Template 1: Financial ratios

Financial ratios
Financial ratios	Calculations
Current ratio
Debt to equity ratio
Gross profit ratio
Inventory turnover
Net profit ratio
Return on assets

Template 2: Financial strategy

Financial strategy (400-500 words)

Financial objectives

Budget priorities

The capacity of existing financial systems to invest in the new identified market based on financial ratios.

Strategies for achieving the objectives

Part B: Forecast financial data and business system requirements.

This part of the activity is a continuation of part A of this activity.

This part of the activity requires you to forecast financial data and business system requirements, including additional expenditure requirements.

To complete this activity, you must:

• Analyse and use the followingbudget systems:
  • Activity-based budgeting.
  • Incremental budgeting
• Follow the templates provided (Template 3 and Template 4) to complete the forecasts and report them to the General Manager.

To do so, you are required to follow the steps given below:

• Step 1: Analyse the following financial reports given in the case study.
  • Profit and loss statement
  • Balance sheet
• Step 2: Prepare the forecasted profit and loss statement and balance sheet using 'Template 3' and 'Template 4'.
• Analyse the expected sales and expenses for B2C engagements (given in the case study).
• Analyse the financial predictions for the next years for both B2B and B2C engagements (given in the case study).
• Document the forecasted profit and loss statement and balance sheet using 'Template 3' and 'Template 4'.

Template 3: Forecasted profit and loss statement: Include and delete rows as required

	2021	2022
Revenue
Direct Costs
Gross Margin
Gross Margin %
Operating Expenses
Salaries & Wages
Employee Related Expenses
Loan payments
Inventory purchases
Office supplies
Total Operating Expenses
Operating Income
Interest Incurred
Depreciation and Amortization
Gain or Loss from Sale of Assets
Income Taxes
Total Expenses
Net Profit
Net Profit / Sales

Template 4: Forecasted balance sheet: Include and delete rows as required

	2021	2022
Cash
Accounts Receivable
Other Current Assets
Total Current Assets
Long-Term Assets
Accumulated Depreciation
Total Long-Term Assets
Total Assets
Accounts Payable
Income Taxes Payable
Sales Taxes Payable
Total Current Liabilities
Long-Term Debt
Long-Term Liabilities
Total Liabilities
Paid-In Capital
Retained Earnings
Earnings
Total Owner's Equity
Total Liabilities & Equity

Part C: Consult General Manager and External financial advisers.

This part of the activity is a continuation of part A and part B of this activity.

This part of the activity requires you to consult the following stakeholders about financial information to support decisions.

• General Manager
• External financial advisers (Two).

The trainer/assessor will take on the role of the General Manager and assign the role of the External financial advisers to your class mates.

The trainer/assessor must further brief the student and the staff members of their roles and responsibilities and script to be followed before the meeting.

The roles and responsibilities are as below:

Roles and responsibilities (Operations Manager/Student)

• Conveys information about financial ratios and financial strategy (developed in part 1) using language, format and style appropriate to the audience.
• Uses listening and questioning to confirm and clarify understanding.
• Discuss the capacity of the existing financial systems to invest in the new identified market, i.e., B2C engagements.
• Gather feedback from the General Manager and External financial advisers regarding the best sources to invest in the new business segment.
• Answer the questions asked by the General Manager and External financial advisers.

Roles and responsibilities (General Manager)

• Understand and clarify information regarding the organisation's financial strategy.
• Ask the questions given in the Script provided.
• Provide feedback regarding the best sources to invest in the new business segment.

Roles and responsibilities (External financial advisers)

• Understand and clarify information regarding the organisation's financial strategy.
• Ask the questions given in the Script provided.
• Provide feedback regarding the best sources to invest in the new business segment.

To conduct the meeting, you must follow the meeting process and the meeting script provided below.

Meeting process:

Before the meeting	1. meeting agenda. Confirm the meeting time and place with the trainer/assessor. Use the meeting agenda template provided to prepare the meeting agenda. 2. E-mail the following documents developed in Activity 1 and Activity 2 along with the meeting agenda to the meeting participants and request confirmation for the meeting. Template 1: Financial ratios. Template 2: Financial strategy. Template 3: Projected profit and loss statement Template 4: Projected balance sheet
During the meeting	1. Welcome the participants 2. Discuss the information about financial ratios and financial strategy (developed in part 1). 3. Clarify the understanding of the meeting participants. 4. Discuss the capacity of the existing financial systems to invest in the new identified market, i.e., B2C engagements. 5. Gather feedback from the General Manager and External financial advisers regarding the best sources to invest in the new business segment. 6. Conduct the meeting based on the 'Meeting script' provided.
After the meeting	1. Summarise the agreed outcomes using the meeting minutes template provided.

Meeting script: Meeting

Script: Meeting 1 The Operations Manager will first discuss the outcomes of financial ratios and financial strategy (developed in part 1) After discussing key features of the outcomes of financial ratios and financial strategy, the Operations Manager will discuss the capacity of the existing financial systems to invest in the new identified market, i.e., B2C engagements. The Operations Manager will then answer the questions asked by the General Manager and Financial advisers.

Script for General Manager and External Financial advisers

General Manager will ask the following questions: 1. What are the start-up requirements for venturing into the new market? 2. What do you think will be the best method to source funds to venture into the new market? External financial advisers will ask the following questions: 1. What is the capacity of existing financial systems to invest in the new market? 2. What are the outcomes of financial ratios calculated? 3. What are the expected profits from B2C engagements (new market) for the next year? 4. Why do you think that method chosen to source the funds is the most appropriate method?

MEETING AGENDA TEMPLATE:

1. Meeting Objective

Name	Department/Division	E-mail	Phone
2. Attendees

3. Meeting Agenda
Topic	Owner	Time

4. Pre-work/Preparation (documents/handouts to bring, reading material, etc.)
Description	Prepared by

MEETING MINUTES:

Meeting Minutes:
Date of Meeting: (MM/DD/YYYY)		Time:
Minutes Prepared By:		Location:
1. Meeting Objective
2. Attendance at Meeting
Name	Department/Division	E-mail	Phone
3. Agenda and Notes, Decisions, Issues
Topic	Owner	Time
4. Action Items
Action	Owner	Due Date
5. Next Meeting (if applicable)
Date: (MM/DD/YYYY)		Time:		Location:
Objective:

Part D: Prepare recommendations and assessment indicators for budget expenditure

This part of the activity is a continuation of part A-C of this activity.

This part of the activity requires you to prepare recommendations and assessment indicators for budget expenditure according to organisational and legislative requirements.

To prepare recommendations and assessment indicators for budget expenditure, you must use Template 5 provided and include the following details:

• Recommendations for sourcing funds to venture into the new market.
• Assessment indicators for budget expenditure.
• Organisational and legislative requirements for budget expenditure.

Template 5: Recommendations and assessment indicators for budget expenditure

Recommendations and assessment indicators for budget expenditure

Recommendations for sourcing funds to venture into the new market (150-200 words)

Assessment indicators for budget expenditure (100-150 words)

Organisational and legislative requirements for budget expenditure (150-200 words)

Part E: Present and communicate recommendations to relevant stakeholders, including organisational staff

This part of the activity is a continuation of Part D of this activity.

This part of the activity requires you to present and communicate recommendations prepared in Part D of this Activity to the following stakeholders:

• General Manager
• External financial advisers (Two).
• IT Manager
• Marketing Manager

To present recommendations, you are required to:

• Write an e-mail to the above stakeholders and present recommendations.
• Follow the e-mail guidelines provided.
  • Ensure the text written in the e-mail is grammatically correct and free of errors.
  • Use business style writing.
  • Write an appropriate subject line.
  • The text must brief stakeholders on the recommendations and assessment indicators.
  • Attach recommendations and assessment indicators (Template 5) to the e-mail.

For Activity 1, your Assessor will look for evidence that you have:

1. Analysed financial reports and established the capacity of existing financial systems to invest in a new identified market.

• Analysed the stated financial reports.
• Calculated the stated ratios to assess the financial health of the organisation.
• Used correct formulas to calculate financial ratios.

1. Prepared a financial strategy.

• Analysed the start-up budget requirements for the new market, i.e., B2B engagements.
• Assessed the capacity of existing financial systems to invest in the new identified market.
• Devised objectives and developed strategies (roadmap) to achieve the objectives.
• Included the budget priorities.

1. Forecasted financial data and business system requirements, including additional expenditure requirements.

• Analysed and used budget systems and reporting procedures.
• Prepared the forecasted profit and loss statement and balance sheet.

1. Consulted the General Manager and External financial advisers.

• Conveyed information about financial ratios and financial strategy using language, format and style appropriate to the audience.
• Used listening and questioning to confirm and clarify understanding.
• Discussed the capacity of the existing financial systems to invest in the new identified market, i.e., B2C engagements.
• Gathered feedback from the General Manager and External financial advisers regarding the best sources to invest in the new business segment.
• Answered the questions asked by the General Manager and External financial advisers.

1. Prepared recommendations and assessment indicators for budget expenditure. Provided the following details:

• Recommendations for sourcing funds to venture into the new market.
• Assessment indicators for budget expenditure.
• Organisational and legislative requirements for budget expenditure.

1. Presented and communicated recommendations to relevant stakeholders, including organisational staff:

• Wrote an e-mail to the above stakeholders and presented recommendations.
• Followed the e-mail guidelines.

Activity 2: Implement financial strategy

This activity is a continuation of Activity 1.

This activity requires you to implement the financial strategy prepared in Activity 1.

To do so, you are required to complete the following parts:

• Part A: Identify resourcing requirements
• Part B: Prepare an implementation and monitoring plan to support staff in the implementation of recommendations

Part A: Identify resourcing requirements

This part of the activity requires you to identify the resourcing requirements to implement the financial recommendations prepared in Part D of Activity 1 and implement forecasted financial statements prepared in part B of Activity 1.

You must document resourcing requirements using Template 6.

To identify the resourcing requirements, you are required to follow the steps given below:

• Step 1: Analyse the following forecasted budgets/statements prepared in Part B of Activity 2:
  • Forecasted profit and loss statement
  • Forecasted balance sheet
• Step 2: Analyse the financial recommendations prepared in part D of Activity 3.
• Step 3: Identify and document resourcing requirements to implement the financial recommendations prepared in Part D of Activity 1 and implement forecasted financial statements prepared in part B of Activity 1. Document the outcomes usingTemplate 6.

Template 6: Resourcing requirements

Resourcing requirements (200-250 words)

Part B: Prepare an implementation and monitoring plan to support staff in implementing recommendations

This part of the activity requires you to prepare an implementation and monitoring plan to support staff in implementing recommendations prepared in part D of Activity 1 and implementing forecasted financial statements prepared in part B of Activity 1.

To do so, you must analyse the following documents prepared in Activity 1:

• Forecasted financial statements prepared in part B of Activity 1. (Template 3 and Template 4)
  • Forecasted profit and loss statement
  • Forecasted balance sheet
• Recommendations prepared in part D of Activity 1. (Template 5)

To prepare an implementation and monitoring plan, you are required to follow the steps given below:

• Step 1: Prepare an implementation plan using Template 7 to support staff in implementing recommendations prepared in part D of Activity 1 and implementing forecasted financial statements prepared in part B of Activity 1. Include the following details in the Implementation Plan (Template 7).
  • Four (4) financial targets to be achieved by the end of the next financial year.
  • Two (2) risks associated with the achievement of each financial targets.
  • Strategies to minimise risks.
  • Resources required.
• Step 2: Prepare a monitoring plan using Template 8to support staff in implementing recommendations prepared in part D of Activity 1 and implementing forecasted financial statements prepared in part B of Activity 1. Include the following details in the Monitoring Plan (Template 7).
  • Four (4) financial indicators to be monitored during the implementation of forecasted financial statements.
  • Steps to be implemented to monitor financial indicators over a full planning cycle.
  • Timeframes to monitor the financial indicators over a full planning cycle.
  • Resources required to monitor financial indicators.
  • Compliance mechanism to be followed to procure resources. Include details regarding financial legislations and policies and procedures to be followed.

Template 7: Implementation plan

Implementation plan
Four (4) financial targets to be achieved	Two (2) risks associated with the achievement of each financial targets	Strategies to minimise risks	Resources required.

Template 8: Monitoring plan

Monitoring plan
Four (4) financial indicators to be monitored.	Steps to be implemented to monitor financial indicators.	Timeframes to monitor the financial indicators over a full planning cycle.	Resources required.
Compliance mechanism to be followed to procure resources (150-200 words)

For Activity 2, your Assessor will look for evidence that you have:

1. Identified resourcing requirements based on the following.

• Forecasted budgets/statements.
• Financial recommendations.

1. Prepared an implementation plan to support staff in implementing recommendations and included the following details:

• Four (4) financial targets to be achieved by the end of the next financial year.
• Two (2) risks associated with the achievement of each financial targets.
• Strategies to minimise risks.
• Resources required.

1. Prepared a monitoring plan and included the following details:

• Four (4) financial indicators to be monitored during the implementation of forecasted financial statements.
• Steps to be implemented to monitor financial indicators over a full planning cycle.
• Timeframes to monitor the financial indicators over a full planning cycle.
• Resources required to monitor financial indicators.
• Compliance mechanism to be followed to procure resources. Include details regarding financial legislations and policies and procedures to be followed.

Activity 3: Monitor implementation of financial strategy

Activity context:

During the implementation of the forecasted budgets or financial statements for the initial year, i.e., 2021, the following were actual income and expenditure:

• Actual sales from B2B engagements increased by 20%, as expected in the forecasts.
• Expected sales for the expenses for the B2B engagements increased by 20%, as expected in the forecasts.
• Sales and expenditure from B2C engagements:
  • Sales:
    • $360,000 (10% less than forecast)
  • Expenses:
    • Labour cost: 20% of the sales/revenue
    • Indirect costs: 30% of the sales/revenue

Revisions to be made to the budget priorities in the budget for the year 2022 to meet operational contingencies and risk management:

• Expected sales and expenses for the B2B engagements will be same as forecasted.
• Expected sales and expenses from B2C engagements:
  • Sales: Year 2022
    • $540,000
  • Expenses: Year 2022
    • Labour cost: 20% of the revenue
    • Indirect costs: 35% of the revenue

Description of the activity:

This activity is a continuation of Activity 1 and Activity 2.

This activity requires you to monitor the implementation of the financial strategy. To do so, you are required to complete the following parts:

• Part A: Monitor actual income and expenditure against budgets and identify deviations from budgets that generate an adverse effect on budget objectives
• Part B: Develop action plans to remedy significant deviations from budget objectives and projections
• Part C: Revise budget forecast according to changes in budget deviations.

Part A: Monitor actual income and expenditure against budgets and identify deviations from budgets that generate an adverse effect on budget objectives

This part of the activity requires you to monitor actual income and expenditure against forecasted budgets and identify deviations from budgets that generate an adverse effect on budget objectives.

To do so, you are required to follow the steps given below:

Step 1: Monitor actual income and expenditure against forecasted budgets.

• Assess the actual income and expenditure information given in the Activity context.
• Compare the actual income and expenditure against the forecasted profit and loss statement and balance sheet and document the outcomes using Template 9 and Template 10.
  • In column 2 of Template 9 and Template 10, include the forecasted figures for profit and loss statement and balance sheet.
  • In column 3 of Template 9 and Template 10, calculate the actual figures based on the actual income and expenditure information given in the Activity context.
  • In column 4 of Template 9 and Template 10, calculate deviations based on forecasted and actual income and expenditure and mark them as favourable or unfavourable.

Step 2:Based on thecalculations performed in Step 1, identify the unfavourable deviations from the budget that generate an adverse effect on budget objectives and document using Template 11.

Template 9: Forecasted versus actual profit and loss statement: Include and delete rows as required

	Forecasted figures	Actual figures	Deviations (Favourable or unfavourable)
Revenue
Direct Costs
Gross Margin
Gross Margin %
Operating Expenses
Salaries & Wages
Employee Related Expenses
Loan payments
Inventory purchases
Office supplies
Total Operating Expenses
Operating Income
Interest Incurred
Depreciation and Amortization
Gain or Loss from Sale of Assets
Income Taxes
Total Expenses
Net Profit
Net Profit / Sales

Template 10: Forecasted versus actual balance sheet: Include and delete rows as required

	Forecasted figures	Actual figures	Deviations (Favourable or unfavourable)
Cash
Accounts Receivable
Other Current Assets
Total Current Assets
Long-Term Assets
Accumulated Depreciation
Total Long-Term Assets
Total Assets
Accounts Payable
Income Taxes Payable
Sales Taxes Payable
Total Current Liabilities
Long-Term Debt
Long-Term Liabilities
Total Liabilities
Paid-In Capital
Retained Earnings
Earnings
Total Owner's Equity
Total Liabilities & Equity

Part B: Develop action plans to remedy significant deviations from budget objectives and projections

This part of the activity is a continuation of part A of this activity.

This part of the activity requires you to develop action plans to remedy significant deviations from budget objectives and projections identified in part A of this activity.

You must use Template 11 to develop action plans. You must develop an action plan for each negative deviation identified.

To develop the action plans, you must follow the steps given below:

• Step 1: Identify three (3) negative deviations based on the outcomes of part A of this activity.
• Step 2: Develop an action plan for each identified negative deviation. Include the following information in each action plan:
  • Three (3) risks based on the negative deviation.
  • Remedial action
  • Key performance indicators
  • Person responsible

Template 11: Action plans

Action plans
Negative deviation 1:
Three (3) risks based on the negative deviation.	Remedial action	Key performance indicators	Person responsible.
Negative deviation 2:
Three (3) risks based on the negative deviation.	Remedial action	Key performance indicators	Person responsible.
Negative deviation 3:
Three (3) risks based on the negative deviation.	Remedial action	Key performance indicators	Person responsible.

Part C: Revise budget forecast according to changes in budget deviations.

This part of the activity is a continuation of part B of this activity.

This part of the activity requires you to revise budget forecasts based on budget deviation identified in part B of this activity and to meet the operational contingencies and risk management given in the activity context.

You must revise budget forecasts using Template 12 and Template 13.

To revise budget forecasts, you must follow the steps given below.

• Step 1: Analyse the forecasted financial statements prepared in Activity 1 (Part B).
• Step 2: Analyse the deviations identified in part B of this activity.
• Step 3: Assess the revisions to be made to the budget priorities in the budget for the year 2022 to meet operational contingencies and risk management (given in the Activity context.
• Step 4: Revise the budget forecasts based on the analysis conducted in Step 1 to Step 3 and document the revised budget forecasts using Template 12 and Template 13.

Template 12: Revised profit and loss statement: Include and delete rows as required

	2021	2022
Revenue
Direct Costs
Gross Margin
Gross Margin %
Operating Expenses
Salaries & Wages
Employee Related Expenses
Loan payments
Inventory purchases
Office supplies
Total Operating Expenses
Operating Income
Interest Incurred
Depreciation and Amortization
Gain or Loss from Sale of Assets
Income Taxes
Total Expenses
Net Profit
Net Profit / Sales

Template 13: Revised balance sheet: Include and delete rows as required

	2021	2022
Cash
Accounts Receivable
Other Current Assets
Total Current Assets
Long-Term Assets
Accumulated Depreciation
Total Long-Term Assets
Total Assets
Accounts Payable
Income Taxes Payable
Sales Taxes Payable
Total Current Liabilities
Long-Term Debt
Long-Term Liabilities
Total Liabilities
Paid-In Capital
Retained Earnings
Earnings
Total Owner's Equity
Total Liabilities & Equity