Answer To: FNS60217 Advanced Diploma of Accounting FNS50217 Diploma of Accounting FNSACC607 Evaluate Business...
Sumit answered on Aug 09 2021
assignmentfnsacc511-dhyr1pnz (3).xlsx
Vertical Analysis
Consolidated Statement of Profit & Loss:
Particulars 2018 Percentage 2019 Percentage
Sales Ravenue 33,223,525 99.04% 39,702,824 99.16%
Interest Revenue 3,465 0.01% 21,011 0.05%
Other Income 317,540 0.95% 313,868 0.78%
Total Income 33,544,530 100.00% 40,037,703 100.00%
Less: Foreign Exchange Loss -6,349 -0.02% -55,418 -0.14%
Raw materials, consumables & delivery -13,113,924 -39.09% -14,265,524 -35.63%
Operating expenses -3,560,975 -10.62% -3,816,059 -9.53%
Employee benefit expenses -7,697,811 -22.95% -8,610,381 -21.51%
Depreciation and amortisation expenses -1,238,204 -3.69% -1,432,985 -3.58%
Sales and marketing expenses -3,446,233 -10.27% -6,429,446 -16.06%
Administration expenses -458,765 -1.37% -589,212 -1.47%
Occupancy expenses -774,577 -2.31% -749,270 -1.87%
Finance costs -96,126 -0.29% -138,303 -0.35%
Profit before income tax 3,151,566 9.40% 3,951,105 9.87%
Income tax expense -1,087,854 -3.24% -1,301,719 -3.25%
Net Profit 2,063,712 6.15% 2,649,386 6.62%
Horizontal Analysis
Consolidated Statement of Profit & Loss:
Particulars 2019 2018 Change Percentage
Sales Ravenue 39,702,824 33,223,525 6479299 20%
Interest Revenue 21,011 3,465 17546 506%
Other Income 313,868 317,540 -3672 -1%
Total Income 40,037,703 33,544,530 6493173 19%
Less: Foreign Exchange Loss -55,418 -6,349 -49069 773%
Raw materials, consumables & delivery -14,265,524 -13,113,924 -1151600 9%
Operating expenses -3,816,059 -3,560,975 -255084 7%
Employee benefit expenses -8,610,381 -7,697,811 -912570 12%
Depreciation and amortisation expenses -1,432,985 -1,238,204 -194781 16%
Sales and marketing expenses -6,429,446 -3,446,233 -2983213 87%
Administration expenses -589,212 -458,765 -130447 28%
Occupancy expenses -749,270 -774,577 25307 -3%
Finance costs -138,303 -96,126 -42177 44%
Profit before income tax 3,951,105 3,151,566 799539 25%
Income tax expense -1,301,719 -1,087,854 -213865 20%
Net Profit 2,649,386 2,063,712 585674 28%
assignmentfnsacc511-jzrtqieb (4).docx
Cover Page
Student Name:
Assignment 1
Financial Objectives of the client:
(a). Tax Liability Reduction Goal
(b). Wealth Accumulation
(c). Planning for Retirement
The relevant legal and financial requirements that will need to be considered in order to achieve the client objective are:
Financial Requirements:
1. Salary, Wages and Allowances: Pay as you go payment summary, signed letter from the payer which gives payment summary.
2. Statements from banks or any other financial institutions showing the amount of interest the client has earned during the year.
3. Statements from any company or unit trust or any other entity showing the amount of dividend received by the client.
4. Statements of return received in form of capital gains or dividends from the investments made in mutual funds or other types of funds.
5. If the client is receiving any rent, then statement of rent received should be provided.
6. Records relating to expenses made by the client like car expenses, rental expenses, travelling expenses, education expenses, Other work-related expenses.
7. Details of asset acquired or disposed during the year. Details relating to date of acquisition or date of disposal. Contract entered during the sale/acquisition from which cost can be ascertained.
8. Records relating to gift received or paid by the client.
9. Records relating to any donations made by the client.
Legal Requirements:
1. Income Tax Assessment Act 1936
2. Income Tax Assessment Act 1997
3. Competition and Consumer Act 2010
4. Australian Consumer Law.
5. Corporations Act 2001
6. Corporations Amendment (Future of Financial Advice) Act 2012.
7. Anti-Money Laundering and Counter-Terrorism Financial Act 2006.
8. National Consumer Credit Protection Act 2010
9. The Financial Services Reform Act 2002 (FSR)
10. Financial Sector (Collection of Data) Act 2001
Strategy to achieve Tax Liability Reduction Goal:
1. Salary Sacrificing: Salary Sacrificing means to make some payments before the salary is taxed. Some of the payments that can be made are purchase of cars, mortgage payments, superannuation etc. There is a limit on the amount that can be paid towards salary sacrificing.
2. Private Health Insurance: In case of Private Health Insurance the clients have to pay more surcharge. If the income of tax payer is high this additional surcharge can reduce the taxes payable by the client.
3. Prepay Expenses: Prepaid expenses can reduce the liability of current year. This strategy is useful in those years when tax liability is higher than usual years. This strategy is also useful to reduce tax payable due to capital gain in any year.
4. Using a Tax Agent: An expert having detailed knowledge in Income can help save a lot of time and save tax by claiming deductions which the client has forgotten to claim.
Strategy to Wealth Accumulation:
1. Investing in Growth Assets: If the age of client permits and the client has risk appetite, investing in growth assets can provide high capital appreciation and abnormal returns in comparison to other investments options. Investing in growth assets also provides diversification to the portfolio.
2. Use of Installment Investing: Installment investing means investing small amount regularly like in monthly installments rather than investing the sum in one go. This method is particularly good for those who do not have income for investing at one time (generally salary employees). Another benefit of this investing is that as the income of client increases, he can increase the amount of installment.
3. Diversification: Diversification helps in reducing the risks to the portfolio of the client. Diversification helps to exploit the opportunities available in the market. In helps in safeguarding against adverse market cycles and reduces the overall volatility of the portfolio.
Strategy to Plan for Retirement:
1. Commence an account-based pension: This is a common strategy to reduce tax in retirement. When you commence a pension from your super fund, the 15% tax applied to fund earnings is removed. In other words, fund earnings become tax-free once you commence a pension from your fund. Additionally, if you are aged 60 or more, the pension income is also tax-free, regardless of the amount of income you draw.
2. Consider using a self-managed super fund (SMSF): A SMSF provides far greater scope and flexibility for tax planning compared to other super funds. Because of this, if you have a SMSF, you will have more avenues available to managing tax during (and leading up to) retirement. A common scenario for those without an SMSF is commencing an account-based pension to eliminate the 15% earnings tax where there is no need for pension income which must be drawn with respect to the minimum payment factors (as discussed above). This situation effectively forces a withdrawal of funds from superannuation before the 15% earnings tax is removed. Because of the increased tax-planning flexibility afforded by SMSF’s, this situation can often be avoided.
3. Consider selling assets and transferring the proceeds to super: Liquidating assets and contributing the proceeds to superannuation may reduce tax and simplify your estate planning arrangements. This strategy is often even more appealing if you have a self-managed super fund (SMSF) (as discussed above). Once you commence a pension from your super fund, pension income will be tax-free if you are age 60 or over. If you hold significant assets outside superannuation, the income generated from them may still be taxable once you retire.
4. Make deductible contributions to super: If you are retired and under age 65, you may be eligible to make personal contributions to superannuation and claim a tax deduction for them. If you are paying income tax in retirement, this strategy will reduce your taxable income and therefore the amount of income tax you pay. It will also boost your super account balance and therefore the amount of tax-free income available if you start a pension at age 60 or over. However, you need to be mindful that deductible contributions will incur 15% contributions tax within your super fund and that such contributions will count towards your annual concessional contribution cap.
Assignment 2
1. The authorities / personnel / sources to consult with to ensure the financial data provided is accurate and complete are:
(a). Management is responsible for the preparation, presentation and integrity of the financial statements and other financial information in this report. The accompanying financial statements have been prepared in accordance with generally accepted accounting principles, and include estimates and judgments made by management that were necessary to prepare the statements in accordance with such accounting principles.
(b). The financial statements have been audited by the Company's independent auditors. Their audit was made in accordance with generally accepted auditing standards, as indicated in the Report of Independent Auditors, and included a review of the system of internal accounting controls and tests of transactions to the extent they considered necessary to carry out their responsibilities for the audit.
(c). Management has considered the internal auditors' and the independent auditors' recommendations concerning the Company's system of internal control and has taken actions that we believe are cost-effective in the circumstances to respond appropriately to these recommendations. The Audit Committee of the Board of Directors meets periodically with the internal auditors and the independent auditors to discuss the Company's internal accounting controls, auditing and financial reporting matters.
Thorough overview to reconcile the financial data to confirm accuracy:
(a). Ensure the accuracy of the data entry process, which involves journal entries of financial transactions and the posting of journal entries to the ledger.
(b). Reconcile your accounting records with external records, such as bank statements, supplier invoices, credit card statements and other documents.
(c). Check for obvious balance-sheet errors.
(d). Review the income statement for possible errors.
(e). Verify that you have made adjustments for non-cash expenses in the statement of cash flows.
(f). Follow up with your bookkeeper, store manager or the warehouse supervisor if you spot anomalies.
3. The Formula for Debt-Equity Ratio is:
Total Liabilities / Equity
For the financial year ended 2019:
Total Liabilities = $12,343,363
Total Equity = $51,040,629
Debt-Equity Ratio = 0.24
4.
The Directors have not been notified and are not aware of any breach of any significant environmental regulation under a law of the Commonwealth or of a State or Territory. The Directors have considered compliance with the National Greenhouse and Energy Reporting Act 2007 which requires entities to report annual greenhouse gas emissions and energy use. For the measurement period 1 July 2018 to 30 June 2019 the Directors have assessed that there are no current reporting requirements, but the Company may be required to do so in the future
5. The reasons for decrease in cashflows are:
(a). On 20 September 2018, the Company acquired 100% of Matso’s Broome Brewing Pty Ltd. The cash payment in this deal was $13 Million Dollars.
(b). Overall increase in capital expenditure amounting to $4.40 Million Dollars.
(c). increase in trade & other receivables amounting to $6.40 Million Dollars.
(d). Increase in Inventory amounting to $0.20 Million Dollars.
6.
(a). Profitability: During the year 2019, The sales revenue of the company has increased 20%. The interest revenue has increased 506%. The total income of the company has increased 19%. The overall Net Profit of the company has increased by 28%. The company has also acquired Matso’s Broome Brewing Pty Ltd. This is expected to increase the future profitability of the company. Since all the profitability measures of the company is increasing, we can assume that the overall financial position of the company with respect to profitability are very good.
(b). Financial Stability: The Company finished the financial year with a strong cash balance of $9.3m and in a debt-free position. During the financial year the business had one-off non-recurring working capital movements resulting from both a change of trading terms with Endeavour Drinks as well as the natural increase of debtors due to the onboarding of Matso’s sales and revenues. This resulted in an increase of $6.0m in trade debtors at year end. Since all the Stability measures of the company is increasing, we can assume that the overall financial position of the company with respect to Financial stability are very good.
(c). Efficiency: One of the programs of the company includes the installation of a new commercial scale canning line, a new high-speed bottle filler and other plant improvements. These improvements provide a new can-format capability for the...