FNSACC511 Provide financial and business performance information

Student Name		Student Number
Unit Code/s & Name/s	FNSACC511 Provide financial and business performance information
Assessment Name	Assessment 2	Assessment Task No.	2 of 2
Assessment Due Date		Date submitted
Assessor Name
Student Declaration: I declare that this assessment is my own work. Any ideas and comments made by other people have been acknowledged as references. I understand that if this statement is found to be false, it will be regarded as misconduct and will be subject to disciplinary action as outlined in the TAFE Queensland Student Rules. I understand that by emailing or submitting this assessment electronically, I agree to this Declaration in lieu of a written signature.
Student Signature		Date

Instructions to Student	General Instructions: This is an open book assessment and all resources may be used including the prescribed textbook and appropriate internet sites. There are five (5) questions in this assessment. You are required to: Complete and submit all assessment tasks by the due date. Answer all questions in this booklet. Write your responses in the blank pages which follow each question. Write your name and student number in the space provided on this page. Please ensure you reference all external sources of information, following APA or Harvard referencing systems, guidance available through the TAFE Queensland Library Services https://library.tafeqld.edu.au/friendly.php?s=referencing. Present all responses in a professional manner as this assignment presumes that you are working in a financial consulting firm. Read and analyse each question to formulate an informed response. Respond to each question using appropriate detail, working and calculations as though you are providing information to a client who does not have a thorough knowledge of business finance. One or two sentence answers will not be accepted Do additional research for answering the theory question. Please refer to the Supplementary Resources first, and if not enough , you can check the internet on appropriate educational sites Save your document regularly to a USB or your computer as you work through this booklet. Save this document to your computer or USB once all questions are answered and then upload the document at the Assessment Centre. At Diploma level you are required to supply comprehensive answers to theory questions. One to two sentences is not sufficient. Ensure all aspects of the question are addressed and correct numbering is maintained. Information / Materials provided: Assessment booklet with questions 1-6 Templates “Queensland Fruits” Assessment Criteria: To achieve a satisfactory result, your assessor will be looking for your ability to demonstrate the following key skills/tasks/knowledge to an acceptable industry standard: Knowledge of the key requirements of relevant corporations and consumer legislation? Explain what a business plan is? What the characteristics of a business plan are? Provide at least five reasons for writing a business plan? Explain budgetary controls and the effects of different financing options on cash budgeting and risk Design and present a client comparison financial performance report using Excel( attaching the excel File) . Number of Attempts: You will receive up to two (2) attempts at this assessment task. Should your 1st attempt be unsatisfactory (U), your teacher will provide feedback and discuss the relevant sections / questions with you and will arrange a due date for the submission of your 2nd attempt. If your 2nd submission is unsatisfactory (U), or you fail to submit a 2nd attempt, you will receive an overall unsatisfactory result for this assessment task. Only one re-assessment attempt may be granted for each assessment task. For more information, refer to the Student Rules.
Submission details (if relevant)	Insert your details on page 1 and sign the Student Declaration. Include this form with your submission. Due Date: Refer to Unit Study Guide and/or Learning Management System Assessment to be submitted via TAFE Queensland Learning Management System: Connect url: https://connect.tafeqld.edu.au/d2l/login Username; 9 digit student number For Password: Reset password go to https://passwordreset.tafeqld.edu.au/default.aspx>
Instructions to Assessor	This is an unsupervised written assessment. Students are required to complete all tasks. No time restrictions apply Students must complete their assessments as individuals Usual office WHS requirements should be met by students Physical conditions are at the students discretion Interactions with team members or supervisors should be limited to general instructions and clarification or explanation of the assessment requirements. Contingencies if conditions cannot be met are at the discretion of the Assessor.
Note to Student	An overview of all Assessment Tasks relevant to this unit is located in the Unit Study Guide.

Question 1

Read the question and record your response in the blank page which follows. (N.B. Do not copy and paste, answer in your own words)

Why is knowledge of relevant legislation, for example, consumer law and corporations’ law, important for a business to operate successfully – with maximum profit and minimum risk. How does legislation impact on business performance? Give 2 examples of relevant consumer legislation and how it impacts on business performance. Under Corporations Act 2001, as a Director, if a business is operating as a Company, what are the record keeping and financial reporting requirements? (see www.asic.gov.au/regulatory-resources/financial-reporting-and-audit/directors-and-financial-reporting)

This page has been left blank for you to write your response to Question 1.

Question 2

Read the question and record your response in the blank page which follows.

What is a business plan? What are the key characteristics of a business plan. Provide at least five reasons for writing a business plan.

This page has been left blank for you to write your response to Question 2

Question 3

1. What is an operating cycle?
2. What measures can be taken to reduce the length of an operating cycle?

This page has been left blank for you to write your response to Question 3.

Question 4

Read the question and record your response in the blank page which follows.

Identify and explain the key features of government fiscal policy and how it might affect the financial management of a business. Consider, for example, its impact on business risk, cost of capital, and business plans.

This page has been left blank for you to write your response to Question 4.

Question 5

Read the scenario and tasks and record your response in the blank page which follows.

Scenario QUEENSLAND FRUITS Pty Ltd is a farming company growing small crops and selling to supermarkets. You have been recently employed in this business and Peter the Senior Partner has asked you to prepare a performance report. The Profit and Loss Statement, Balance Sheet and Schedule of Ratios have been provided on the following pages. Tasks Your report should include the following: A spreadsheet of the ratios achieved by the company for 2017 and 2018 and comparison of these to the industry averages ( For presentation purposes please copy the Template provided into Excel). Note: The Excel file is to be submitted separately. Analysis of the results based on the ratios calculated. This should consist of two or three sentences about each ratio commenting on – what the results indicate about the performance of the business and – identifying any existing and potential problem areas. Make suggestions about how to improve problem areas. Outline the importance of cash flow budgeting and explain the principles of budgetary control and how this relates to business performance results. Specifically refer to at least 2 of your recommendations (above) and explain the effect they would have on cash budgets.

X

This page has been left blank for you to write your response to Question 5 (b) (c) and (d)

Note: 5 (a) should be presented in Excel and submitted separately.

Question 6 – Part A

Jolfa Ltd. is an Australian retailing company. Currently, Jolfa Ltd. only operates in Australia. The Balance Sheet and Income Statement for Jolfa Ltd. are given below.

Jolfa Ltd. Balance Sheet as at 30 June, 2015XCurrent Assets		$ ‘000	$ ‘000
Cash		50
Accounts Receivable		80
Inventory		120	250
Non-Current Assets
Plant and equipment		950
Land and Building		1100
Goodwill		140	2190
Total Assets			2440
Current Liabilities
Accounts Payable		280
Provn for Long Service Leave		85	365
Non-Current Liabilities
Debentures		550
Mortgage loan		220	770
Total Liabilities			1135
Net Assets			$1305
Equity
Share Capital:
1,150,000 ordinary shares issued at $1.00		1150
Retained earnings		155
Total Equity			$1305

Additional information

• Current share price is $1.55

• Most recent dividend was $0.05 per share. Dividends are expected to grow by 7% per year.

• 550 Debentures were issued with a face value of $1,000 trading at par value of 8.5%. The Market Price of the Debentures is $950. The time to maturity is 3 years.

• The mortgage loan is currently at a variable rate of 8.9%.

Jolfa Ltd. Income Statement for the Year Ended 30 June 2015X		$ ‘000	$ ‘000
Total Sales			2310
Less cost of goods sold
Opening Inventory		220
Purchases		1620
Goods available for sale		1840
Less closing Inventory		120	1720
Gross Profit			590
Less operating expenses
Depreciation		110
Interest		90
Rent		30
Wages		150
Advertising/marketing		20
Other		40
Total Expenses			440
Net Profit before tax			150
Tax		45
Net Profit After Tax			105

1. Calculate the WACC of Jolfa Inc using the above information. Assume a company tax rate of 30%.
2. Explain why financial managers of Jolfa should be aware of the WACC and how this information can be used to analyse business performance and manage risk.

Note: All calculations should be made to at least three decimal places in parts a) and e) above.

This page has been left blank for you to write your response to Question 6 – Part A

A1 WACC Calculation

A 2

Part B

Task B1Jolfa Ltd is also considering the following investment project:

Capital outlay $200,000

Net Profit p.a. (before depreciation and tax) $ 90,000

Depreciation p.a. $ 40,000

Economic life: 5 years

Salvage value: Zero

Tax rate payable (assume paid in year of income): 30%

Required rate of return: 12% (WACC + Risk factor)

Calculate the following:

1. The Net Profit after Tax for each year.
2. The Annual Cash Flow for each year.
3. Accounting Rate of Return (using total investment).
4. Payback Period.
5. Net Present Value.
6. Internal Rate Of Return

Task B2

Multiple Choice:

Select the answer that would correctly complete the following sentence.

Evaluating projects on an Independent Basis (rather than Mutually Exclusive) and using NPV evaluation method means you would:

1. Choose the individual project with the highest NPV (Net Present Value).
2. Choose the individual project with the highest ARR.
3. Choose all projects with a positive NPV.
4. Choose all projects with an ARR greater than the W.A.C.C.
5. None of the above

This page has been left blank for you to write your response to Question 6 – Part B