in compliance.
F. Compliance, due diligence and statutory requirements
1. Assist with decision making functions to ensure that the financial statements are kept in proper place and are in organized form.
2. Monitor the business performance based on sales, profits and operating margins.
3. A proper financial system will help in planning an effective budget.
4. It will help to prevent errors and frauds and safeguarding the valuable assets of the company.
5. It will help to determine whether the company should focus on debt or equity to...