Resource ManagementFinancial Management 1 BSBFIM501 Manage Budgets and Financial Plans BSB51918 DIPLOMA OF LEADERSHIP AND MANAGEMENT BSB51415 DIPLOMA OF PROJECT MANAGEMENT ii WORKBOOK | © 2019 YOUNG...

ASSESMENT 2
FINANCIAL MANAGEMENT
Part A – Written or Oral Questions
1. List TWO sources of information that may help a manager to estimate the cost for the coming year. (2 Marks – 1 Mark per point)
Profit and loss statements
Previous years balance sheets.
2. Identify and
iefly describe THREE examples of external banking records which are used for the purpose of record keeping
(3 Mark – 1 Mark per example)
Bank statements: This record shows detailed information about all the transactions a business made during a period of time.
Deposit Books: These books can support all the deposits made on the business bank account, when the deposit was made, who made it and a short description to give details about the transaction.
Check Books: They are used to support all the expenditures made by the business.
3. List the relevant personnel you may communicate with in the organisation to ensure that documented outcomes and information about customers, competitors and business operations. (2 Marks)
- Financial Manager.
- Accountant.
- Financial controller.
- Production Manager.
- Supervisors.
4. What is a contingency plan? Explain the reasons for a contingency plan?
What are the steps to follow to prepare and develop a contingency plan?
List THREE specific areas to include in the plan. (10 Marks)
What is a contingency plan?
A contingency plan is a course of action designed to help an organization respond effectively to a significant future event or situation that may or may not happen.
Contingency planning is a component of business continuity, disaster recovery and risk management.
Contingency planning is about:
Command and control
Anticipating, and planning a response to something that might go wrong
Safety and security personnel
Documentation
Examples:
Purchasing: Changes suppliers
Reduces materials on hand
Finance: Backup financial records
Photocopy key documents
Explain the reasons for a contingency plan?
The reasons for a contingency plan are mainly to be prepared having a plan ‘B’ to face risks and develop strategies to avoid the negative consequences a risk can
ing with them
- Minimise the risk
- Determine how to respond to unsatisfactory performance
- To respond to external events such as natural disasters
What are the steps to follow to prepare and develop a contingency plan?
- Analyse risks: list out all of the possible events that could disrupt operations
- Determine the likelihood and impact of risks.
- Develop a process for each item.
- Look at alternatives
List THREE specific areas to include in the plan. (10 Marks)
Natural disasters such as fires , loss of data loss due, Damage, Mismanagement
5. What is a financial plan? What should financial plans include? What are the external and internal factors that may affect the financial planning? (10 Marks)
What is a financial plan?
A financial plan is an evaluation of the business cu
ent and future financial state by using cu
ently known variables to predict future cash flows, asset values and withdrawal plans.
To build a financial plan the following variables can be used: cu
ent net worth, tax liabilities, asset allocation and estate plans in developing financial plans.
These metrics are used along with estimates of asset growth to determine if a person's financial goals can be met in the future, or what steps need to be taken to ensure that they are.
It will examine the individual total position, both financial and non-financial and put in place a set of actions or plan.
What should financial plans include?
- Financial goals
- Budget forecast
- Net worth statement
- Cash flow analysis
- Risk management plan
- Long-term investment plan
- Funds required starting the entity
- Anticipated funding over the next few years
- Use of funding
What are the external and internal factors that may affect the financial planning?
-Internal sources are those that you can find within the organisation such as: clients personal details, employees details, employees costs, profit and loss statements, asset register, creditor details, expenses and so on.
Staff turnove
Financial position
Financial performance
-External sources are those that you can only find outside the organisation, this information usually comes from third parties sources such as: interest rates that can be found on the reserve bank web page, information about competitors coming from these companies’ reports and websites, taxation information and rates coming from the taxation office and so on.
Economic environment
Interest rates
Inflation
6. What is a budget? What are the objectives of a budget? What is the role of the master budget? (10 Marks)
What is a budget?
A budget is a formalised financial plan for the operations of an entity for a specified future period. This plan helps the organisation coordinate the activities needed to ca
y out the plan. A budget is a detailed quantitative plan for acquiring and using financial and other resources over a specified forthcoming time period.
What are the objectives of a budget?
-Developing and communicating organisational strategies and goals for the entire entity as well as for each segment, division and department.
- Assigning decision rights (authority to spend, and responsibility for decision outcomes);
- Motivating managers to plan in advance;
- Coordinating operating activities such as sales and production;
What is the role of the master budget?
The master budget is a one-year budget planning document for the firm encompassing all other budgets. It coincides with the fiscal year of the firm and may be
oken down into quarters and, further, into months. If the firm plans for the master budget to be an ongoing document, rolling from year to year, then normally a month is added...