Assignment Task
The Assessment activities are Individual Activities and are to be completed in full. You can use your Training Manual and completed Class Activities to reflect back on when completing these assessments.
Further information on the Assessment process is provided in the relevant section of this booklet.
WILL CONSTRUCT PTY LTD DIRECTOR INVOLVEMENT
1. What are Michael and Paul intending to personally invest into this new business venture?
2. How much are they seeking to borrow to fund the purchase of the business?
BUSINESS COST CALCULATIONS
1. Use general class discussion and other information sources to determine the approximate, relevant start-up costs for Will Construct Pty Ltd
2. Refer to ‘Business Plan table 5.3’ and the ‘2017 Profit and Loss Statement for Will Construct Pty Ltd’. Use this data to calculate an operating budget for the first 3 months of this new venture:
3. Which of the above expenses could possibly be adjusted to reduce the ‘3 month operating’ expense?
CALCULATING BREAK-EVEN LEVEL
1. What is the Break-even cost of the business:
2. What does the Break-even amount mean for the business?
3. How can we improve the Break-even point of the business?
RECORDING TRANSACTIONS
Scenario from Will Construct Pty Ltd.
The original records of several transactions for goods purchased from a local hardware supplier have been left in the sun, on the dash of Pauls work vehicle. On handing them over to Mary, she discovers that they have faded and only just readable.
What could Mary do to ensure compliance?
PREPARATION OF STATEMENTS
In this class activity, you will learn how to extract figures from a trial balance to produce an associated profit and loss statement and a balance sheet.
Scenario
Will Construct Pty Ltd has provided us with a trial balance of their financial position in 2015 (provided on the following page) and is looking for assistance in relation to the completing two other financial documents for their business.
1. Refer to the Will Construct P/L Trial Balance 2015 on the following page. In columns 5, write down where the items are found in either the profit & loss statement (P&L) or the balance sheet (BS). In column 6 indicate the specific location of the item within each P&L or BS.
2. Use this trial balance to assist Michael and Paul to complete the:
- Profit and Loss Statement ending 30th June 2015 (use blank template provided on following pages)
- Balance Sheet as at 30th June 2015 (use blank template provided on following pages)
CASH FLOW FORECAST CALCULATIONS
Scenario
Michael and Paul have calculated their Break-Even Income (BEI) for their new Will Construct Pty Ltd Business starting in 2018/19 financial year. Their task now is to forecast their cash-flow to meet this BEI and hopefully make a small profit in their first year.
Task On the following page a Will Construct Pty Ltd 2018 Cash-Flow Template is provided as an example. A larger A3 copy can be found in the attachments located at the end of this manual. This cash flow forecast is partly populated. Your task is to peruse the cash-flow to understand the elements and layout and then assist Michael and Paul to:
a) calculate the GST payable on their quarterly BAS
b) calculate their opening and closing cash flow balances for each month
SOURCING BUSINESS FINANCE
Refer to the Will Construct Pty Ltd Business Plan section 5. Michael & Paul need to access a funding sources to purchase and run its operation. Discuss this matter with classmates and list below examples of when they may need to use some or all of the following funding methods.
INCOME TAX CALCULATIONS
This activity requires you to work out the amount of Tax which needs to be paid in the following scenario. Research the relevant Tax Tables and other information you will require to answer this activity from the Australian Taxation Office website.
Max works in the office carrying out estimating, quotes and contract work for Will Construct Pty Ltd.. Max’s income for the previous financial year was as follows:
- $71,000 for salary from Will Construct Pty Ltd
- $5,000 in sale of shares
- $500 in interest received
Max’s deductions have totalled $1,500 including car expenses
In small groups, discuss Max’s situation and then complete the following calculations:
- Calculate Max’s total income
- Calculate Max’s taxable income
- Calculate Max’s tax payable (Use the ATO table on the previous page)
- Add in Max’s Medicare levy
- Calculate Max’s total tax liability
CREDIT POLICIES
- One of their clients, for a particular quote, has asked Max for 60 days credit terms after the job is completed. What should Max do?
- Why should Michael and/or Paul ask Mary to develop a credit policy before accepting credit arrangements?
- What essential information would Mary require on an Application for Credit form?
- In this policy, should Mary ask the credit applicant directors for their personal guarantee for any debt that may
- Who could Mary seek advice from to help develop and create the credit policy?
PROGRESS PAYMENT POLICY
Will Construct Pty Ltd’s policy for claiming progress payments for single storey brick veneer construction is outlined
1. Max is required to calculate the payments due at each stage for one of their current project which has a contract signed for the build of $180,000. Help max calculate the amounts due at each stage
BUSINESS MONITORING & STOCK MANAGEMENT
Discuss the following:
Due to the break-even projection for Michael & Paul of Will Construct Pty Ltd in their first year, excess stock will not be entertained by these new owners.
1. What implications could this ‘no stock’ target have for Will Construct Pty Ltd:
a) as a positive outcome
b) as a negative outcome
BENCHMARKING FINANCIAL POSITION
For this task we will refer to WILL CONSTRUCT Pty Ltd and their P&L and Balance sheets for 2016 found in the Business Plan.
Calculate the following ratios, benchmark and comment on the result in relation to the industry standards referred to in 2.3 above.
- How does this result compare to industry standard?
- What does this result tell us about the business’s liquidity situation?
- What does this result tell us about the business’s liquidity situatio?
- What does this result mean to the business’s borrowing capacity?
- Is this a good debtors day result for Will Construct Pty Ltd? Explain
- Is this a good or poor return for owners’ equity invested? Explain
CUSTOMER REQUIREMENTS
1. Prior to commencing a building job, questions need to be asked and answered by both parties, and the process may take more than a single session. Provide three potential questions that could be asked of the customer.
2. List the five core principles that you should apply in order to achieve a successful outcome
