Business plan Case study

For this task, you are required to respond to a range of prompt questions that examine your understanding of key legislative and financial management requirements for a case study organization. This assessment also requires you to review available financial information and establish a budget for the organization

Assessment Requirement

1. Read the case study.
2. Analyze the case study information and respond to the questions in the space provided.
3. Analyze the case study information (including business plan summary and previous financial data) and complete the following.
   1. Develop a sales budget, profit budget, cash flow budget and debtor ageing summary using electronic spreadsheets (as separate worksheets – you can use the templates provided) making sure each budget is divided into quarterly periods and that you use previous financial data to determine allocations for resources. Ensure each budget you prepare complies with the organizational policies and procedures as provided.
   2. Develop budget notes which include:
   3. identification of reasons for previous profits and losses
   4. Your comment on the effectiveness of existing financial management approaches

iii. All assumptions and basis that have been made or used to form budgets

1. Any relevant notes regarding implementation and monitoring of budget expenditure.
2. Communicate information regarding the budget and answer a series of prompt questions in written or oral form as agreed with your assessor.

You must provide:

• A completed annual budget in a single spread sheet with a separate sheet for each budget component
• Budget notes and question answers in a written format.

 

Case study

You have recently been appointed as the business manager of A2Z Solutions Pty. Ltd having been a store manager for the past three yearsA2Z Solutions Pty. Ltdis a 15 store retail chain located in Melbourne.A2Z Solutions Pty. Ltd is the leading home wares retailer, catering to the growing need for furnishing new and renovated dwellings in the greater Melbourne area.

The assortment on offer of bathroom fittings, bedroom fittings, mirrors and decorative items together with the recently added lighting fixtures has positioned A2Z Solutions Pty. Ltd as a leader in homewares retailing in Australia. A2Z Solutions Pty. Ltd has grown over the past five years from a single store to the current chain. A2Z Solutions Pty. Ltd prides itself on superior after sales service which has been a key reason for the continued growth in sales and corresponding profit increases. Today A2Z Solutions Pty. Ltd employs over 150 staff.

A2Z Solutions Pty. Ltd is a proprietary limited company (ACN 34 765 234 02) registered with the Australian Securities and Investment Commission. The registered address is with A2Z Solutions Pty. Ltd.’s solicitors (Mars Lawyers, 537 Queen Street, Melbourne, VIC 3000) and the principle place of business is 506Collins Street, Melbourne, VIC 3000.

 

Computer software requirement

The current accounting information system has not adequately provided sufficient analysis of revenue and expenditure and has made it difficult to make informed estimates of future profits. Estimates have relied on the ‘gut feel’ of the experienced traders on the board and of the senior managers. The board sees the need to apply more analysis to past results that they believe could be done with the introduction of state-of-the-art computer software.

A2Z Solutions Pty. Ltd. wants to upgrade their existing accounting system which will manage the company accounts more efficiently in the long run. They request that the new system you recommend to them to be compliant with all legislative and statutory requirements for small to medium businesses.

None of A2Z Solutions Pty. Ltd.’s products are GST free, however the accounting information system records the GST collected as well as the input tax credits earned on the purchases of stock and assets. These amounts are reported and paid in accordance with the business activity statement (BAS) schedule determined by the Australian Tax Office.

They have 100 fulltime and 50 part-time staff, but only 10 of the staff will have or need access to the financial system. Some staff are paid on a salary sacrifice arrangement that attracts fringe benefits tax. The staff with access to the financial system want software that is a single purchase with no ongoing license fees, and a plan to keep using it for the next 3–5 years, while the organisation continues to grow. They are anticipating that within five years they will have over 250 full-time staff, and at least 20 staff will require access to the financial system by then.

The payroll system deducts withholding tax from the employees and remits this along with the firm’s pay as you go (PAYG) instalment each quarter as reported on the firm’s business activity statement. Income tax return for the company and its annual statement is completed by the firm’s accountant. Taxes and fees due are paid by the due dates. Financial records are kept at A2Z Solutions Pty. Ltd.’s principle place of business.

A2Z Solutions Pty. Ltd has just upgraded their computers and has five new desktop PCs which will be used by the finance staff. They are current (for 2011) specification machines with i5 CPUs and 4Gb RAM each, and all have Windows 7 Professional and Norton’s 360 installed with the professional version of Microsoft Office Small Business as well. Other staff will use their machines at various times, so it is important that the software requires a login to access data and that data stored by the software cannot be accessed in any other way.

 

Corporate details

Jimmy Retro, the CEO, has asked you to prepare some financial budgets for the 2011/12 financial year as a preliminary overview of the financial year ahead. He asked you to first prepare a 12 months budget and then break it up over the four quarters. The areas he is particularly interested in seeing is:

1. Sales budget for 2011/12 by department by quarter.
2. Profit budget (including detailed expenses) for 2011/12 by quarter.
3. The cash flow result per quarter of the GST after adjusting the GST collected by the allowable GST tax credits.
4. The anticipated aged debtor’s summary at the end of each quarter.

The CEO wants to be given all the budgets except for the aged debtors’ budget which the accountant and accounts receivable clerk can monitor. The CEO produced a summary of the current business plan that covered the budget year to highlight some of the key goals, objectives and strategies he would like incorporated into the budget.