Manage Budgets and Financial Plan 4
BSBFIM501A Manage Budgets and Financial Plans
Big Red Bicycle
Average Debtor Days= Trade Debtors / Sales x 365
= 362,500 / 200,000 x 365 = 666.49
Average Creditors Days = Trade Creditors / cost of sales x 365
= 80,000 / 1,000,000 x 365 = 29.2
Average stock turnover = COGS / Average Stock Value
Average stock value= Opening Stock + Closing Stock / 2
= 100,000 + 300,000 / 2
COGS = 1,000,000
Average stock Turnover=1,000,000 / 200,000
Statement of financial performance – when looking at the statement of financial position and calculating the average of debtor days is too high. This means that the average debts are not being paid quickly.
The scenario information also states that the business is having financial trouble with debts. The ageing debtors budget can be seen that some debts are not paid after 30 days which is the BRB’s policy.
It is important for this business to improve its debtors and make sur...
The 3 sources of information that I used to complete this scenario was
2,280,000 fixed costs + $1,000,000 profit target / 250 (profit from each sale) = 9,120
9,120 bikes need to be sold
2,280,000 fixed costs + $1,000,000 profit target / 8,000 (units in indonesia) = 285
To reach the expected profit target, there are two possibilities that could happen. Either the business changes manufacturing to Indian where they can manufacture 10,000 and beat the 9,120 units to get more than $1,000,000 profit. The second option is the raise the price to at least $285, and reach the target profit while manufacturing in indonesia.
The first option is more practical as customers may not want to pay the extra $35, thus the business may not reach the 8,000 units it needs to sell.
All financial records such as GST records must be kept for at least five years
The action plan will be to move the manufacturing to India
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