Delivery in day(s): 4
BSBFIM601 Manage Finances Paper Editing Services
The first step is to prepare a detailed plan and the timeline for the creation of organisational budgets for the financial year April 2016 to March 2017. In order to prepare this, it is very vital to understand the process which is involved in the budgeting process, they are stated as
Creation of policies and procedures for preparing the budget:This steps involves in understanding and creating the detailed procedures for the preparation, the estimated days to complete this is kept as 2 days
Developing budget committee which oversees the activities:The organisation need to create a budget committee to oversee the activities and task, which may take additional 2 days
Making assumptions for the budget:Once the committee is formed, the executives need to make the basic assumptions in creating the budget. This is considered as the vital step as it involves many statistical analysis and data forecasting to be applied in order to arrive at the assumptions, the estimated time period is 3 days
Creation of functional and other budgets:Once the assumptions is made, the group heads will create the detailed budget for their respective teams and submit the same to the committee, who will review them and state the necessary changes to complete the task. Any changes and amendments stated by the team need to be incorporated. This will take atleast 5 days to complete the entire task
Creation of master budget for the organisation:Once the team budgets are finalized the committee members will aim to consolidate the master budget which is for the entire organisation, this contains the projected income statement, financial position of the company etc. the time taken to complete the task is 2 days
Getting the approval from the management: After the completion of the master budget, the committee presents the budget to the top management for final review in order to check the overall consistency of the budget and to check the consistency between the budget and the stated objectives, this activity requires 6 days
Publish and look to implement the budget:When the final approval of the top management is given the same must be communicated to all group heads and must look forward to implement them.
Types of activities to perform the research
Start date of the activity
Expected completion of the activty
Days required to perform the activity
Creation of policies and procedures for preparing the budget
Developing budget committee which oversees the activities
Making assumptions for the budget
Creation of functional and other budgets
Creation of master budget for the organisation
Getting the approval from the management
Publish and look to implement the budget
The main goals of the organisation is to be the market leader in the retail segment of green and sustainable solutions for high quality products, in order to achieve this task the company has segregated its objectives into financial stability, market position and people. In the financial stability the company is mainly poised in increasing the sales by 15% year on year. Also , the firm is focused to have a profit margin of 15% for each year. The management has decided to reinvest 75% of the total profits back into the business for each financial year.
The company in order to maintain the market leader aims to provide personal sales attention to the customers and enable in providing personal level services to the customers, the firm tend to expand their sales through online retailing and phone stores. The future demand of the company is estimated that, the customers purchases atleast 16,000 items which is at the lower end of the product, the price is in the range between $500 to $750. These products are being marketed and sold in 150 different stores. Large corporate clients usually purchase two times in a year and the average purchase in the range between $10000 to $15000, whereas the VIP customers purchases 1 high end items and nearly 5 to 10 low end items, with the estimated purchase of more than $10,000.
With these anticipated demand and the expected price, the company forecast the sales of $150 million in the year 2015 to 2016.
Net profit margin
Net profit ratio
Cash flow return on assets
Return on owners equity
From the analysis it is noted that the overall profit margin and the net profit margin is at 9.06%, and net profit ratio at 10.23% This is very low when compared with the budgeted estimate of 15%. Also, it is noted that cash flow return on assets is 0.34 and the return on owners equity is 0.37.
Horizontal analysis of greatest impact
payment to suppliers
other staff related expenses
From the overall horizontal analysis between 2016 and 2015 it is noted that the net income has drastically down by 27%. The company has made saving in expenses mainly from salaries, marketing management, accommodation, communication etc. the total operating expenses were down by 23%. However due to the fall in the total income, the earnings before interest & tax and earnings before tax is less by 49% when compared with the previous year
payment to suppliers
From the variance analysis it is noted that the actual sales is less than the budgeted sales by 2.86%. However, the payment to suppliers expenses has increased by more than 48%,the main reason is due to the changes n the payment agreements with the suppliers which has been advanced by 30 days and due to this the actual EBIT has affected the entire cash flow and the overall variance between the budgeted and actual were down by more than 68%. The salaries is also affected mainly due to lower full time and part time employees in the month of February
Organisational cash flow
From the cash flow statement it can be stated that the company is maintaining a healthy receipts flow, through there is a little low in the cash inflows in the month of April, the company can manage the overall cash held. However, it is noted that in the month of March 2016, the cash available is in negative, this is mainly due to the capital purchase decision.
The company must focus in enhancing the sales and enable in generating more receipts, when compared with the budgeted plan the overall sales is very low. Therefore the company must involve in increasing the sales and profitability
Profit & loss
payment to suppliers
other staff related expenses
Statement of cash flows
payment to suppliers
Cash in hand
Cash and bank deposits
Other current assets
Total current assets
Plant & equipment
Total non-current assets
Risk management plan
The risk is generally stated as the event which may impact the company in achieving the overall goals and the objectives. The risk analysis will enable the organisation to understand the various risk which affects the business and the steps the top management need to take in order to minimize the risk. The risk evaluation enable in comparing the risk and take measures and methods by which it has to be dealt with. The risk management of the company is mainly involved in complying to various legal requirements, ensuring that the risk is effectively managed. The top management is mainly responsible for providing the appropriate recommendations on the risk management policies and procedures.
The main context of the risk management policy is to enable in identifying the risk, rating them based on various aspects, employing risk control measures and monitoring & reporting. The risk management committee s mainly responsible for overseeing the risk management policies of the organisation and take steps in implementing them. The employees of the organisation should apply proper risk management policies while performing their task. There are various aspects of risk which will impact the business, some of them are classified as : Death or injury of the employees, financial loss, material loss, damage to the assets of the company, damage to the physical environment and any failure to meet the regulatory requirements.
Identification and analysis
Grade A: This states the risk likelihood which will occur regularly. There may occur some complaints from the customers, the news published in the local media which will impact the organisation. These events tend to happen even when the risk management policies are in place. The expected can be classified as the activities which can possess the probability of more than 80%. This states that there is a high chance of occurring the event
Grade B:The second stage is mostly probable. There may be minor spill incident, pollutant contained and cleaned up. There may be organisational breach which may not specify the legislative and regulatory issues. The next grade which is termed as probable can be stated as the probability of occurring of more than 50% but less than 80%.
Grade C: The third stage is the possible occurrence, which may be like accidents or other issues. The probability of occurring of such event is that the probability is more than 20% but less than 50%
Grade D: The fourth stage is the occurrence of improbable, there may be major fines due to breach of some issues. In this stage the probability of occurring of this event will be in the range of more than 5% to 20%
Grade E:Loss of life of an employee may not occur and it is very rare to occur. The company will take appropriate measures on these kinds of risk so that they can minimize the occurrence and eliminate them completely. The organisation should implement steps to manage the risk very effectively. In this the probability of occurring the event can have the probability of less than 5%. This shows that this event may not even occur during the entire life of the organisation.
Risk categorization table
Level of risk
The employees may not take adequate precautionary measures while working
Very minor injury
Low: Consequence: Small
May lead to death or temporary disability or permanent disability of the employees
The company need to pay compensation and may face many legal and regulatory issues
Very high Consequence: Catastrophic
Serious injury to the employees
The company need to compensate the employees for the loss, suffer huge financial loss and have regulatory impact
High with major consequence
Risk control treatment
In case of major accidents, it will result in casualty of many employees, the organisation will face huge loss of the assets, pay claims and compensations, replace the asset, undergo various legal and regulatory issues
Providing adequate safety and precautionary tools to employees
The employees can use these safety gears before working which will avoid any major accidents
The employees may not wear them during the working hours
The danger and other sign can be displayed in the work area. This will enable the employees and other to take precautionary care while performing their activities
The employees may ignore the sign or the paint would have worn out and it is not properly displayed
The impact may lead to facing huge loss for the organisation, may need to face legal battle, settle the claims of the employees in the labour court and will affect the profits of the organisation. Also, due to these reasons the price of the stock may fall drastically and the insurance company will ask for more premiums due to the accidents etc.
Top management, employees, Security officer, Managers, Labour council, Other stakeholders
Due to the risk treatment the organisation can adequately reduce the overall risk involved in the work activities, have insurance plan for the employees so that in case of uncertainty financial claims can be received as compensations
Risk management plan for misappropriation of funds
Each organization has its own unique goals. These goals are the reason for starting a business, but also the future development. To identify the risks in the company deep understanding of the purpose of the agencies have to risk managers. When risk managers to fully understand the objectives of the organization, so that they can rank the threats and opportunities facing the company in the future and create solutions or risk prevention in the future organizations. An example would be a company's goal is to compete globally risk managers will create a plan to help achieve the goals of the organization, but also for the prevention of risks associated, such as political laws and other countries or consumer demand for products and services.
exposure to risk identification
Exposure losses, the loss of financial assets, physical, human lives and loss of reputation. This is the danger that risk managers were able to identify when assessing the potential risk to the company. These losses can be avoided if proper identification of risks takes place before an adverse event occurs. The loss of financial assets generally attributed to the decision of the responsibility for the failure and repression. The loss may be due to bad investments in intangible assets, property issues of land and natural disasters that can damage property. The human cost associated with death, injury or dismissal of employees, which could affect the company's operations. Reputation is very important that the company is active, if consumers trust product and service organizations that improve reputation, but otherwise can lead to a loss of goodwill.
Measuring the same meaning
An organization not only determine the risk or loss, but also to measure the impact of these risks to the organization. These can be achieved in different ways to assess the risk of a customer survey and regrets reports. This research will help identify risk management for the areas where you need to change and improve, as we say in the study of patients complained that the rough leaders nurses should evaluate the staff of the department and try to make the necessary adjustments to increase the satisfaction of customers, avoiding human loss . The second reason is that accident reports are usually used in the report risks produced by a common tool for determining the staff, which includes events occur in normal daily activities. further screening of genetic information requires compensation for employees, concessions and agreements, informal relationships and meetings with leaders and determination and its effect on how the body can be used for employee risk.
The acceptable level of variation in order to achieve a specific objective of the organization known as risk tolerance. This is a percentage or level at which the risk is accepted by the body, but there are some limitations that still allows the body to function.
Risk management of Biz Ops
The first step is the identification of the risk, the stated risk is the misappropriation of funds. The level of likelihood is the possible occurrence.
The level of impact of the risk is very high, as it leads to theft of the funds and the firm may not able to retrieve it.
The risk categorization matrix can be arrived as a major since the level of impact is large and the level of likelihood is possible, this has stated that the category as “High risk”. The company need to implement various steps in order to minimize the risk of misappropriation of funds.
The risk categorization table can be stated that
Level of risk
Loss of funds and may not able to recover
The firm’s online bank accounts can be hacked.
High and the consequence can be Catastrophic
In order to control the risk, the company needs to implement various strict measures in order to ensure that the funds are allocated properly with proper authorization. Therefore it is important to note that before accepting or making payment, the company should ensure that there is a three level authorization made. First level is the employee or the individual who is making or receiving the payment, the same must be verified and checked by his supervisor or manager and finally it must be cross verified by the financial controller
Only after passing through three level check the payment need to be disbursed.
According to the goal of the organization's risk managers should create an initial list of companies that may affect the achievement of the target organisms. These events can be obtained from the organization or external environment. The internal factors such as political organizations and procedures, human resources, information technology and internal sources. While external factors related to political, economic, legal, sociological and environment. After a review of these factors, the risk manager is classified as a threat or an opportunity for the organization. written annual reports, internal and external factors provide risk managers with a number and a percentage for immediate action hazards. The assessment of the residual risk will help to evaluate the efficient and proper risk management, it is acceptable tolerance level of the organization of risk. This is the internal checks and balances are still in place within the organization. Therefore, we do not know what the basic risk management in organizations reached. Risk management is not a simple task to find and resolve, but this is a systematic and scientific way to identify, implement and evaluate the impact of the risk to the organization. The organization has always faced the risk of being able to move and not stagnate in the current situation it is inevitable that professional risk management organizations to understand the purpose of the statement and create a high-risk treatment plan. It is also important to assess the effectiveness of the risk management plan and ensure that vulnerabilities are changed for a better result in the future.
The following can be considered as the checklist of activities which need to be used for analyzing the effectiveness of budgeting and financial planning procedures
1. Assumptions of the budgeting and planning procedures is stated clearly
2. Definition of budgeting policies and procedures are carefully carried out
3. Budget committee communicates policies and guidelines
4. Classification of budget cost centres
5. Specifying the limiting factors
6. Application of statistical methods for forecasting
7. Preparation of functional budgets
8. Required changes and updates are properly incorporated
9. Preparation of master budget
10. Communicating to the top management
11. Getting the approval from the top management
12. Publish the budget
The following is the detailed checklist for auditing
1. Unique userid and login is created for financial management software
2. The system supports the software requirements
3. Individuals cannot share the password
4. Funds are disbursed only after 3 reviews
5. Proper signatures are received before disbursing the funds
6. Funds are paid only in checks and online transfers
7. Safety of the bank accounts is maintained effectively.
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