ENS6152 Steel Design Assignment Help
Delivery in day(s): 3
In this assessment, you are required to calculate key financial ratios for a listed company and its competitor and interpret this information in the context of your allocated competitor and interpret this information in the context of your allocated competitor company over time.
criteria 
Marks 
The accuracy of data sourced and calculations performed for ratios and the cash cycle 

Correct calculations for net profit margin, asset turnover, current ratio, quick ratio and debt ratio 
2 marks for each ratio and total is 60 marks. Part marks can be allocated 
Correct calculations for cash cycle 
3 marks per year for possible 18 marks 
Demonstration of an understanding of the issues involved in effective ratio and cash cycle management of a company 

Relevant and accurate theoretical discussion is incorporated. For example, does the report provide a quality explanation of key concepts of the ratios and the cash cycle, their meaningfulness and issues relevant in making and implementing policy around these ratios and cash cycle including limitations from a theoretical point of view as proposed in chapter 8 of the textbook 
12 marks 
Assessment and recommendations are based on logic and evidence and ability to apply knowledge of the outcomes calculated 

Accurate interpretation/assessment of the company's actual calculated ratios and cash cycle figures and its components, on their own and in comparison with a competitor.

15 marks 
Recommendations clearly follow from the assessment of the current situation derived from ratios and the cash cycle 
15 marks 
Total of 120 marks available divided by 6 to equate to 20 marks. 
At 30 June 2018, this company had a bank balance of $26 500.
a. Prepare and manage monthly cash budget for the three months ending 30 September 2018.
Comment: This question is covered on pages 395397 section 9.5 of the textbook. On page 397 there is a similar set up covered at Step 4.
Landscaping Business Cash budget 

for 3 months ended 30 September 2018 


July 
August 
September 
ANTICIPATED RECEIPTS 



Fees 



Sale of surplus noncurrent assets 







Total receipts 0.5 marks per balance year 



ANTICIPATED PAYMENTS 



Salaries and wages 



Supplies 



New equipment 







Plants 





Total Payments 0.5 mark per balance year 



Excess (Deficit) receipts over payments 



Bank balance at beginning of month 1.5 per year 



Bank Balance at End of Month 1.5 marks per year 



b. The owners were wondering what the effect would be on the cash position if they did not buy the new equipment but instead took advantage of a new rental arrangement. The equivalent equipment would cost $10 000 per month under the rental arrangement. Redraft the cash budget to show the impact of the rental alternative. Based on the information available, should they lease or buy the equipment?
Based simply upon cash flow outcomes between part a and part b they should lease the equipment as this means no periods of negative cash flow as evidenced in part a.
2. The landscaping business plans to introduce various aged trees to their product range in 2018. They have provided the following information relating to its planned activities.
I year old 2 years old 3 years old 
Sales mix (250,000 units) 125,000 75,000 50,000 
Selling price $20 $28 $45 
Variable cost/unit 12 18 27 
Total fixed cost = $402,800 
a. Calculate the breakeven point in total units and units per product based on the 2018 data.

1 year old 
2 years old 
3 years old 
Total 
Unit sales 
125 000 
75 000 
50 000 
250 000 
1.Contribution margin $ 




2.Sales mix % 




3.WACM $ 




4. Breakeven point =
5. Number of units of each product to sell:
1 year old =
2 years old =
3 years old =
Comment: This is covered on pages 429 to 430 of the text under Break even analysis for multiple products.
B. Calculate the beforetax profit (loss) that would be achieved in 2018 based on the above data. This calculation relates to the information from question 2 only.
Comment: Can either use Revenue (Sales * selling price) – Expenses (costs) or Units * WACM – Fixed Costs.
C. Management is concerned about competition for some of its trees and wants to increase its sales of 3 years old trees relative to 1yearold trees. This initiative would increase annual fixed costs by $50 000 and alter the sales mix to 30 percent for 2 years old trees, 30 percent for 3 years old trees and 40 percent for 1yearold trees. On the available data, would you recommend the initiative? Show workings.

1 year old 
2 years old 
3 years old 
Total 
Contribution margin $ 




1.Sales mix % 




2.WACM $ 




3.Units 
100 000 
75 000 
75000 
250 000 
Before tax profit with new product mix = Comment: Can either use Revenue (Sales * selling price) Expenses (costs) or Units * WACM – Fixed Costs.
Comment: This is covered on pages 429 to 430 of the text under the Breakeven analysis for multiple products. The difference between a) and c) is simply the sales mix and the additional $50,000 in fixed costs.
Comment: If total units sold are held constant at 250 000 units the new product mix will be more profitable as sales of the product with the highest contribution, 3yearold trees, has been increased. This will become obvious if you recalculate Revenue (Sales * selling price) – Expenses (costs) or Units * WACM – Fixed Costs.
3. Deciding between two machines
Our landscaping business is now considering the purchase of one of two acceptable pieces of equipment. Each of these two pieces of equipment is expected to have individual advantages. The Office Manager who has calculated the information below is quite conservative and likes to rely on the Accounting Rate of Return (ARR) as the chief decisionsupport tool. The assistant office manager, on the other hand, is a new business graduate and has worked out the expected Internal Rate of Return (IRR) for the two items of equipment as shown below.
A. What does more financial information the company owner need to make a decision?
Comment: The minimum ARR and IRR are acceptable to use as a benchmark for comparison.
B. Would you as the owner rely only on this information to make a decision? If not, why not?
Comment: No, it would be desirable to also have NPV information to ascertain the wealthgenerating potential of the equipment.
C. If the calculated returns all exceed the entity’s required minimum rate, which design would you recommend to the owner? Why?
Comment: Equipment B. Even though the ARR is higher for Equipment A, the IRR is a more comprehensive measure and with the higher IRR it may have superior early net cash inflows and possibly lower risk.
Part 2
1. The following information relates to a landscaping business. At 30 June 2018, it had a bank balance of $26 500. Provided below are estimates for receipts and payments for the three months ending 30 September 2018.
A. Prepare a monthly cash budget for the three months ending 30 September 2018. 12 Marks.
B. The owners were wondering what the effect would be on the cash position if they did not buy the new equipment but instead took advantage of a new rental arrangement. The equivalent equipment would cost $10 000 per month under the rental arrangement. Redraft the cash budget to show the impact of the rental alternative. Based on the information available, should they lease or buy the equipment? 9 marks.
2. The landscaping business plans to introduce various aged trees to their product range in 2018. They have provided the following information relating to its planned activities.
I year old 2 years old 3 years old 
Sales mix (250,000 units) 125,000 75,000 50,000 
Selling price $20 $28 $45 
Variable cost/unit 12 18 27 
Total fixed cost = $402,800 
A. Calculate the breakeven point in total units and units per product based on the 2018 data. 15 marks.
B. Calculate the beforetax profit (loss) that would be achieved in 2018 based on the above data. This calculation relates to the information from question 2 only. 2 marks.
C. Management is concerned about competition for some of its trees and wants to increase its sales of 3 years old trees relative to 1yearold trees. This initiative would increase annual fixed costs by $50 000 and alter the sales mix to 30 percent for 2 years old trees, 30 percent for 3 years old trees and 40 percent for 1yearold trees. On the available data, would you recommend the initiative? Show workings. 15 marks.
3. Deciding between two machines
Our landscaping business is now considering the purchase of one of two acceptable pieces of equipment. Each of these two pieces of equipment is expected to have individual advantages. The Office Manager who has calculated the information below is quite conservative and likes to rely on the Accounting Rate of Return (ARR) as the chief decisionsupport tool. The assistant office manager, on the other hand, is a new business graduate and has worked out the expected Internal Rate of Return (IRR) for the two items of equipment as shown below.
A. What more financial information does the company owner need to make a decision? 2 marks.
B. Would you as the owner rely only on this information to make a decision? If not, why not? 2 mark.
C. If the calculated returns all exceed the entity’s required minimum rate, which design would you recommend to the owner? Why? 3 marks.
Total of 60 marks which will be divided by 4 to represent 15% of available marks for subject ACC10707.
Students face off various problems in completing this assessment such as understanding the complex problems of making references, prepare a cash budget, calculate profit & tax etc. Students can take help and guidance from our experts and get better grades in their assessments.
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