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back to top A second case study will be prepared for you and uploaded to Interact2. This case study is for you to assess the position and performance of the business as it stands. You are working as a...

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A second case study will be prepared for you and uploaded to Interact2. This case study is for you to assess the position and performance of the business as it stands.

You are working as a consultant and are preparing an annual management report for a stakeholder meeting (could be shareholders or family). The report is to be presented as a business document, rather than an assignment and be of a professional standard. Include a cover page, table of contents and an executive summary.

Part A - Calculate the following performance indicators to inform and support your analysis in Part B below. The calculations must be submitted as an excel spreadsheet provided in Interact2, and set out in a professional manner for your client.

  1. Gross Margin per Ha
  2. Gross Margin per Ewe/Cow (as appropriate)
  3. Gross Margin per DSE for the livestock enterprises (as appropriate)
  4. Net Profit Ratio
  5. Opening Equity % & Closing Equity %
  6. Return to Capital
  7. Return to Equity
  8. Debt Equity ratio
  9. Current ratio
  10. Liquidity ratio
  11. Expense ratios

Part B – Annual Management Report

Following your review of the business, and making reference to the ratios outlined in Part A above, address the following in a word document report to your stakeholders (750 words).

  1. ·Liquidity
  2. ·Stability
  3. ·Profitability (of the business as a whole and the enterprises)
  4. ·Valuation of owners’ equity
  5. ·Recommendation for future improvements based on your interpretation of the financial results (Part 5 – for AGB533 students only)


When writing your interpretation, be specific about the data you generated in the financial reports. Use relevant references to support your interpretation of the results and the discussion about what the results mean to the management of the farming business.

Include the following summarised reports as neatly formatted tables.

  • Statement of Financial Position
  • Cash Flow Statement
  • Statement of Comprehensive Income

Ensure tables are numbered, have a short title and are cross-referenced in a descriptive summary before being inserted into the report.

Any references should be cited in the text and included in a reference list using APA6 style guide - contact staff if you need any assistance with referencing.

RATIONALE
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SUBJECT LEARNING OUTCOMES

This assessment task will assess the following learning outcome/s:

  • Be able to utilise financial performance indicators to analyse the profitability, liquidity and long term stability of an agricultural business
  • Be able to apply marginal and sensitivity analysis in an agricultural business context

Assessment 4 isdesigned for you to

  • Perform appropriate ratio calculations
  • Demonstrate appropriate knowledge and techniques necessary to evaluate and analyse the financial performance of an agricultural production business.
  • This assessment demonstrates the use of budgeting to support decision making and its relationship with information from other sources.
GRADUATE LEARNING OUTCOMES

This task also contributes to the assessment of the followingCSU Graduate Learning Outcome/s:

  • Academic Literacy and Numeracy (Skill) - Charles Sturt Graduates demonstrate the literacy and numeracy skills necessary to understand and interpret information and communicate effectively according to the context.
  • Academic Literacy and Numeracy (Application) - Charles Sturt Graduates consider the context, purpose, and audience when gathering, interpreting, constructing, and presenting information.
  • Information and Research Literacies (Skill) - Charles Sturt Graduates demonstrate the skills required to locate, access and critically evaluate existing information and data.
  • Information and Research Literacies (Application) - Charles Sturt Graduates synthesize and apply information and data to different contexts to facilitate planning, problem solving and decision making.
  • Digital Literacies (Skill) - Charles Sturt Graduates use, create, communicate and share multimodal information in digital environments.
  • Digital Literacies (Application) - Charles Sturt Graduates ethically, legally, safely and critically use technology to select, create and share information and participate in online learning, professional and social communities.
MARKING CRITERIA AND STANDARDS
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The marks will be awarded according to the following rubric:

Criteria

HD XXXXXXXXXX%)

DI (75-84%)

CR (65-74%)

PS (50-64%)

Marks

Part A:
Financial management ratios are professionally constructed and submitted in an Microsoft Excel spreadsheet using the information provided in the case study.

Competent in preparing & calculating all financial ratios.

Minor Errors in preparing & calculating all financial ratios

Few errors in preparing & calculating financial ratios

Some errors preparing & calculating financial ratios.

/21

Part B:
Provide a written interpretation of the financial analysis you have developed in the form of an Annual Management Report submitted in word document.

Professional and high quality discussion of liquidity, stability, profitability and valuation of owners’ equity. Includes relevant industry references and benchmarking data. Drawn on a wide range of high quality & relevant academic references.

Meaningful discussion of liquidity, stability, profitability and valuation of owners’ equity. Includes mostly relevant industry references and benchmarking data. Drawn on range academic references

Mostly meaningful discussion of liquidity, stability, profitability and valuation of owners’ equity. Includes some reference to industry information (e.g. benchmarks).


Somewhat meaningful discussion of liquidity, stability, profitability and valuation of owners’ equity. Includes some basic reference to industry information (e.g. benchmarks).

/19

Presentation: Professionally presented spread sheet (Part A) and well written report (Part B) to support analysis and decision making.

The report includes graphs to support analysis and interpretation submitted in word document.

Highly professional spread sheet and well written report that reflects a high level of expertise and value for money. Information is in depth and relevant reflecting the interpretation and analysis with graphs and relevant information.

Well presented spread sheet and well written report that is supported with graphs and relevant information. The report includes sound interpretation and analysis of ratios supported with appropriate graphs and relevant information.

Mostly presented spread sheet and mostly well written report that is supported with graphs and relevant information. The report includes interpretation and analysis of ratios supported with mostly appropriate graphs and relevant information.

Spread sheet and report is presented in an appropriate manner that reflects basic interpretation and analysis. The report is somewhat supported with appropriate graphs and information.

/10

Mark:

Subject Grade:

/30

/20



PRESENTATION
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  • Your cover sheet will include your case study number, name and student number
  • The written report and should be presented as such and submitted as a word document. In industry, this type of report would typically cost a business $5000 - $6000, so please ensure your report reflects that level of investment and is professional and value for money.
  • Spreadsheets must be neatly presented (i.e. is appropriately formatted on the spreadsheet), are accurate and in reflect the information contained in the allocated case study
  • APA referencing is to be included where necessary.

Appendices:

Appendices will be well regarded in this assessment. Include material in the main body of the report to illuminate the condition of the business and support decision making. Your calculations, supporting spreadsheets, tables from references could be included as references. The appendices will have the detail of your logic if markers need to determine how you have completed your analysis.

Answered Same Day May 31, 2021 AHT231 Charles Sturt University

Solution

Ayush answered on Jun 03 2021
136 Votes
9
Annual Management Report
Australian Agriculture Enterprises
XX.05.2020

Sushant Pyakurel
Your Roll Number
Case Numbe
Table of Content
1. Executive Summary                                    2
2. Liquidity Position                                    3
3. Stability                                        3
4. Profitability                                        4
5. The Value of Owner’s Equity                                4
6. Recommendations                                    5
7. References                                        6
8. Appendices                                        7
9.
Executive Summary
Australian Agriculture Enterprises (AAE) is highly liquid. Its Bank Balance soared 1062% to $ 322,799 which was mainly driven by Canola, Wheat, and Sheep Trading. The firm has done most of its business in the 4th Quarter. The firm is in a stable position with mainly Short-Term Debt in the form of Creditors and GST. Its Long-Term Debt is decreasing. On the profit side, the firm has earned a Net Profit of 51% at Return of Capital of 8.3% in the period 1-Jan -31-Dec 2019. The firm has done reasonably well on the Gross Margins per Ha, DSE, and Animal. The value of equity has not changed much. The business and land contributed to new equity. The firm needs to improve its wheat inventory turnover. Also, it needs to rope in new suppliers rather than depending on only one. Further, it needs to negotiate better terms with suppliers. The Land Usage methods are advised to improve Gross Margins per Ha. The firm is advised to put some more money into Short-Term Securities.
We analyze the performance of Australian Agricultural Enterprises by assessing Liquidity, Stability, Profitability, the value of the owner equity, and finally make some recommendations for improving future prospects of the business.
Liquidity Position
The Cu
ent Ratio of the business has increased by 0.8 times from 6.8 times in 1-Jan to 7.6 times on 31-Dec. The Liquidity Ratio[footnoteRef:2] has increased a whopping 1062% going from 0.2 times in 1-Jan to 2.4 times on 31-Dec (Figure 1). This growth is attributed to Bank Balance which grew from a mere $ 11,000 to $ 322,799. The firm also received a GST component & refund worth $ 121,826 while a total GST payment made by the firm was $ 79, 037. Account Receivables (AR) went up by 77% going from $ 157,090 in 1-Jan to $ 278,460 on 31-Dec (Figure 2). This increase was mainly because of Escort Grains (Canola) which saw a rise of 213% from $72,100 to $ 225,720. Graincrop (Wheat) saw a moderate rise of 34% from $ 5,120 to $ 6,880 but the quantum was small as compared to Escort Grains. Treasury Wine Estates (TWE) and Western Wool Buyers (WWB) reduced their AR by 29% and 74% respectively with TWE
inging down its AR from $ 55,000 to $ 39,300 and WWE down from $ 24,870 to $6,560. The Wheat inventory has shot up by 5697% going from $ 3,300 in 1-Jan to $ 191,290 on 31-Dec. Account Payable (AP) also went up by 153% from $ 53,942 to $ 136,216 (Figure 2). The GST payable increased by 336%; going from $ 12,730 in 1-Jan to $55,518 on 31-Dec 2019. The firm had done most of its sales in the 4th quarter. The firm also made some fixed term investment the value of which stood at $ 30,000 in 1-Jan fetched a interest income $ 2,063. Also, an additional investment of $ 10.000 was made and stood at $ 40,000 on 31-Dec 2019. Overall, the firm is in a solid liquidity position and has generated lots of cash. [2: Liquidity Ratio includes only Bank Balance]
Figure 1: Cu
ent and Liquidity Ratio
Figure 2: Account Receivable and Payable
Stability
The firm’s Debt to Equity ratio has gone up by 34% from 2.2% in 1-Jan to 2.9% on 31-Dec. This rise in Debt to Equity is due to a rise in Cu
ent Liabilities which account payable only and which comprises of credit owed to Orange Rural and Australian Taxation Office in the form of GST. The credit owed to Orange Rural nearly doubled in the period of 1-Jan - 31-Dec 2019 from $ 41,212 to $ 80,698. The GST also surged by more than 3 times as mentioned in the liquidity section. However, these are a form of Short-Term Debt (STD) and should not be a wo
y. However, the firm was using Overdraft facilities the interest of which was a heavy payment of $ 13, 172. The company also took Long-Term Debt (LTD) in 2007 to acquire a property, the interest of which is paid quarterly. The principal outstanding was at the beginning of the year $ 115,000 came down by 3% to $ 111,680 at the end of the year. Thus, we can say that it is STD that is contributing to the rise of the Debt to Equity ratio while LTD is decreasing. STD has a life of a maximum of 1-Year. It also signifies a better relationship between Creditor (Orange Rural in this case) and the firm. The firm is quite stable.
Profitability
The Net Profit Ratio was 51% for the period of 1 -Jan to 31-Dec 2019 while the Return of capital[footnoteRef:3] (RoC) was 8.3% for the same period. The overall Expense Ratio was approximately 50% while the Livestock Expense Ratio[footnoteRef:4] and Crop Expense Ratio[footnoteRef:5] stood 14% and 40% respectively. The Expense Ratio was mainly driven by expense on Crop, Livestock and Permanent Labour. The permanent labour received a monthly payment of $ 4,780. Also, they received payment of $ 7,250 in the March and July. The overall permanent labour expense for the year stood at $ 62,300. Other expenses were minor in quantum and consisted of Fuel & Oil, Rent & Rates, Accountant, Insurance cost, and Telephone cost. Repair was major expense comprise of Plant Repair and Structural Repair. The overall repair cost was $ 13, 822. Of the crop expense, only 5% was spent on seeds while 28% was spent on Canola followed by Wheat, the expense was 26% (Figure 3). Orange and Grapes formed 21% and 19% expense portion respectively. Of the Livestock expense, 53% was spent to raise Sheep followed by 26 % to grow Pasture and 21% on to raise Cattle (Figure 4). [3: Net Profit before Interest and Tax calculated...
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