ASSESSMENT 2
Course Name FNS60215
Advanced Diploma of Accounting
Subject/module Financial Strategies
Assessment method Scenario/Case Study
Weighting 50%
Units of Competency FNSACC610
Develop and Implement Financial Strategies
Instructions
1. Assessments should be completed as per your trainer’s instructions.
2. Assessments must be submitted by the due date to avoid a late submission penalty.
3. Plagiarism is copying someone else’s work and submitting it as your own. You must write your answers in your own words and include a reference list. A mark of zero will be given for any assessment or part of an assessment that has been plagiarised.
4. You may discuss your assessments with other students, but submitting identical answers to other students will result in a failing grade. Your answers must be yours alone.
5. Your trainer will advise whether the assessment should be digitally uploaded or submitted in hard copy. Assessments that are digitally uploaded should be saved in pdf format.
6. You must attempt all questions.
7. You must pass all assessments in order to pass the subject.
8. All assessments are to be completed in accordance with WHS regulatory requirements.
Assessment 2 – Scenario/Case study
Financing Options Scenario 1:
Finance helps businesses access the cash they need for their day-to-day trading operations. There are a lot of options out there, and it’s important to know how each can help a business.
Research and evaluate at least 4 different forms of financing which can be divided into short-term and long-term sources. Create a table similar to the example below and report on the strengths and weaknesses of each option.
(6 marks each, scenario 1 total: 24 marks)
Short Term Strengths Weaknesses
Long Term Strengths Weaknesses
Scenario 2:
Using the data on page 12, analyse the ability to pay current liabilities, Big Bend Picture Frames Pty Ltd have asked you to determine whether the company’s ability to pay liabilities and total liabilities improved or deteriorated during the
2012
a. Current ratio
b. Acid-test Ratio
c. Debt ratio
d. Times interested earned ratio
(3 marks each, scenario 2 total: 12 marks) Summarise the results of your analysis in a written report.
BigBend Picture Frames Pty Ltd.
2012 2011
Cash $ 61,000.00 $ 47,000.00
Short term investments $ 28,000.00 $ –
Net receivables $ 122,000.00 $ 116,000.00
Total Assets $ 560,000.00 $ 490,000.00
Total current liabilities $ 275,000.00 $ 202,000.00
Long term debt $ 40,000.00 $ 52,000.00
Profit before income tax $ 165,000.00 $ 158,000.00
Interest expense $ 48,000.00 $ 39,000.00
Scenario 3:
1. Obtain the financial report of a company of your choosing. Use the consolidated financial statement and the multi-year summary data to chart the company’s progress during the three most recent years, including the current year. Calculate the following ratios that measure profitability and are used to analyse shares as an investment.
Profitability measures:
a. Rate of return on net sales (2 marks)
b. Rate of return on ordinary shareholder equity (2 marks)
c. Rate of return on total assets (2 marks)
Share analysis Measures
d. Price/earnings ratio (if given, use the average of the ’high’ and ‘low’ share prices for each year) (4 marks)
2. a. Is the trend in the profitability measures consistent with the trend in the
share analysis measure? (2 marks) b. Evaluate the company’s overall outlook for the future. (2 marks)
3. Review and provide an overview of the organisational structure and lines of
management authority. (5 marks)
(Scenario 3 total: 19 marks)
Scenario 4:
A financial plan is a forecast of future performance for a business, usually prepared using spreadsheet software. A business can benefit greatly from taking the time to do a financial plan at least annually. The plan helps a business to better manage cash flow by preparing for situations that could result in cash shortages, such as seasonal fluctuations in revenues. The financial plan is normally prepared as part of an overall business planning process, during which goals are set and strategies are chosen to help the business grow in the upcoming year.
You have been asked to set up the business structure and prepare the Financial Plans to meet strategic goals of your company. Using the financial report from the company you selected in Scenario 3 prepare the financial plan for the next 12 months.
a. Use Excel to create the Financial Plan
b. Use a 6% increase in sales to determine the expected income
c. Staff costs will increase to accommodate the increase income
d. Include tax efficiencies to improve the taxation expense of the business
e. Based on current figures consider any long or short term objective that might be achieved in the coming financial year.
f. Include in portfolio of evidence the financial report you used to create this activity
(3 marks each, scenario 4 total: 18 marks)
Assessment 2 total: 73 marks Notes: