BSBFIM601 Financial Performance Online Tutoring

Purpose

The purpose of this report is to outline or present financial performance of the Grow Management Consultant for the financial year 2018-2019 and then using that information to budget or plan for the future years.

2018-2019 Profit and Loss Analysis

 The business was highly profitable in FY 2018-2019 which was reflected by the value of gross profits and net profits on reports.

• The total revenue or gross profit which company generated was $1,614,720 while the total cost sales was $127,644 which include new cost of E-book and conference costs. The net profit of the company was $797,125.
• The gross profit margin is calculated when gross profit is divided by the sales revenue. For the cost of sales of $127,644 the relevant revenue is $1,614,720. The gross profit after deducting cost of sales from revenue is$1,487,076. So, the gross profit margin is 92.09%.
• The net profit margin is calculated when net profit is divided by sales revenue, so its value is 49.37%.
• Company earn highest proportion of revenue from consulting and executive search service.
• The area of highest cost for the business was salaries/wages

Overall Business Performance:

• The sales turnover from consulting is $1,410,720
• The sales turnover from workshop is $45,000
• The sales turnover from publishing is $15,000
• The sales turnover from Executive search service is $144,000

Reasons

• The reason why consulting generates high turnover because client prefer this service because consulting provide personalized or company focused approach.
• The demand of workshops has been decreasing so less attendants providing lesser turnover.
• There have been reasonable sales for E-book if we compare with the last where E book generates only $2000 sales and it is due to marketing.
• There had been GDP growth from July 2018 to June 2019 from 0.3% to 0.6% at the end June 2019 which also increase the revenues or demand for consultancy service.
• The 2018-2019 period was best for the businesses in Australia as overall Business confidence points increased from previous years. The summers of 2018-2019 shows the decline in demand for all the businesses.

Goals & Priorities for 2019-2020

• Increase the sales for E book by investing more money on marketing in order to achieve target E-book sales of more than $10000.
• Every Grow management consultants aims to achieve the profit margin of at least 43%. The company achieve the net profit margin of 49% this year which is more than they planned. In order to maintain this profit margin, the company need to invest money on marketing of conference so that it would increase sales and able to charge high amount for value added service which it is providing to its clients through the service of conference.
• The company need to increase the sales of conference and E book so that it would cover the costs and increase profits. The estimated fixed cost particular conference with no attendant is $51000 so Grow Management Consultants need to make sure that it would easily bring at least 80 participants so that it would reach break even point if it is planning to charge $750 for single attendant. In future company must look for those venue with 120-150 people capacity so that company would earn more profits or would maintain annual 43% profit margin.
• More marketing has to be done on E books in order to cover its costs and make it profitable income stream like Conferences.
• Key business periods are start and end of 2019-2020.

Cash flow trends analysis

• There have been increase in the net cash flow for the Grow management Consultants to $1,669,490.00 from previous year which was $1,212,172.00.
• The company doesn’t have any cash flows in investing activities because it is the service business, so it does not invest in tangible fixed assets.
• There are no cash flows in financing activities so company does not finance its operations from debt and equities.

Recommendation on Accounting software

• Currently the company is using the MYOB software which cost $60/month. However, this is not interactive software.
• SAP ERP and QuickBooks are the alternative software company can use other than MYOB. SAP ERP contains all business features not only accounting. While QuickBooks is the accounting specific software.
• SAP ERP can be the best software for Grow Management Consultants if it wants to grow in future. Because it offers other features of sales, marketing and supply chain which gives it edge over other accounting software. However, SAP ERP is the most expensive software if we compare to other alternatives and its implementation cost is $3000.

Statutory requirements for compliance and tax

 GST reporting requires the organization to report both GST collected, and GST spent and pay to the ATO. The GST that Glow Management would have collected is from the sales of its service while the expenses it incurs would be deducted from GST payable to ATO. The company requires to report quarterly.

• PAYG withholding requirements including that employers must hold mandatory tax withholding amounts from their employees with each pay and then pay this to the ATO each month. The purpose of this is to ensure employee declarations are up to date.
• PAYG income tax contributions are charged to the ATO every quarter and is an advance of the organization’s estimated income tax based on results and taxable income from the previous year.
• Grow Management Consultants have the payroll tax obligations to pay each state’s payroll offices based on the employees employed in each state. As Grow Management Consultants conduct workshops in three cities, so this obligation has to be fulfilled by this company.
• If an employee receives more than $450 in a month, an employer is entitled to pay the Superannuation Guarantee, which is 9.5% of ordinary time earnings – in addition to earnings.
• Superannuation must be paid by Grow management consultants quarterly to the ATO and it is paid through SuperStream.
• The superannuation for FY 2018-2019 was $63,000

Current tax or super liabilities

• The cash flow statement shows the increase in the Tax payable to $12000 form the $5613 which tells that the tax payable amount is greater for this year.

Due Diligence Checks

The profit and loss statements were calculated correctly and the information I was provided in the business plan was ensured, and the financial scenario information was adequately reflected.

Verify that super was equal to 9.5 percent of wages and pensions–this demonstrates that the company has paid sufficient quantities of super job guarantee. Moreover, check the few expenses with the possible source document I had.

Ageing debtor summary analysis

• The amount the company is owing from the debtors is $19,198.00 and it is the 15% of the current debt.
• One client’s debt was owed to the company for more than 120 days, but we have represented this client since then and received a new billing that is only due for more than 30 days. If they have a debt more than 60 days ago, the organization must consider not servicing new clients.
• $5,718 is due 30 days ago, but more significantly $7,766 is due 90 days ago, representing 40 per cent of our debtors.
• The company need to improve its debt collection process so that it would receive amount as soon as possible from its clients. The company need to frequently send the statements or reminders to its credit customer and must use the service of debt factoring agent to recover the amount.