Analysis for Finance for Managers Paper

Analysis for Finance for Managers Paper
BRIEF
To demonstrate your understanding of the chapters presented, you are required to complete the following parts to form your analysis for Finance for Managers.
You should submit all three parts of your assignment as a written assignment. Submit any spreadsheet workings for Parts 1 and 3 as a separate attachment. Your spreadsheet supports your written assignment. It does not replace any part of it.
ASSIGNMENT INFORMATION
Part 1: Financial Statements
Notes:
• Although the statements are all for the same company and same period, the values for some items may differ between cash flow and P&L due to timing of actual cash out/inflows. Analysis for Finance for Managers Paper.
• Some values in the statements will require calculation.
• Some items could be interpreted in more than one way. State your assumption and account for the value in the appropriate way based on the assumption you have made.
1.1 Construct a balance sheet for ABC Pty Ltd for the year ended 30/06/2019 from the following jumbled list of accounts. All values are in $000.

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Accounts Payable 270
Preference Shares 260
Vehicles 235
Tax Liability 90
Cash 200
Accounts Receivable 235
Ordinary Shares 690
Bank Loan 320
Inventory 370
Plant and Equipment 310
Retained Earnings ?
Land and Buildings 1210
Bank Overdraft 330
Corporate Bonds 430
1.2 Construct a profit and loss statement for ABC Pty Ltd for the year ended 30/06/2019 from the following jumbled list of accounts. All values are in $000.
Closing Inventory 257
Wages -117
Purchases 554
Sales 992
Interest -27
Dividend Received 50
Utilities -57
Loss from Sale of Machinery -10
Opening Inventory 272
Rent -82
Tax -10
1.3 Construct a statement of cash flows for ABC Pty Ltd for the year ended 30/06/2019 from the following jumbled list of accounts. All values are in $000. Analysis for Finance for Managers Paper.
Repayments of Long-Term Borrowings 24
Wages Paid 130
Cash Paid to Suppliers 240
Proceeds from Long-term Borrowings 155
Interest Paid 12
Taxes Paid 8
Interest Received 10
Dividend Paid 26
Proceeds from Issue of New Shares 85
Cash Received from Customers 460
Purchases of Plan, Property and Equipment 350
Cost of Buying Back Shares 31
Proceeds from Sale of Plan, Property and Equipment 80
Dividends Received 9
Payment of Finance Lease Liabilities 48
Cash at the beginning of the year 270
Part 2: Financing – Risks and Returns
2.1 When considering potential sources of financing for a business, list five features/characteristics that one should consider and provide brief discussion on why these characteristics are important.
2.2 List three sources of financing suitable for a start-up firm and explain why they are most suitable for a firm at this stage of its lifecycle.
2.3 List three sources of financing suitable for a growing-expansion firm and explain why they are most suitable for a firm at this stage of its lifecycle.
Part 3: Cash flow Estimation and Project Evaluation
Refer to the following information to form your responses to questions in Part 3 ABC Pty Ltd is considering a new project. Your task is to determine whether the additional revenues generated by the project will justify the investment.
 A feasibility study will be conducted to determine whether or not the project is technically feasible at a cost of $20,000.
 The project will last for 5 years and will require the purchase of equipment costing $200,000.
 The equipment will be depreciated on a diminishing value basis at the appropriate rate according to Australian Tax Office rules to a book value of zero for tax purposes. Analysis for Finance for Managers Paper.
 The equipment is expected to have a salvage value of $10,000.
 The project will increase the company’s revenue from $250,000 per year to $370,000 per year. Operating expenses are always 60% of revenue.
 The project will require an increase in net working capital of $25,000.
 It will cost $20,000 to shut down the project, including removal of buildings and equipment.
 The corporate tax rate is 30% and the firm’s WACC is 8.90%
 Assume all terminal cash flows of the project will happen at the end of Year 6.
3.1 What is the rate of diminishing value depreciation (in terms of % per annum)?
Complete the following in a table showing the dollar amount of depreciation and book value each year.

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Year 1, 2, 3, 4, 5
Opening book value $200,000 for Year 1
Depreciation
Closing book value $0 for Year 5
3.2 Calculate the firm’s additional EBIT in Years 1 to 5 and its after tax incremental earnings by completing the following in a table.
Year 1, 2, 3, 4, 5
Revenue
Expenses
Depreciation
EBIT
Tax
After Tax Earnings
3.3. Calculate the firm’s additional free cash flows in Year 0 to 6 by completing the following table. Free cash flows are to be calculated from after tax earnings using the indirect methods.
Year 0, 1, 2, 3, 4, 5, 6
After Tax Earnings
Depreciation
Feasibility Study
Initial Outlay
Increase in NWC
Profit / loss on salvage
Salvage Value Tax
Shutdown Costs
Shutdown Cost Tax
Free Cash Flow
3.4 What is the Net Present Value (NPV) of the cash flows generated by the project? Based on the NPV, should the project be implemented?
3.5 Discuss alternative project evaluation measures and their pros and cons.
CONSIDERATIONS
Upon review of my essay, have I demonstrated critical thinking aligned with my chosen analysis task option?
Specifically:
• Have I Identified and defined the academic concepts related to the analysis task using current academic literature?
• Have I demonstrated an analysis of these relevant concepts and topics?
• Have I demonstrated an ability to apply and integrate the relevant concepts and topics in the analysis; have I provide evidence or examples?
• Have I developed an argument and demonstrated understanding of differing points of view?
• Have I demonstrated understandings of the relevance of the chosen concepts to the overall concept of management?
• Have I demonstrated understandings of considerations and implications for contemporary management practice?
• Did I produce a quality essay? Consider presentation, referencing and a balance between academic and industry sources. Analysis for Finance for Managers Paper.

 
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Accounting Assignment Paper

Accounting Assignment Paper
The next step in planning for your new business is to analyze the cost behaviors and systems of your industry and conduct the relevant financial calculations to determine appropriate costing solutions.Accounting Assignment Paper.  In this milestone assignment, you will conduct a break-even analysis to determine your target profits and the selling price you plan to use to achieve these profits for each product.

Prompt

Use information from Milestone One and the provided Milestone Two Market Research Data Appendix to conduct a cost-volume profit analysis. Complete the “Contribution Margin Analysis” and “Break-Even Analysis” tabs in the Project Workbook that you used for completing the Milestone One assignment.

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Specifically, you must address the following rubric criteria:

  • Contribution Margin. Determine your contribution margin per unit in the “Contribution Margin Analysis” tab.
    • Choose a sales price for each product.
    • Calculate the contribution margin for each product based on your sales price and the variable cost for that product. Show your work using calculations to the side of the table or using appropriate formulas in the table.
  • Break-Even Analysis. Use cost-volume-profit (CVP) analysis to determine your break-even points for achieving your target profits in the “Break-Even Analysis” tab.
    • Determine the break-even points for each product. Show your work using calculations to the side of the table or using appropriate formulas in the table.
    • Determine break-even units for the suggested target profits for each product. Show your work using calculations to the side of the table or using appropriate formulas in the table. Accounting Assignment Paper.
Guidelines for Submission

Submit the Project Workbook with the “Contribution Margin Analysis” and “Break-Even Analysis” tabs completed. This file should be completed and submitted using Microsoft Excel.

Milestone Two: Market Research Data

You have conducted some market research for style and size of products you want to use to launch your business. The market research has indicated the following sales price ranges will be optimal for your area depending on style of products you choose to sell:

  • Collars
    • With pricing at $20 per collar, you can expect to sell 30 collars per day.
    • With pricing at $24 per collar, you can expect to sell 25 collars per day.
    • With pricing at $28 per collar, you can expect to sell 20 collars per day
  • Leashes
    • With pricing at $22 per leash, you can expect to sell 28 leashes per day.
    • With pricing at $26 per leash, you can expect to sell 23 leashes per day.
    • With pricing at $30 per leash, you can expect to sell 18 leashes per day. Accounting Assignment Paper.
  • Harnesses
    • With pricing at $25 per harness, you can expect to sell 25 harnesses per day.
    • With pricing at $30 per harness, you can expect to sell 22 harnesses per day.
    • With pricing at $35 per harness, you can expect to sell 20 harnesses per day.

Additionally, you will need to compare your break-even points for the following target profits for each area of your business to determine your prices:

  • Collars
    • Break-even
    • $300 target profit each month
    • $500 target profit each month
  • Leashes
    • Break-even
    • $400 target profit each month
    • $600 target profit each month
  • Harnesses
    • Break-even
    • $500 target profit each month
    • $650 target profit each month
ACC 202 Milestone One: Operational Costs Data Appendix

You plan to open a small business for manufacturing pet collars, leashes, and harnesses. You have found a workshop space you can use for sewing your products. After some research and planning, you have estimates for the various operating costs for your business.

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The total square footage for the sewing rooms is 1,500 square feet broken into three areas (500 square feet each). You have taken out a loan for start-up costs, and the monthly payment is $550; it goes into effect immediately and should be accounted for in your costs. You will also collect a modest salary for the first year of $500 per month; remember to divide evenly among the services. Accounting Assignment Paper.

Salary and Hiring Data
  • One collar maker, who will be paid $16.00 per hour and work 40 hours per week
  • One leash maker, who will be paid $16.00 per hour and work 40 hours per week
  • One harness maker, who will be paid $17.00 per hour and work 40 hours per week
  • One receptionist, who will be paid $15.00 per hour and work 30 hours per week

 

Other Costs
  • Rent: $750 per month; allocate based on square footage
  • High-tensile strength nylon webbing—$12 per yard of webbing
    • 3 collars per yard of webbing
    • 2 leashes per yard of webbing
    • 2 harnesses per yard of webbing
  • Polyester/nylon ribbons—$9 per yard of ribbon
    • 3 collars per yard of webbing
    • 2 leashes per yard of webbing
    • 2 harnesses per yard of webbing
  • Buckles made of cast hardware—$0.50 per buckle
    • 4 buckles used per collar
    • 3 buckles used per leash
    • 8 buckles used per harness
  • 3 industrial sewing machines at $3,300 each for a total of $9,900; depreciation is $165 per month (5-year life)
  • Utilities and insurance: $600 per month; allocate based on square footage
  • Scissors, thread, cording: $1,200
  • Price tags: $250 for 2,500 ($0.10 each)
  • Office supplies: $2,400 or $200 per month
  • Other business equipment: $2,000
  • Loan payment of $550 per month
  • Salary drawn of $500 per month

Accounting Assignment Paper

 
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How important is it to trace costs appropriately?

How important is it to trace costs appropriately?  Explain.

As you are beginning to think about the importance of tracing costs appropriately, please consider the differences between variable costing and absorption costing.  What implications does each of these have on such things as financial reporting of profit and pricing your products for the marketplace?

 
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