Professional Documents
Culture Documents
1
Profits declined considerable in 2010 and 2011 after a good
performance in 2009. The reasons were mixed but controllable. In
2009, revenues were up and expenditure was low. In 2010,
expenses were pretty much the same but revenues dropped,
creating less profits. In 2011, revenues were up but so were the
expenses.
Expendi
Income
$1,724.
ture
$1,501.8
Tax
Profit
2011
92
$1,520.
5
$1,302.1
$222.95
$141.25
2010
36
$1,706.
1
$1,344.2
$218.25
$153.10
2009
52
$362.30
$234.03
Main areas for profit have been rooms division sales and food and
beverage sales. Main areas for loss have been more than expected
expenditure by housekeeping and kitchen. Profits and losses are
also closely linked to the quality of our Standard Operating
Procedures. Poor procedures that are inefficient lead to more labour
costs and higher expenditure figure at the end of the financial year.
1.2
Profits and loss are linked to each decision made on every single day
throughout the financial year within the organization. No one person
or operation can lead to surprising losses. They are a chain reaction,
one decision leading to the other catastrophe. Although Crimson is
not in loss, the profits are not as much as they could be considering
the fact that we have done better at same scales in the past.
Profit
Tax
2009
2010
Expenditure
2011
Income
0%
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Reasons for less than expected profits at Crimson are due to several
factors across an array of hierarchical issues and personnel. A few of
these are:
1.3
Crimsons new Corporate Marketing Plan is all about attracting new
customers and retaining them through excellent service standards.
Inform-Attract-Deliver-Retain is the new strategy under which they
plan to re-launch their hotel brand to promote growth within midsegment market. This entails companies, which are looking for
medium-priced accommodation option for their employees and
clients. Critical dates for the new plan are set in accordance with the
fact that it will take around 8 months to make the plan fully
functional and achievable:
Step
Timeframe
1 Month
Approval
2 Weeks
Finance Allocation
2 Weeks
Budgeting
1 Month
Marketing
2 Months
Launch
1 Month
2 Months
1.4
Cash flow is the dominant tool to analyse the performance of a
company. Cash flow is the movement of money into or out of a
business, project, or financial product. It is usually measured during
a specified, finite period of time. Measurement of cash flow can be
used for calculating other parameters that give information on a
company's value and situation. Cash flow can be used, for example,
for calculating parameters:
economic realities.
Cash flow can be used to evaluate the 'quality' of income
generated by accrual accounting. When net income is
composed of large non-cash items it is considered low
quality.
To evaluate the risks within a financial product.
In case of Crimson, analysing the cash of flow over last three years,
we observe the following:
2011
2010
2009
$435.84
$402.45
$493.56
$30.53
$85.40
-$45.36
$466.37
$487.85
-$748.95
-$649.90
$448.20
$1,105.74
It clearly shows that the money management has improved over the
last few years and long-term investments have been more closely
monitored to be invested in. purchase of fixed assets has increased
and so has the sale of fixed assets. Interest received has also seen a
substantial rise in last two years while the long-term deposits placed
with subsidiaries have reduced.
1.5
Tax is a legal duty towards our government, which in turn, manages
our communities for us and makes our environment a better place
to live. Statutory requirements depend a great deal on the nature
and type of business we operate. The nature of our business
determines many of the statutory requirements we need to meet.
The structure of the business
For example, we need to consider:
Employing staf
Location
Depending on where we locate, we probably should consider local
government regulations dealing with:
Development applications
Building permits
Height restrictions
Parking requirements
Landscaping.
Our industry
Different industries often require different licenses. For example, a
restaurant requires a food operator's license, whereas a building
company requires a building license. The licenses and permits
required vary according to the type of business and the local
government in which the business operates.
This subject goes on to cover:
1.6
Using software to assist in keeping our finances in order is a great
way to stay on track. Most financial software will allow we to keep
track of income, expenses, and even our investments. Some even
2. Microsoft Money
Microsoft Money Plus Premium makes it easy to begin planning for
our future, whether it is saving for college, getting out of debt, or
building our retirement nest egg. Microsoft Money Plus Premium
2009 takes investment management to a new level with enhanced
features that allow we to track our investments in great detail as
well as having quick access to research tools. It is important to note
that Microsoft Money is being discontinued as of 2009. We can still
use existing software, but there will be no more updates going
forward.
4. Mint.com
If we're looking for a good free money management option, look no
further than Mint.com. Mint is an entirely online application that
allows we to manage and track our expenses from any computer. In
addition, Mint seamlessly integrates with most existing bank
accounts to easily import our data. If we're always on the go, Mint
even has a mobile phone application that can help we keep tabs on
our spending wherever we are. A few more have been compared
below:
2.1
Resource allocation is the distribution of resources usually financial
- among competing groups of people or programs. Resource
2.2
Additional Cost Estimation Plan:
Item
Cost
Budgeting
$2,000
Marketing
$25,000
Equipment
$32,000
Communication
$4,000
IT
$10,000
Finance
$3,000
HR
$12,000
Media Resources
$5,000
Contingency Reserves
$18,000
2.3
Revenue
2011
2010
2009
2012
$580.13
$488.98
$460.08
$658.45
$1,093.37
$919.96
$1,073.95
$1,240.97
$0.00
$64.35
$85.54
$0.00
$1,673.50
$1,473.29
$1,619.57
$1,899.42
$29.89
$36.83
$69.50
$33.33
$0.00
$0.30
$4.09
$0.00
$0.05
$0.00
$0.04
$0.06
$11.68
$3.33
$0.00
$13.02
$9.80
$6.61
$13.32
$10.93
$51.42
$47.07
$86.95
$57.33
$1,724.92
$1,520.36
$1,706.52
$1,956.76
$1,264.40
$1,101.44
$1,164.77
$1,390.84
Depreciation/Amortization
$108.46
$104.14
$94.46
$119.31
Interest
$139.99
$104.99
$95.40
$153.99
Income
Food and Beverage
Rooms, Restaurant, Banquets
Other Operating Income
Total Income
Other Income
Dividend Income
Exchange Gain
Miscellaneous Income
Expenses
Operating and General Expense
Other
Total Other Expenses
Profit Before Tax
Tax
Net Profit After Tax
-$10.88
-$8.46
-$10.41
-$11.97
$1,501.97
$1,302.11
$1,344.22
$1,652.17
$222.95
$218.25
$362.30
$304.59
$81.70
$65.15
$128.27
$90.27
$141.25
$153.10
$234.03
$214.32
3.1
Informing any other employee is a process wherein the responsible
party must decide the level at which it is to be done. I would
personally inform the managers and supervisors through a proper
formal training session. A brief session for about an hour that
contains scope for a detailed presentation, Q&A session and general
discussions among the members. Rather than informally educating
everyone and running the risk of them asking repeatedly or making
information
about
budgeting,
finances
and
financial
3.2
Funds do not exist within the company in the form of cash. Most
fraudulent intentions come into effect through finance department,
which handles and monitors all the transactions. It is thus important
to have sufficient internal controls and checks to immediately
highlight the responsible fraudster. It is not possible to prevent
people from doing things. It is however, possible to have systems
wherein any unwanted behavior becomes highlighted before bigger
damage is on its way. Thus excellent bookkeeping and internal
controls and checks are the only way through in this case. To have
an efficient and fraud-proof system of bookkeeping we need to:
1.
2.
3.
4.
5.
3.3
Looking at the figures, it is quite apparent that the finances side of
Crimson is unstable at times. As compared to 2009, income has not
seen a substantial increase while the expenses have been rising all
along. Interest payments have increased in magnitude. Net profit
before tax has fallen substantially:
2009
362.30
2011
141.25
3.4
Revising the present budget for managing contingencies is a great
step, as it will help Crimson to deal with the crisis-oriented situation
with ease and efficiency and get back to normal at the earliest
notice. To do this, it is important that Crimson starts to include a
contingency budget within its main planning and organizing activity
at the beginning and the end of each year. Risk management is the
process of identifying and proactively responding to project risks.
Generally (but not always) we will look for ways to eliminate risks or
to minimize the impact of a risk if it occurs.
However, what if we're unsuccessful in preventing some risks? In
that case, the risk will actually occur and cause some type of
problem for our project. If the risk occurs, there may be some
monetary impact on our project.
A risk contingency budget can be established to prepare in advance
for the possibility that some risks will not be managed successfully.
The risk contingency budget will contain funds that can be tapped
so that our project doesn't go over budget.
The question is--how do we know how much money to place into the
risk contingency budget account? We can use Expected Monetary
Value (EVM) as a technique to quantify the risk into budget terms.
The risk contingency budget works well when there are a number of
risks involved. The more risks the team identifies, the more the
overall budget risk is spread out between the risks. The EVM
technique provides a formula for determining the right amount of
budget to apply to the risk contingency budget.
3.5
Our ability to tell the complete story of what happened to all client
funds from the date of receipt to the date of the final disposition is a
pivotal requirement of our job.
We need to maintain a good audit trail that ties together all the
records that relate to a financial transaction. We may record the
same information several times in various journals and ledgers to
accomplish this function.
An audit trail is a number of documents that make it possible to
trace what happened to trust or general funds that the practice has
handled. It should start when we receive funds on behalf of a client
and continue until we issue the final cheque and the balance that
we owe the client is zero.
The following documents provide a paper trail for most transactions
that we will record:
3.6
Compliance with the legislation is a vital step we need to take
alongside every other step we take. We want to be a legally
operating company at all times and thus we need to have systems
in place which are flexible and evolving enough to keep us up-todate with the legislation and statutory requirements:
There are two compliance management models that you can use to
ensure this:
4.1
There is a set of legal requirements when it comes to publishing
4.2
Comparing the financial performance of past years with the current
one is a base benchmark of performance analysis and makes
obvious sense. We need to know how we did over a period of 365
days the same time last year and how did we do it in the current
one. Monitoring and measuring figures and comparing them with
the historic ones reveal patterns and trends that are useful to make
decisions that will have a profound impact on the future of the
company. Companies traditionally judge their quarterly financial
performance by comparing their latest quarter with the same
quarter of the previous year. They refer to this as year-over-year
(YTY) change. Sometimes companies also point out how the current
quarters results compare to the previous quarter, what is termed as
sequential change. Comparing results of the fast three years, it is
apparent that few changes are required to keep the business on a
profitable track. Looking at the financials, it could be suggested that
Crimson should:
1.
2.
3.
4.
5.
6.
4.3
assessment
Economic Dependency
for
example,
reliance
upon
underlying assumptions
Business planning including forecast income streams and
forecast expenditure
Assets and liabilities
Financial statements audited by an independent qualified
auditor
Financial records for the previous 12 months, including profit
including assumptions
Tax records
Information about current debts and debtors, credits and
financial
projections
including
4.4
The current environment for financial management is a complex
one:
functions
Increasingly there are political risks as well as business risks.
successful delivery
Ensuring managers
set
and
track
progress
against
account
of
finance
when
taking
decisions.
The
planning,
budgeting,
performance
management
system, with a clear line of sight between the money, the plans and
the delivery of operational and strategic priorities throughout the
business. Leadership, People, Processes, Stakeholders, and Results
five elements that need to be aligned and managed to maintain a
viable financial business.
5.1
The term financial viability refers to the short-, middle- and longterm ability of an organization to pay its bills, secure reliable and
diverse sources of income and balance income and expenses.
An organization, which continuously fulfills all these requirements, is
often in publications called financially sustainable. It has achieved
financial sustainability.
5.2
Asset
Liability
Equity
Income
Expense
Pay as you go
(PAYG)
Goods and
services tax
(GST)
Fringe benefit
tax
Business
activity
statement
(BAS)
Work Cover
5.3
Bilateral or
regional trade
agreements
International
Commercial
Terms
(INCOTERMS)
Trade
Practices Act
Warsaw
Convention
World Trade
Organization
determination
s
Australian
Accounting
Standard
Board (AASB)