GBE806 Business Financing Enterprise Questions and Answers

 

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GBE806 Business Financing Enterprise Assignment

 

 

ASSIGNMENT 2

Task/Activity Instructions:

 

Business Idea

Provide a brief overview of your business and the services/products you will provid

 

Establishing your business

• Establishing your business Prepare an itemised list of assets needed to establish your business.
• Discuss how you will finance the purchase of these assets ie debt/equity.

 

Managing your Assets

• Discuss methods/procedures you will use to evaluate business asset purchases. Ie cost/benefit analysis
• Discuss methods/procedures you will use to manage your working capital ie cash, inventory, accounts receivable, accounts payable.

 

Income Statement (Profit & Loss)

Estimate your sales and expenses (exclusive of GST) for each month, for the first year of your business (including a total column) and the resultant profit(loss).

 

Note: You will need to explain your sales and expense estimates.

ïƒ Sales

• Your sales estimate should include an explanation on the selling price. This explanation should refer to the costing of your service/product and comparison to competitor pricing.
• You also need to give details on the volume of your sales eg number of customers.
• You should also explain when you expect to receive your sales in cash (for use in your cash flows budget)

 

If Expenses

• A brief explanation for each of your expenses will suffice.

• Don’t forget to include depreciation and insurance costs.

• You should also explain when you expect to pay these in cash. (for use in your cash
  flows)

Cash Flows

Estimate your cash receipts and payments (including GST) for each month for the first year of yourbusiness (including a total column).

 

Note: Assume that you are on the 6 monthly GST payments basis
 Use your sales and expense estimates to calculate when you will receive/pay cash. If Don’t forget to include establishment costs (assets), loan finance and drawings.

 

Cost Volume Profit Analysis

Using your forecast income and expenses classify the expenses into fixed and variable costs. Calculate the breakeven point for your business. Provide a contribution margin statement to prove your calculations are correct. Show workings.

Using the variable cost percentage and fixed costs calculated for breakeven point above, prepare a forecasted Income Statement (contribution margin format) based on the most likely, most optimistic and most pessimistic outcomes for your business.

 

CRITERIA:

Possible
Marks
Your
Mark

 

75 – 100%  Methods and procedures discussed in relation to asset management are appropriate for the type of business

• Establishment costs and financing are realistic and consistent with the type of business
• Appropriate explanations have been provided in the evaluation of forecasted financial statements
• The key forecasted financial reports are consistent with explanations and logically relate to the appropriate report
• Key sections of the plan relating to the establishment costs, income statement, cash flows and cost, volume, profit analysis are logically linked
• Overall the report is well structured, logical and professionally presented 60 – 74%
• Methods and procedures discussed in relation to asset management are appropriate for the type of business but some minor modifications may be needed
• Establishment costs and financing are realistic and consistent with the type of business but some gaps identified
• Appropriate explanations have been provided in the evaluation of forecasted financial statements but some minor gaps identified
• The key forecasted financial reports are consistent with explanations and logically relate to the appropriate report however there are some inconsistencies
• Key sections of the plan relating to the establishment costs, income statement, cash flows and cost, volume, profit analysis are logically linked however there are some logical inconsistencies
• Overall the report is well structured, logical and coherent.

 

50 – 59%  Methods and procedures discussed in relation to asset management are appropriate for the type of business but some major modifications may be needed

• Establishment costs and financing are realistic and consistent with the type of business but some important gaps identified
• Appropriate explanations have been provided in the evaluation of forecasted financial statements however some important gaps may be evident
• The key forecasted financial reports are consistent with explanations and logically relate to the appropriate report but there are some important inconsistencies
• Key sections of the plan relating to the establishment costs, income statement, cash flows and cost, volume, profit analysis are well linked but there are logicalinconsistencies
• Overall the report is has some deficiencies regarding its structure and logic

 

40 – 49%  Methods and procedures discussed in relation to asset management are inappropriate for the type of business

• Establishment costs and financing are not realistic and inconsistent with the type of business
• Not enough appropriate explanations have been provided in the evaluation of forecasted financial statements
• The key forecasted financial reports are not consistent with explanations and do not logically relate to the appropriate report
• Key sections of the plan relating to the establishment costs, income statement, cash flows and cost, volume, profit analysis have not been completed and/or not well linked and there are significant logical inconsistencies
• Overall the report has major deficiencies regarding its structure and logic

0 – 39%  Seriously deficient in all areas.