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Task 2 Finance Report
Task 2 Finance Report
Introduction
Growth Management Consultants is consultancy firm which is providing leadership and
management training to companies. Company started its operations in 2010 and now
diversifying its operations. This financial report is performance analysis of the company for the
Year 2016/2017 on the basis of profit & loss as well as cash flow. From the result of the analysis
and forecasting techniques, budget forecasting of the next year will be prepared.
Company incurred total expenses of &683,523 from which major portion is Salaries & Wages
(including PAYG) amounting $504,000. Other key expenses are Superannuation ($60,000), Rent
($43,000), Travel & Accommodation ($24,000) and Contract Writer E-book ($10,000). Company
earns net profit of $652,077.
Based upon the information, a vertical analysis is done for the company.
Income
Expenses
Important figures in the vertical analysis are highlighted in bold. It shows that Net Profit is
48.82% of the net sales which is a positive trend. Company’s Publication revenue is below par
and consist only 0.15% of total revenue so it needs serious attention where company could able
to sell Publications. Major expense, which is Salaries & Wages, is 37.74% which is because it is a
consultancy firm and key expense is salaries in service providing firms (Yaniv, 2014).
As world is becoming digital day by day, there is need to go digital and online conferences. If
company stick to current policy it will lose portion of its business. Major reason of low
Publication revenue is not adopting the changing business trend of digital publication. There is
overall global recession too so companies are cutting their expenses; it is another reason that
company is not getting adequate revenue from training workshops.
Cash Flow Statement for the year 2016/17 gives monthly in-coming and out-
going of the cash which shows that some items have activities throughout the
year and some items have periodical activities. Income side of the cash flow
statement describes that Consulting Fees and Executive Search are regular
income items where cash flow is coming every month. However, income from
Workshops is coming in four month when workshop conducted (Edward, 2017).
Analyzing cash outflow in expense side, it is observed that there are fix amount
of salaries, superannuation, rent and cleaning paid in every month. Accounting
Fees is paid once which is annual software contract. Travel and Accommodation
expenses cash outflow occur in four months which is related to Workshops.
Financial Software
If a company chooses good financial software, it will solve the half of company’s
financial data problems. Financial software provides quick review of financial
data and also give highlights of business performance. Finance office can record
and analyze all accounting and financial data through efficient use of financial
software.
Budgeted Forecast
2016 -
PROFIT & LOSS 2017 Budget 2017-18 Notes
Income
Consulting fees $1,175,600 $1,293,160 10% increase
$38,000 750*100
Workshops $75,000 budgeted
Publications $2,000
Executive Search Service $120,000 $132,000 10% increase
E-Book $10,000 Budgeted Sale
Gross profit/net sales $1,335,600 $1,510,160
Expenses
Accounting fees $6,823 $7,164 5% increae
Advertising & marketing $5,000 $5,250 5% increae
Computer Software $4,600 $4,830 5% increae
Insurance $7,500 $7,875 5% increae
Lease/loan payments $1,500 $1,575 5% increae
Motor vehicle expenses $2,500 $2,625 5% increae
Office Cleaning $5,500 $5,775 5% increae
Office supplies $2,100 $2,205 5% increae
Rent & rates $43,000 $45,150 5% increae
Repairs & maintenance $1,200 $1,260 5% increae
Salaries/wages (including PAYG) $504,000 $529,200 5% increae
Superannuation $60,000 $63,000 5% increae
Telephone $3,400 $3,570 5% increae
Utilities $2,400 $2,520 5% increae
Travel and accommodation (for $24,000 $25,200 5% increae
workshops)
Contract writer e-book $10,000 $10,500 5% increae
Total expenses $683,523 $717,699
NET PROFIT (Net Income) $652,077 $792,461