MAA104-Financial Literacy

MAA104-Financial Literacy

Trimester 3, 2022

Problem-based Assignment

DUE DATE:

Friday 13^th January 2023 11.59pm

PERCENTAGE OF FINAL GRADE: 10%

WORD LIMIT: 1500 words

Learning Outcome Details

Assessment Feedback:

Students who submit their work by the due date will receive their marks and feedback within 15 days of submission

Submission Instructions

1. This assignment is to be submitted ONLINE ONLY (You are NOT required to submit a hard copy).
2. You must submit your report in Word format with your surname and student id as the file name (for example: docx; Please convert your .pages file to a .docx/.doc file if you are using pages on Mac).
3. The completed assignment must be submitted into the submission folder in the Assessment Tile. (Assessments -> Assignments)
4. This is an individual submission and covers topics 5-8.
5. You are not required to upload an Assignment Cover Sheet. You will complete a Plagiarism declaration when you access the Submission Folder.
6. Once submitted you cannot take your assignment back BUT you CAN SUBMIT another version. The most recent version submitted will be marked.
7. Please refer to the rubric for guidance on the marking
8. Harvard Referencing is

A note on plagiarism and collusion

Plagiarism and collusion are forms of cheating and is considered a serious academic misconduct, and severe penalties are associated with them. Please refer to the MAA104 unit outline for your responsibilities with regards to plagiarism and other academic offences.

You must keep a backup copy of every assignment you submit, until the marked assignment has been returned to you. In the unlikely event that one of your assignments is misplaced, you will need to submit your backup copy.

Any work you submit may be checked by electronic or other means for the purposes of detecting collusion and/or plagiarism. You should check that you can see your assignment in the Assignment Submission folder after upload.

Notes

• Penalties for late submission: The following marking penalties will apply if you submit an assessment task after the due date without an approved extension: 5% will be deducted from available marks for each day up to five days, and work that is submitted more than five days after the due date will not be marked. You will receive 0% for the task. 'Day' means working day for paper submissions and calendar day for electronic submissions. The Unit Coordinator may refuse to accept a late submission where it is unreasonable or impracticable to assess the task after the due date.

• For more information about academic misconduct, special consideration, extensions, and assessment feedback, please refer to the document Your rights and responsibilities as astudent in this Unit in the subject Unit Outline.

Question

Tanya had recently taken over her aunts business selling pots and ceramic wares after she graduated from Deakin University with a Bachelor of Business in 2019. Now she wants you to do some financial analysis for the business. Tanya has provided you with the following financial statements for 2020/2021 and 2021/2022 fiscal years. Please ignore any taxation related matters in this question.

Income Statement

Balance Sheet as at 30^th June

She has also provided you with the following account balances for her business as at the fiscal end of 2023.

She has also made the following forecasts for her business in 2024.

Cash collections 70% of Tanyas quarterly sales are cash sales and the remaining 30% are credit sales. Cash collections from credit customers are:

80% of credit sales are collected in the quarter following the sale.

20% of credit sales are collected in the second quarter following the sale.

80% of all purchases are paid for in the quarter they are purchased, with the remaining 20% paid for in the following quarter.

The business also plans to take out a small business loan of $50,000 at the end of Quarter 1 2024 and will be repaying it back in Quarter 1 of 2025. Equipment costing $70,000 is expected to be bought in Q2 2023 following the receipt of the business loan.

The selling expenses are $15,000 each quarter. Administrative expenses are $12,000 per quarter, excluding depreciation expense. Expenses are paid in the quarter they are incurred.

Tanya also predicts a cash at hand amounting to $16,300 as at 30^th June 2023.

Required:

1. From the information above, prepare properly classified Income Statement for the 2022/2023 fiscal year. (5 marks)

2. From the information above, prepare Balance Sheet as at the fiscal end of 2023.(5 marks)

3. Prepare a schedule of cash collections, a schedule of purchase payments, and a cash budget for all the four quarters in 2024. (5 marks)

4. Tanyas aunt had started the business as a sole-proprietorship upon commencement of the business. She remains a major owner of the business whilst Tanya is in charge of the financial and operating matters of the business. Should the ownership structure of the business be converted from sole trader to a partnership or a private limited company? Please provide three justifications. (5 marks)

5. Tanya was approached by her friend who works as a Funds Manager to invest in a project that promises her 5.65% p.a. compounding annually for three years. Her initial investment required is $100,000. She is aware that the interest rates paid by the banks on term-deposits are currently around 4.9% for a 36-months term.

• How much can Tanya expect to receive at the end of the investment project should she invest at 5.65%?

• What are the advantages and disadvantages of placing this amount in a term-deposit? Suggest any other investment options which she could consider to earn a higher return on investment. (5 marks)

Please prepare a report addressing the above questions. To answer those questions, you can make your own assumptions if necessary. There is no format requirement for this report other than those listed in Submission Instructions.

Total 30 marks