Financial Analysis * The tax rate is approximately 30% 5.618.8=29.79% 5.418.1=29.83% 5.418=30% * Based on the industry average, a sports store of similar size should be making around $21000 or 67% more profitable than Rhodes’ store. * Assuming the lots are of the same size and bear the same tax burden, if the unused lot is sold off property taxes would be reduced by $6000 at the 2008 rate. All else being equal, this would increase net profit by 6000×0.30=$1800, for a total of $14400. Profit as a percentage of sales would increase from 2.1% to 2.4%. * Of the $18400 Rhodes made in mortgage payments last year, $8000 was interest.
Without setting a cash budget for example, spending five dollars a day on lunch seems fairly reasonable. However, upon setting a cash budget to account for regular annual cash expenditures, this seemingly small daily expenditure comes out to $100 a month which may be better spent on other things. 3) What are the five basic principles of cash management that a company can follow in order to improve its chances of having adequate cash? 1- Increase the speed of receivables collection; by lowering the average collection period for funds, you will have more money to use for operations or investing. 2- Keep inventory levels low; maintaining the proper levels of
How can different sources of funds help a business achieve its financial objective? Businesses usually have five main financial objectives. They are efficiency, growth, solvency, liquidity and profitability. Sourcing different sources of funds and interdependence with other key business functions (operations, marketing and human resources) is the way that businesses achieve these goals. It is important that these funds match their needs, for example, short-term funds to match short-term goals.
The executives team decides a direction in which the company will place into a master budget. This new budget will include the sales, production, materials, labor as well as administrative, fixed assets and overhead. The budget will also show the current income statement, balance sheet and forecast of cash utilized. The goal of having a budget is that it allows for improvement in efficiency, assignment of responsibility, providing direction for the company, and helps the company plan and controls its financial status. Budgetary Concerns for Competition Bikes There are several areas of concern
BSBFIM501A - Manage budgets and financial plans Written / Oral Questions 1. Why do organisations need accurate and timely financial information? What information is required to manage the organisation’s finances? Who is usually responsible for an organisation’s financial management? -Financial management ensures that a business is monitoring their finances.
Other fixed and variable costs are 40 per cent which allows 10 per cent profit per dollar. An increase in marginal costs will affect marginal revenue. Fortunately for the Snack Cart, the marginal cost does not greatly impact marginal demand. Dedicated customers are willing to pay the price in order to have their favorite products available in the manner they have grown accustom. The purchase price of supplies and products does not fluctuate so significantly that marginal revenue is affected unless there are weather-related events which create a decrease in supply.
The information is passed onto the staff and then plans are made on how best to manage the changes. If further training is needed it is put into place. Review of the Accounting Function System Requirements The Credit Control function of Chic Paints must be able to ascertain if potential customers are a good credit risk and be given an appropriate credit limit. The systems in place need to be able to produce invoices on time and chase debts according to the company policy. The risk of bad debts must be minimised to enable the company to carry on being profitable.
George is aware you are in an MBA Managerial Finance class and comes to you for advice on his working capital practices. More specifically George asks: 1. How you would describe my working capital practices, including my methods of capital budgeting analysis techniques? 2. What are potential pitfalls in my Capital Budgeting practices that I should be aware of?
Budgeting is the foundation of every financial plan of operation. A sound budget comes from understanding how much money you have, where it goes, and then planning how to best allocate those funds for a company. A financial budget is a financial plan that is structured to note projections on incomes and expenses on both a long and short term basis. Budgets incorporate budgeting strategies for a period of at least one year, although in some case organizations may prepare a budget to cover from anywhere to two to five years at a time. (Tatum, 2012) There are numerous reasons that a budget is important.
THE CO-OPERATIVE BANK: CASE ANALYSIS Q1: What new issues, if any, arise when applying analysis to service business? Activity Based Costing (ABC) is a costing method that defines a firm’s activities and then assigns costs or overheads based on those activities. For example in the case, the activities of Co-operative Bank as illustrated in Exhibit 5 are providing ATM services, issuing cheque books, handling customer inquiries etc. Therefore costs incurred by each cost centre or resource pool are allocated on the basis if those activities. By applying activity based costing the bank was able to estimate the cost of an additional service such as financial advice services.