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Payroll Service

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CREATING A Business Plan for your Payroll Department
A Step by Step Guide 

(Best viewed in 800 x 600 resolution)

A FREE step by step guide that details the methods, procedures and documentation required to create a Business Plan for your Payroll Department. A spreadsheet template together with an example can be downloaded.

The guide details the methods and routines required for a manufacturing business, but if you are a retailer, wholesaler or in the business of providing a service, don't stop reading. Creating a Business Plan for your Payroll Department for any type of business for the most part follows the same procedures. A manufacturing business requires additional calculations relating to manufacturing activities, manufacturing expenses; product costs and stocks. The guide is sufficiently detailed for other types of business to recognise those elements and calculations they have no requirement to include in their plans. Spreadsheet templates are available and can be downloaded. Three separate templates are available that are suitable for either Manufacturing; Wholesaling or Retailing and Service types of business (see the end of this paper).

 


Goals Current Marketing Action Plans Cap. Exp. Monitoring Profitability Evaluation P & L A/c Balance Sheet Cash Flow Analysis by Accounting Period


     

  1. MISSION STATEMENT (See Figure 1)
    1. The Mission Statement states a Company's reason and purpose for being in business. Its purpose is to communicate this to whoever has dealings with the Company both internal (e.g.. employees) and external (e.g.. customers suppliers and shareholders).

     

  2. POLICY STATEMENT. (See Figure 1)
    1. The Policy Statement lists the policies that are considered necessary to comply with the mission statement and achieve the Company's basic objectives.
    2. The statements in the policy document must be realistic and have substance justifying their inclusion, covering such areas as:-
      1. Markets to be supplied and market share target.
      2. Service to customers and attitudes to debt collection
      3. Product quality, price positioning and technology.
      4. Sourcing of raw materials and/or product. The degree of communication with and loyalty to suppliers.
      5. Relationships with employees. The degree of communication, the principles with regard to payment levels, rewards for efficiency and length of service, training methods and support.
      6. The degree of communication with shareholders, and dividend policy.
      7. Financial parameters, such as equity to borrowing ratios and profit levels.

    Figure 1:- Mission and Policy Statement

    Figure 1 illustrates a typical Mission and Policy Statement for a company, which is trading on the basis of service and quality.
    It is important to recognise the basic philosophy and policies, by which you carry out your business, and which you believe gives you competitive advantage. It could be any combination of quality, service, price, proximity to the market, reputation, skills etc.

     

     

    Business Plan for your Payroll Department
    COMPANY .....XYZ Manufacturers Ltd
    From April 5th 1999.....To March 31st 2000
    MISSION and POLICY STATEMENT
    AREA/FUNCTION STATEMENT
    MISSION
    Always to look for opportunities to grow the business, using proven skills to create value for the shareholders.
    ETHICS
    The Company shall conduct its dealings in a fair manner and in such a way to enhance its reputation in both the business and general community.
    At all times and in all transactions the Company will comply with the legal requirements of the country in which it is dealing.
    MARKETS
    SUPPLIED
    SHARE

    To supply the product to the Asia Pacific region.
    A market share of at least 15% in each market segment shall be the minimum target.
    Entry into new markets in the region, should show prospects of achieving the market share requirement in the medium term.
    CUSTOMERS
    SERVICE STANDARDS



    DEBT COLLECTION

    The Company shall offer quality, service and value for money, at least comparable with that of its main competitors.
    Product will be supplied from stock. On average 90% of product should be available on receipt of order.
    A customer can qualify for discounts, based on the volume of business transacted in a given period.
    Before product is supplied, each new customer will be required to supply a banker's reference and at least one trade reference.
    Normal credit terms will be in accordance with industry practice. Current terms = Statement date 20th of the month. Payment due 10th of the month following.
    Extended credit will be given to customers, only in exceptional circumstances.
    PRODUCT
    QUALITY

    PRICE


    TECHNOLOGY


    The product quality is guaranteed. Product subject to customer complaint will be replaced, or if requested payment refunded.

    The product is targeted in the "medium" price bracket.
    Discounts will not be given outside the normal price structure. The price list structure will give discounts related to the size of order.

    The technical efficiency of the product will be maintained at a competitive level.

    SUPPLIERS
    SOURCING
    LOYALTY

    COMMUNICATION
    PAYMENTS


    Local suppliers will be given preference, provided that their quality, service and cost meets that of imported alternatives.
    Established suppliers will be given notice of any intention to change sources that will affect them.

    Detailed product specifications and any revisions will be given to suppliers in writing.
    Payments to suppliers will not be unduly delayed, without prior negotiation.

    EMPLOYEES
    COMMUNICATION
    WAGES/SALARIES
    LOYALTY/SERVICE
    EFFICIENCY
    TRAINING

    The Company shall communicate general policy through the medium of the Company Newsletter.
    Salaries will be in accordance with industry standards, and structured to maintain staff turnover within 10%.
    Employees will receive additional benefits related to length of service and attendance
    Deparmental managers will meet with staff each month to discuss actual performance compared with plans.
    Objectives will be agreed annually for each employee and performance reviewed quarterly.
    The Company will maintain internal training and support external industry related and professional training.
    SHAREHOLDERS
    COMMUNICATION
    DIVIDENDS

    The Company will hold shareholders' meetings in accordance with legal requirements. In addition a half yearly report will be sent to shareholders.
    Dividends distributed will be two thirds of profits available for distribution.
    FINANCE
    EQUITY/BORROWING
    PROFIT

    Borrowings, both long and short term, shall not exceed 50% of shareholders' equity.
    Net profit shall be sufficient to give a competitive return to shareholders and sufficient retention to finance the replacement cost of fixed assets and the inflation in working capital.

  3. GOALS, TARGETS & OBJECTIVES.
    1. Before embarking on planning, be clear about personal goals.. (See Figure 2)
      Make sure the goals set are the true goals. For example is the goal to become a successful business person to create a busy life style, providing both social and business contacts, or to provide financial security which allows provision for family and the development of other social activities?
      What level of income do you require to meet your annual expenditure needs?
      What is your target relating to personal wealth creation, both outside and additional to the business, or developing the worth of the business?
    2. Convert the relevant personal goals into business goals.
      For example, what trading profit level is required to meet personal goals? Does the level of profit need to be increased significantly? Will this require a significant expansion of the business?

      Figure 2:-Sole Trader - Personal Requirements converted to a Profit Requirement

      Figure 2 shows the calculation of a Trading Profit requirement, if the sole trader is to meet his/her personal expenses needs, and acquire a target personal wealth in addition to the value of the business. The target wealth, for the purposes of the example is set at one million dollars at today's values in 20 years time. Such an exercise inevitably involves assumptions relating to time scale, inflation (even 2% makes a significant difference over 20 years), and taxation. The example is not meant to detail how the calculations should be done, but rather to show how personal objectives can be evaluated and converted into business goals. It should, of course, be adjusted to meet individual income requirements, circumstances and aspirations.

       

       

      CALCULATION OF PROFIT REQUIREMENT
      The objective is to provide a gross salary, which will cover living expenses
      and allow investment outside of the business to create, in 20 years time,
      wealth equivalent to one million dollars at "todays" dollar value
      BUDGETED PERSONAL
      EXPENDITURE
      PROFIT REQUIREMENT
      CALCULATION
      EXPENSE ITEM ANNUAL
      SPEND

      $

      ITEM
      WEALTH
      ADDITION

      $
      Life Assurance
      Medical Insurance
      Rates
      Insurance House
      Insurance Contents
      Electricity
      Garden Maintenance
      House Maintenance
      Furniture Replacement
      Telephone
      Petrol
      Car Insurance
      Car Servicing
      Car Registration
      Cash Living
      Clothing
      Golf Subscription
      Entertainment
      Holidays
      Small Sundries
      Extraordinary
      Medical
      1,200
      1,644
      1,200
      400
      350
      1,300
      668
      1,000
      1,800
      2,928
      2,016
      800
      400
      400
      13,000
      4,000
      1,100
      3,000
      5,000
      500
      2,000
      950

       
      Objective
      Inflation Adjustment
      20 years @

      Period

      Investment
      Return

      Annual Investment
      Required
      Add: Company Tax*
      Total
      Salary
      Trading Profit
      Required**


      2%

      Years

      Gross
      11%



      33%
      1,000,000

      1,485,947

      20

      Net
      7.92%


      32,760
      16,136
      48,896
      63,411

      112,307
      Total Expenditure
      Tax @ average 28%
      Gross Salary Required
      45,656
      17,755
      63,411
      *Assumes the investment requirement is taken as dividend
      ** Before salary and tax




       

    3. Alternative to the above, objectives can be less personal being more specifically related to the mission statement. Objectives should be expressed in terms of market share targets, profitability, finance and personnel ratios etc. (See Figure 3)

      Figure 3:- Company objectives

      Figure 3 illustrates a selection of items that typically would be included in the objectives of a company. When "etc." is quoted, it indicates that the example shown is likely to be repeated many times for other instances of the same item.
      For convenience the objectives of the company are shown as one document. In practice there would be a separate document compiled by each senior manager (for chief executive approval) linked, as illustrated in the example, to the policy statement and possibly to a management by objectives scheme.

       

       

      Business Plan for your Payroll Department
      COMPANY .....XYZ Manufacturers Ltd
      April 5th 1999.....to 31st March 2000
      COMPANY OBJECTIVES
      AREA OBJECTIVES
      PRESENT POLICY PLAN
      YEAR
      FUTURE
      YEARS
      MARKETS

      Product A(etc.)



      Market Area 1
      Market Area 2
      Market Area 3
      Market Area 4(etc)
      Market Share
      Present
      11%
      16%
      18%
      Nil
      Market Share
      Minimum
      15%
      15%
      15%
      15%
      Market Share
      Plan
      13%
      20%
      20%
      Nil
      Market Share
      Strategic
      20%
      20%
      20%
      15%
      CUSTOMERS
      SERVICE
      Stock Availability
      Delivery Within
      Rep Call Frequency
      DEBT COLLECTION


      % of Orders Received
      Market Area 1(etc.)
      Category A (etc.)
      Debtor Weeks
      Overdues


      79%
      3 days
      3.6 weeks
      8.9
      21%


      90%
      2 days
      3.0 weeks
      7.5
      >10%


      85%
      3 days
      3.2 weeks
      8.0
      15%


      90%
      2 days
      3.0 weeks
      7.5
      >10%
      PRODUCT
      QUALITY
      Customer Returns
      Factory Rejects
      Specifications
      PRICE (Gross Margin)
      Product A (etc.)
      STOCK


      TECHNOLOGY
      Product A (etc.)


      % of Sales
      % of Production
      Products Covered

      Customer Cat A (etc)
      Raw Materials
      Work in Progress
      Finished Goods

      Resistance (etc.)


      2.9%
      3.9%
      50%

      34.7%
      6 weeks
      7 weeks
      13 weeks

      200 kgs


      >2.0%
      >2.0%
      100%

      36.0%
      5 weeks
      5 weeks
      12 weeks

      200 kgs


      2.5%
      3.0%
      75%

      36.0%
      5 weeks
      6 weeks
      12 weeks

      200 kgs


      >1.0%
      >1.0%
      100%

      36.0%
      5 weeks
      5 weeks
      12 weeks

      250 kgs
      SUPPLIERS
      RAW MATERIALS
      (etc.)



      PAYMENTS
      Creditors


       

      Number
      Max Contract Per.
      Notice Period
      Cost Reduction

      Local Area (ave)
      National (ave)
      International
      Overall

      11
      6 months
      6 months
      Not Appl.

      4 weeks
      6 weeks
      3 months
      6.2 weeks

      8 to 12
      4 months
      4 months
      Not Appl.

      4 weeks
      6 weeks
      3 months
      7.0 weeks

      10
      5 months
      5 months
      -3%

      4 weeks
      6 weeks
      3 months
      6.5 weeks

      5 to 10
      3 months
      3 months
      -5%

      4 weeks
      6 weeks
      3 months
      7 0 weeks
      EMPLOYEES
      LABOUR TURNOVER


      EFFICIENCY
      Direct Workers
      Sales Force
      Sales Administration
      General Admin
      TRAINING
      Snr. Exec Course (etc.)

      Factory
      Salaried


      Factory Efficiency
      Cost Ratio to Sales
      Cost Ratio to Sales
      Cost Ratio to Sales

      Number to Train

      30%
      8%


      81%
      5%
      7%
      6%

      4

      Max 20%
      Max 5%


      90%
      4%
      5%
      5%

      All Snr. Mgt.

      25%
      7%


      85%
      5%
      6%
      5%

      4

      20%
      5%


      90%
      4%
      5%
      5%

      5
      SHAREHOLDERS
      DIVIDENDS

      Interim
      Final

      4 cents
      8 cents

      2/3 of Profit
      Available

      4 cents
      9 cents

      5 cents
      10 cents
      FINANCE
      Gearing Ratio
      PROFIT
      Trading Profit

      Borrowing÷Equity

      Return on Capital

      61%

      16%

      50%

      25%

      55%

      20%

      50%

      25%




       

    4. Separate the business goals into short term and long term.
      Short term being those which can be achieved in the current year. Long term being those that require strategic changes to the business over the longer term. Where objectives indicate that changes from present performance is planned, an action plan specific to that objective should be compiled, showing how and in what time scale the objective will be achieved.

    Return to top

  4. CURRENT BUSINESS.
    1. Write a brief description of the business
    2. List the type of product(s) or service(s) supplied. Assess the each product in relation to the product of competitors.
    3. Complete a SWOT analysis. (See Figure 4) That is consider the Company's current Strengths; Weaknesses; Opportunities and Threats. A well prepared SWOT analysis, will indicate the areas that require action plans.

      Figure 4:- SWOT Analysis

      Figure 4 1llustrates the sort of items that may be included in the SWOT analysis of a company supplying a range of products, both nationally and internationally.
      To be able to prepare a SWOT analysis which will help to determine priorities, it is essential that:-

      1. An objective view is taken of the performance and efficiency of the Company to date.
      2. Reasonable estimates have been made, indicating the Company's market share.
      3. There is knowledge of the market share and the performance of the Company competitors.

      List the factors which you consider are the reasons for the Company's success. That is, what is its competitive advantage?
      Consider how external factors influence the business. For example, factors such as Economic (e.g., inflation and exchange rates); Political Climate; Social Climate; and Technology.
      Consider how internal factors, such as Image; Location; Personnel etc., influence the business.

       

      Business Plan for your Payroll Department
      COMPANY .....XYZ Manufacturers Ltd
      April 5th 1999.....to 31st March 2000
      BUSINESS ANALYSIS - SWOT
      STRENGTHS
      XYZ Ltd is a long established (10 years) company and has a reputation as a reliable supplier.
      The quality of its products, given their price range, is very competitive.
      Production quality systems in place are superior to those of its competitors.
      OPPORTUNITIES
      Many smaller competitors are ideal acquisition targets.
      Better production control systems can improve service and lessen down time.
      Due to the reduction in tariff protection, there are significant opportunities, in the medium term, to develop Market Area 1.
      In the longer term there will be opportunities in Market Area B.
      Using cheaper imported raw materials, provided reliable suppliers can be identified
      WEAKNESSES
      The service ratio is 10% below the Company's objective of 90%.
      Downtime in the factory is excessive due to material shortages.
      Market share in Market Area 1, is below the Company's minimum market share target.
      THREATS
      The reduction in tariff protection and import restrictions is likely to result in increased competition from low cost producers in developing countries.
      Competition from local producers is increasing. 4 new competitors have entered the market this year.



       

       

    4. Summarise the business performance of the last few years in terms of Sales, Costs and Operating Profit.


     

    Return to top


     

  5. MARKETING and SALES.
    1. By product/activity state the following:-
      1. The target market(s)
      2. Customers - why they specifically come to the company.
      3. The estimated market size and the Company's market share objective. (See Figure 5)
      4. The growth factor. That is , is the market for the particular activity/product, growing; static; or declining. (See Figure 5)
      5. Market research needs. That is the research you need to undertake during the planning period, to help you meet your marketing plans.
      6. Advertising methods and focus.
    2. Compile an analysis of competitors on the following lines:-
      1. List all the competitors in the field.
      2. Analyse their strengths and weaknesses.
      3. List their products.
      4. Rate their pricing structures compared to your own.
      5. Make an assessment of their promotional activity compared to your own.
      6. Make an assessment of their distribution methods compared to your own.
    3. Basing your estimates on Objectives, Previous experience and the Marketing Analysis estimate the sales (excluding indirect taxes, such as sales taxes; G S T; V A T; etc.) for the year as follows:-
      1. For each activity or product group, estimate the sales for the year. (See Figure 5) If quantities are important, then the estimate should be done in both quantity and value terms.

        Figure 5:- Market Share Assessment

        Figures 5 shows the sales history and market share calculations for a hypothetical Product Group-A in Market Area 1, together with the estimated sales projections for the Plan Year.
        To calculate market share, requires that an indicator or indicators, relevant to the business and on which calculations can be based, needs to be established. The market share calculations illustrate the principles of how market share can be estimated in particular circumstances.
        The example illustrates the use of population statistics and knowledge of competitor operations.
        Note that the Action Plan to acquire a competitor, would be backed up by data determined from an investigation and investment appraisal of the project contained in a medium term Strategic Plan.

         

        Business Plan for your Payroll Department
        COMPANY .....XYZ Manufacturers Ltd
        April 5th 1999.....to 31st March 2000
        MARKET SHARE ASSESSMENT
        PRODUCT GROUP
        Market Growth Expected
        Product A
        2% per Yr
        MARKET AREA
        Price Inflation Expected
        Market Area 1
        2% per Yr

        SALES HISTORY

        This Year Act/Est
        Previous Year 1
        Previous Year 2
        Previous Year 3
        Previous Year 4
        Units
        '000

        4.3
        4.1
        4.0
        3.4
        2.7

        $'000

        55
        52
        50
        40
        30

        COMPETITORS

        Competitor A
        Competitor B
        Competitor C
        Others (10 total)

        Total
        SIZE
        INDICATOR

        Twice
        Same
        Half
        4 times

        7½ times
        ESTIMATED TOTAL MARKET
        Basis of calculation:-

        Competitors Basis
        Households - Total in Market Area 1
        Expenditure per household
        Total Expenditure
        (Source - Government statistics)
        Total Market current year
        Market share
        Total Market Business Plan for your Payroll Department Year
        CALCULATION

        $55k x 8½
        660
        $897/annum
        660 x 897


        500 ÷ 55
        500 x 1.02 growth x 1.02 infl
        RESULT
        $'000
        467.5


        592.0

        (say) 500.0
        11%
        520
        ACTION PLAN
        Aquire the competitor ABC Ltd in Market Area 1 - Region 2, where the Company's representation
        per household is lower than in other main conurbations.
        BUDGETED SALES

        Actual/Estimated Sales adjusted to Plan Year
        Aquisition ABC Ltd
        ABC Ltd - Total Sales $22k per annum

        Total Budgeted Sales
        Budgeted Market Share
        TARGET MARKET SHARE
        CALCULATION

        55 x 1.02 growth x 1.02 infl
        completed June
        6 mths = 11.0 x 1.02 growth x1.02infl

        57.2 + 11.4
        68.6 ÷ 520
        RESULT
        $'000
        57.2

        11.4

        68.6
        13.2%
        15.0%




         

      2. Summarise the sales details to determine the sales for the year.

        Figure 6:- Sales and Market Details

        Figure 6 illustrates a typical summary showing estimated market size, market share, quantities, prices and the total sales for the year.

         

        Business Plan for your Payroll Department
        COMPANY .....XYZ Manufacturers Ltd
        April 5th 1999.....to 31st March 2000
        SALES and MARKET DETAILS
        Prod
        Code

        Product Description

        Market 1

        Market 2

        Market 3

        Total
        Estimated Quantities - Total Market
        1
        2
        3
        Product - A
        Product - B
        Product - C
        40,000
        15,000
        8,250
        16,150
        14,780
        20,000
        7,900
        8,400
        10,000
        64,050
        38,180
        38,250
        Market Share
        1
        2
        3
        Product - A
        Product - B
        Product - C
        13.1%
        35.0%
        12.5%
        20.0%
        50.0%
        15.0%
        10.0%
        15.0%
        20.0%

         
        Planned Quantities
        1
        2
        3
        Product - A
        Product - B
        Product - C
        5,240
        5,250
        1.031
        3,230
        7,390
        4.600
        790
        1,260
        2.080
        9,260
        13,900
        7,711
        Prices
        1
        2
        3
        Product - A
        Product - B
        Product - C
        $13.10
        $10.25
        $15.75
        $13.00
        $9.75
        $15.00
        $11.75
        1$9.25
        $13.50

         
        Sales Values
        1
        2
        3
        Product - A
        Product - B
        Product - C
        Total Sales
        68,644
        53,813
        16,238
        138,695
        41,990
        72,053
        69,000
        183,043
        9,283
        11,655
        28.080
        49,018
        119,917
        137,520
        113,318
        370,755




         

      3. Estimate the production levels needed to support planned sales. (See Figure 7)
        Production will need to vary from sales:-
        • When stock levels need to be increased to support an increasing sales activity, or reduced if the opposite is the case.
        • When stock needs to be produced to support a development project.
        • If the Company has a policy to increase stock (say to support improved customer service) or reduce stocks (say to liquidate obsolete stock).

        Figure 7:- Quantity Planning Schedule

        Figure 7 shows the type of calculation which determines the level of production output, production input and purchasing to achieve planned levels of stock. It is important also that this calculation is completed logically, otherwise the plan will not include the correct levels of stock and the finance to support it.
        Note that the example assumes that the same stock ratios apply to the whole of the product range. In some businesses it is possible that different stock holding ratios will apply to different product groupings.

         

        Business Plan for your Payroll Department
        COMPANY .....XYZ Manufacturers Ltd
        April 5th 1999.....to 31st March 2000
        QUANTITY PLANNING SCHEDULE

        Prod
        Code

         

        Fin Gds
        Op/Stk

        Plan
        Sales

        Fin Gds
        Cl/Stk
        Req
        Prod
        Fin Gds

        W I P
        Op/Stk

        W I P
        Cl/Stk
        Req
        Prod
        Input
        Raw
        Matl
        Op/Stk
        Raw
        Matl
        Cl/Stk
        Req
        RM
        Purch
        Stock Ratios(wks) 13.0 52.0 12.0 47.0 7.0 6.0
         
        6.0 5.0
         
        1
        2
        3
        Product - A
        Product - B
        Product - C

        Total
        2,315
        3,475
        1,928

        7,718
        9260
        13,900
        7,711

        30,871
        2,137
        3,208
        1,779

        7,124
        9,082
        13,633
        7,562

        30,277
        1,353
        2,030
        1,126

        4,509
        1,159
        1,740
        965

        3,864
        8,888
        13,343
        7,401

        29,632
        1,159
        1,740
        965

        3,864
        966
        1,450
        804

        3,220
        8,695
        13,053
        7,240

        28,988
        Calculation Examples:-
        Finished Goods - Closing Stock: 9,260 ÷ 52 x 12.0 = 2137
        Required Production - Finished Goods: 9260 - 2315 + 2137 = 9082
        Work in Progress - Opening Stock: 9082 ÷ 47.0 x 7.0 = 1353
        Required Production Input: 9082 + 1,159 - 1,353 = 8888


         


     

    Return to top


     

  6. DOCUMENTED ACTION PLAN
    1. If the plan anticipates changes from the Company's current performance, then these changes should be supported by an Action Plan. The Company Objectives (Figure 3) indicate that a number of improvements, in different areas, are included in the Business Plan for your Payroll Department. The Action Plan data may be from a medium term strategic plan or a plan specific to the Business Plan for your Payroll Department year.
      For example the improvements in debtors ratios and the stock ratios should be supported by action plans, as should the acquisition to increase the market share of Product A in Market Area 1 in Figure 5.
    2. A separate Action Plan should be produced for each specific project.
    3. The documented action plan can be compiled and reported in any format which suits the particular plan. It should list the things that have to be done to implement the plan, in a realistic timetable.
    4. The Action Plan report and valuation should be for the duration of the Plan to completion, even if this exceeds the planning period.
    5. The Action Plan should then be evaluated in terms of costs; benefits and finance requirements. Try to do this separately for each element of the Plan then summarise it into the affect it will have on the Company's profit and loss A/c and Balance sheet for each year of the plan.

      Figure 8:- Action Plan - Acquisition of ABC Ltd

      Figure 8 illustrates what the Action Plan to support the acquisition of ABC Ltd (see Figure 5) may look like.

       

      STRATEGIC PLAN
      COMPANY .....XYZ Manufacturers Ltd
      From April 5th 1999.....To 29 April 2002
      ACTION PLAN
      Acquisition ABC Ltd - September 1999
      Motivation
      To increase market share in Market Area 1 and avoid confrontation with Competitor A
      Acquire the contacts and goodwill developed by ABC Ltd in this market area
                   
      Action Schedule
      By
      Week
      Ending
      Action Completed
      By
      14/5/99

      28/5/99

      11/6/99


      18/6/99







      2/7/99

      16/7/99

      23/7/99

      27/8/99
      Contact the owner to explore his interest in a sale

      Compile a preliminary heads of agreement. Pass to the solicitor for his input

      Peliminary heads of agreement from solicitor


      Negotiate and agree
      • Heads of agreement
      • Basis of assets and stock valuation.
      • Goodwill element
      • Date of transfer


      Heads of agreement to solicitor to draw up agreement documents

      Meeting with owners and solicitors to go through the agreement

      Exchange and sign the agreement

      Take stock and assume control

      11/5/99

      26/5/99

      11/6/99


      16/6/99







      13/7/99

      5/8/99

      5/8/99

      27/8/99.
      Financial Summary
      Net Assets Acquired

      Fixed Assets
      Working Capital

      Operating Capital Employed
      Less:-Borrowings
      Net Assets Acquired
      Goodwill

      Consideration
      1999
      $'000
      3.0
      6.3

      9.3
      3.0
      6.3
      1.0

      7.3
      Forecast Trading Result

      Sales
      Operating Costs

      Trading Profit
      Less:-Restructuring Costs
      Goodwill Written Off
      Synergy Benefits

      Adjusted Trading Profit

      Average Capital Employed
      Return on Capital
      1999
      $'000
      22.0
      20.3

      1.7
      -3.0
      -1.0


      -2.3

      5.2
      -44.2%
      2000
      $'000
      44.0
      40.6

      3.4
      -

      2.0

      5.4

      10.3
      52.4%
      2001
      $'000
      44.0
      40.6

      3.4
      -

      2.0

      5.4

      10.3
      52.4%


       

     

    Return to top


     

  7. CAPITAL EXPENDITURE.
    1. Estimate the Capital Expenditure that will be required during the year to replace existing fixed assets. (See Figure 9)
    2. Estimate and/or summarise from Action Plans the Capital Expenditure that will be required for additional fixed assets.
    3. Estimate the sales of assets that are planned to occur and the gain or loss resulting from the disposal. (See Figure 9)
    4. Calculate the depreciation charge.
    5. Calculate the movement in fixed assets, by calculating and deducting the depreciation charge and adjusting for additions and disposals. (See Figure 10)

    Figure 9:- Capital Expenditure/Disposal Summary

    Figure 9 illustrate fairly typical summaries of capital expenditure and disposal plans. In larger companies it is probable that something similar to the top half of the schedule would be submitted by different managers detailing their investment proposals. Expenditure on additional items should be justified by an appraisal procedure and/or inclusion in an action plan. The timing of the purchases and disposals are required for later depreciation and cash flow calculations.

     

     

    Business Plan for your Payroll Department
    COMPANY .....XYZ Manufacturers Ltd
    April 5th 1999.....to 31st March 2000
    CAPITAL EXPENDITURE/DISPOSAL SUMMARY
    CAPITAL EXPENDITURE

    DESCRIPTION
    Ref
    No.
    Mnth
    Purch
    Mnths
    Owned
    Wks
    Owned
    Add/
    Repl
    Cost
    $
    Dep
    Rate
    Dep
    $

     
    Land and Buildings
    Item A
    Item B

    1
    2

    Aug
    Oct

    8
    6

    35
    26

    Add
    Add

    9,000
    7,000

    1.0%
    1.0%

    60
    35
    Total Land and Buildings 16,000
     
    95
    Plant and Machinery
    Item C
    Item D
    Item E
    ABC Ltd

    3
    4
    5
    6

    Jun
    Jun
    Nov
     

    10
    10
    5
    6

    44
    44
    22
    26

    Add
    Add
    Repl.
    Add

    3,200
    4,000
    3,000
    3,000

    48.0%
    21.6%
    21.6
    21.6

    1,280
    720
    270
    324
    Total Plant and Machinery 13,200
     
    2,594
    Fixtures and Fittings
    Item F

    7

    Jul

    9

    39

    Add

    2,800

    18.0%

    378
    Total Fixtures and Fittings 2,800
     
    378
    Grand Total 32,000
     
    3,067
    CAPITAL DISPOSALS


    DESCRIPTION

    Ref
    No.

    Mnth
    Disposal
    Mnths
    Not
    Owned
    Wks
    Not
    Owned

    Cost
    $
    Dep
    Reserve
    $

    W D V
    $

    Proceeds
    $
    Profit on
    Disposal
    $
    Land and Buildings
    Item G
     

    1

    Jan

    2

    9

    3,000

    3,000

    0

    1,265

    1,265
    Total Land and Buildings 3,000 3,000 0 1,265 1,265
    Plant and Machinery
    Item C

    2

    Dec

    3

    13

    2,000

    1,940

    60

    100

    40
    Total Plant and Machinery 2,000 1,940 60 100 40
    Fixtures and Fittings
    Item H

    3

    Jun

    9

    39

    1,560

    1,400

    160

    300

    140
    Total Fixures and Fittings 1,560 1,400 160 300 140
    Grand Total 6,560 6,340 220 1,665 1,445




     

    Figure 10:- Fixed Asset Movement

    Figure 10 illustrates the information required to calculate the movement in fixed assets and how that information can be summarised

     

     

    Business Plan for your Payroll Department
    COMPANY .....XYZ Manufacturers Ltd
    April 5th 1999.....to 31st March 2000
    FIXED ASSET MOVEMENT

     

    At Cost
    $
    Depreciation
    Reserve
    $
    Written
    Down Value
    $
    LAND and BUILDINGS
    Beginning of the year

    Depreciation
    Less: Disposals
    Add: Expenditure
    End of the Year

    60,000


    -3,000
    16,000
    73,000

    5,000

    600
    -3,000
    95
    2,695

    55,000

    -600
    95
    15,905
    70,305
    PLANT and MACHINERY
    Beginning of the year

    Depreciation
    Less: Disposals
    Add: Expenditure
    End of the Year

    61,000


    -2,000
    13,200
    72,200

    24,000

    4,210
    -1,940
    2,594
    28,864

    37,000

    -4,210
    -60
    10,606
    43,336
    FIXTURES and FITTINGS
    Beginning of the year

    Depreciation
    Less: Disposals
    Add: Expenditure
    End of the Year

    21,000


    -1,560
    2,800
    22,240

    14,000

    1,730
    -1,400
    378
    14,708

    7,000

    -1,730
    -160
    2,422
    7,532
    TOTAL
    Beginning of the year

    Depreciation
    Less: Disposals
    Add: Expenditure
    End of the Year

    142,000


    -6,560
    32,000
    167,440

    43,000

    6,540
    -6,340
    3,067
    46,267

    99,000

    -6,540
    -220
    28,933
    121,173


     

    Return to top


     

  8. MONITORING ACTUAL PERFORMANCE
    The management task is now complete. An effective Business Plan for your Payroll Department, has been documented for the year, which details the policies and actions relevant to achieving the planned objectives. To be effective the actual performance compared to the Plan should be monitored during the course of the year.
    1. Ensure that each element included in the Business Plan for your Payroll Department is included in the objectives of someone in the organisation, and that all elements in the plan are covered.
    2. Monitor that the activities included in Action Plans are implemented in accordance with the planned timetable.
    3. Plan the schedule to be used for comparing actual performance with the plans. The frequency of the comparison will depending on how critical the activity is to the achievement of planned objectives. Some activities may be compared daily, e.g. sales order intake and sales, action plans monthly, others on a quarterly basis e.g. routine expense overheads.
    4. Implement activities to correct deviations from plans and/or revise targets where necessary.

    Return to top


     

  9. TARGET PROFITABILITY.
    1. The profit objective for a company is usually expressed by the ratio of profit to capital employed (return on capital).
    2. The capital and financial structures of companies vary enormously. A ratio that effectively measures management performance, which is not distorted by these different structures is the percentage ratio of Trading Profit to Net Operating Assets. The Capital Employed figure should be Operational Net Assets before all financing and taxes owing or owed (excluding indirect sales taxes and added value taxes such as VAT and GST). The fixed asset figures should be increased ideally to replacement cost, but if this figure is not known, at least to original cost. The Trading Profit calculated on this basis, is before interest charges and taxes (except indirect sales taxes and added value taxes such as VAT and GST), but after a reasonable salary reward for the management and other business activities of the directors. If capital employed varies significantly on a seasonal basis or regularly during the course of a month, (indicated by the variation in the level of borrowings) then average figures should be used.
    3. It is recommended that a suitable return to aim for, for small businesses is around twice the borrowing costs of the company or three times a safe investment return whichever is the higher. That is if the company can borrow at a rate 11% and a safe investment return is 8%,it should aim for a return of 24%. This ratio can of course be revised in accordance with personal objectives (See Figure 2)

    Return to top


     

  10. EVALUATION OF THE Business Plan for your Payroll Department
    Capital providers, such as bank managers, will usually require that a Business Plan for your Payroll Department includes accounting statements which indicate the overall financial effect of the plan. Accounting statements can also be a useful internal tool for monitoring progress. How to take the plan further and compile a Trading and Profit & Loss Account, Balance Sheet and Cash Flow Statement is detailed below.


       

    1. Sales Details
      From the details contained in the marketing plan list the quantities and sales prices by product grouping and market and calculate the sales values. (See Figure 6)
      For the Business Plan for your Payroll Department model to be totally interactive it must react correctly to both changes in volumes and also changes in sales and cost prices. A quantity base should be established for the sales calculations, even if such a base does not "naturally" exist. "Unnatural" base units can be such things as:-
      • The "first estimate" of sales
      • Jobs categorised as "Small", "Medium", "Large", etc.
      • Products grouped by type, e.g. cards, leaflets, stationery, etc.

      Whatever base unit is chosen, it must be possible to compile a relevant product specification for that unit. (See Product Specifications below)

       

    2. Quantity Planning Schedule
      See Figure 7. For wholesalers and retailers the schedule will be simpler, because the movement in finished goods is all that is required.
       
    3. Product Specifications
      Create a product specification for each product grouping. If a technical specification already exists, it is probable that the information required can be obtained from this source. As a minimum, the specification should detail raw material usage by type, the processes/operations required to manufacture the product and the production time. Where a product grouping covers a number of products, the specification should represent the "average" product of the group.

      Figure 11:- Product Specifications

      Figure 11 illustrates a product specification format, which indicates the minimum amount of detail required.

       

      PRODUCT SPECIFICATIONS

       
      MATERIALS PROCESSES
      Prod
      Code

      Product Desc
      Raw
      Matl 1

      Kgs
      Raw
      Matl 2

      Kgs
      Raw
      Matl 3

      Units
      Process
      1

      Lab Hrs
      Process
      2

      M/c Hrs
      Process
      3

      Cure Hrs
      1
      2
      3
      Product -A
      Product - B
      Product - C
      1.27
      0.98
      2.35
      0.58
      0.47
      0.75
      4
      4
      4
      0.267
      0.215
      0.175
      0.125
      0.085
      0.150
      0.075
      0.075
      0.075




      Illustrated is the three types of production time encountered in manufacturing processes

      1. Labour Hours: Is the estimated time required by labour to complete a task.
      2. Machine Hours: Is the estimated time required by a machine or machines to complete a task. Machine hours are required for product costing purposes, when different products require a different ratio of labour hour input to machine hour input. For example; if when producing one type of product an operator looks after three machines, but looks after four machines when producing another type of product, then machine hours will require to be calculated separately from labour hours.
      3. Cure Hours: Used here to describe the requirement for a process to be completed, which involves neither labour or machinery. Such a process would be waiting for a glue to achieve the required strength before further processing can continue. It could of course be described in any way which describes the process.


       

    4. Raw Material Costs
      1. Record the cost per unit for each type of raw material.
      2. Using the information from the Quantity Planning Schedule and Product Specifications, calculate the raw material values for:
        • raw material stocks, opening and closing
        • purchases
        • required for to input to production
        • consumed by production.
        • work in progress stocks opening and closing.


       

      Figure 12:- Raw Material Costs and Stock Levels

      Figure 12 illustrates the calculations relating to the level of the purchasing, consumption and stock of raw materials.

       

      RAW MATERIAL COSTS and STOCK LEVELS

      Unit
      Cost/Unit
      Material 1
      Kgs
      $0.75
      Material 2
      Kgs
      $0.35
      Material 3
      Units
      $0.06

       
      Prod
      Code

       
      Product
      Units

      Material 1

      Material 2

      Material 3

      Total


      1
      2
      3




      1
      2
      3
      Raw Materials
      Opening Stock

      Product - A
      Product - B
      Product - C
      Total
      Value

      Closing Stock

      Product - A
      Product - B
      Product - C
      Total
      Value


      1,159
      1,740
      965
      3,864



      966
      1,450
      804
      3,220


      1,472
      1,705
      2,268
      5,445
      $4,084


      1,227
      1,421
      1,889
      4,537
      $3,403


      672
      818
      724
      2,214
      $775


      560
      682
      603
      1,845
      $646


      4,636
      6,960
      3,860
      15,456
      $927


      3,864
      5,800
      3,216
      12,880
      $773






      $5,786






      $4,821

      1
      2
      3
      Purchases
      Product - A
      Product - B
      Product - C
      Total
      Value

      8,695
      13,053
      7,240
      28,988

      11,043
      12,792
      17,014
      40,849
      $30,636

      5,043
      6,135
      5,430
      16,608
      $5,813

      34,780
      52,212
      28,960
      115,952
      $6,957





      $43,406


      1
      2
      3
      Input
      Required Input

      Product - A
      Product - B
      Product - C
      Total
      Input Cost


      8,888
      13,343
      7,401
      29,632


      11,288
      13,076
      17,392
      41,756
      $31,317


      5,155
      6,271
      5,551
      16,977
      $5,942


      35,552
      53,372
      29,604
      118,528
      $7,112






      $44,371


      1
      2
      3
      Consumption
      Required Production

      Product - A
      Product - B
      Product - C
      Total
      Consumption Cost


      9,082
      13,633
      7,562
      30,277


      11,534
      13,360
      17,771
      42,665
      $31,999


      5,268
      6,408
      5,672
      17,347
      $6,071


      36,328
      54,532
      30,248
      121,108
      $7,266






      $45,337


      1
      2
      3




      1
      2
      3
      Work in Progress
      Opening Stock

      Product - A
      Product - B
      Product - C
      Total
      Value

      Closing Stock

      Product - A
      Product - B
      Product - C
      Total
      Value


      1,353
      2,030
      1,126
      4,509



      1159
      1,740
      965
      3,864


      1,718
      1,989
      2,646
      6,354
      $4,765


      1,472
      1,705
      2,268
      5,445
      $4,084


      785
      954
      845
      2,583
      $904


      672
      818
      724
      2,214
      $775


      5,412
      8,120
      4,504
      18,036
      $1082


      4,636
      6,960
      3,860
      15,456
      $927






      $6,752






      $5,786




       

    5. Capital Expenditure
      See the notes above and Figures 9 & 10, which illustrate the details required relating to capital expenditure and disposals. If depreciation is charged on asset purchases in the year of purchase, then the depreciation for the accounting periods subsequent to the purchase should be adjusted for the depreciation relating to each purchase. This analysis although not difficult can be quite extensive.
    6. Costs & Expenses
      The purpose of this exercise is to calculate or estimate the costs and expenses for the year, allocate these to a process or department (cost centre) either directly or indirectly, by a relevant allocation table and calculate cost rates.
      1. Calculate the process hours required to support production requirements. The calculation is Output Quantity Required times Process Hours Per Unit. The basic information for the calculation is from the Quantity Planning Schedule and Product Specification data respectively. Add an allowance for idle/waiting time, if appropriate.
         

        Figure 13:- Calculation of Process Hours

        Figure 13 illustrates the calculations of the process hours per year.

         



        Product Description
        Output
        Required
        Units
        Process 1
        Labour
        Hours
        Process 2
        Machine
        Hours
        Process 3
        Cure
        Hours
        Total
        Process
        Hours
        Product - A
        Product - B
        Product - C
        9,082
        13,633
        7,562
        2,425
        2,931
        1,323
        1,135
        1,159
        1,134
        681
        1,022
        567
        4,241
        5,112
        3,025
        Total
        Idle/Waiting Time
        30,277
        15%
        6,679
        1,002
        3,428
        514
        2,271
        341
        12,378
        1,857
        Total Process Hours 7,681 3,943 2,611 14,235



         

      2. Estimate the fixed items of cost for the year. These are those costs and expenses which do not change when the volume of business changes. They should be analysed in accordance with the Company's departmental structure or function. The usual analysis separates Manufacturing; Selling and Distribution and Administration Expenses.

        Figure 14:- List of Fixed Expenses

        Figure 14 illustrates the types of expenses that are usually included in this category

         

        FIXED EXPENSES
        Factory Fixed Expenses
        Leased Equipment
        Light Heat
        Insurances
        Rates
        Rent
        Depreciation Buildings*
        Depreciation Pl & M/cy*
        Depreciation Fixtures*

        Total Factory Fixed Expenses

        *See Figure 10
        ---$---
        950
        1,500
        2,200
        1,200
        6,240
        695
        6,804
        2,108

        21,697
        Selling & Dist. Fixed Expenses
        Salaries
        Office Expenses

        Total Fixed Sales & Dist. Exp.
        ---$---
        18,100
        2,900

        21,000
        Administration Fixed Expenses
        Salaries
        Accountancy
        Bank Charges
        Fees
        Computer Software
        Licences and Registrations
        Subscriptions

        Total Admin. Fixed Expenses
        ---$---
        14,000
        1,900
        800
        39
        600
        45
        560

        17,944



         

      3. Establish the variable cost links and variable ratios most suitable for the Company and calculate the variable costs.
        Wherever possible variable costs should be calculated linked in a relationship to a basic element on which their level will logically rely, for example in the illustration:
        • Direct labour is total labour hours (including idle time) multiplied by the labour rate per hour.
        • Ancillary labour is estimated to be 20% of direct labour.
        • Holiday pay is based on the number of days holiday estimated for the year related to the level of pay calculated for the labour hours produced in the days worked.
        • Selling and distribution and administration variables linked to the level of sales

        The table below gives a reasonably complete list of the types of variable expense and shows the logical linking and the ratio of expense to that link.

        Figure 15:- Calculation of Variable Costs

        Figure 15 illustrates the links, estimated variable ratios and the calculations, which establish the level of variable costs.

         

        CALCULATION OF VARIABLE COSTS
        Note:-
        Some of these calculations
        rely on standing information,
        or estimates and calculations,
        the bases of which are detailed in
        other paragraphs
        Data for the basis of the calculations
        Data Description
        Weeks in the year
        Working Days
        Direct Labour Rate
        Total Labour Hours
        Wages
        Total Process Hours
        Kilo Watt Hours
        Plant & Equipment (WDV)
        Total Wages & Salaries
        Sales
        Value
        52
        235
        $18.10
        7681
        $166,836
        14,235
        70,581
        43,336
        $219,585
        $370,755

        Operating Costs - Variable

        Link
        Variable
        Ratio
        Operating
        Cost

        $
        Factory Wages
        Direct Wages
        Ancillary Wages
        Holiday Pay

        Total Wages

        Lab Hrs
        Direct Wages
        Wages ÷ Wkg Days

        x Lab Rate
        x 20%
        x Hol Days

        139,030
        27,806
        17,749

        184585
        Factory Expenses
        Cleaning & Laundry
        Power
        Repairs & Maintenance
        A.C.C Levies

        Total Factory Variable Expenses

        Process Hours
        Kilo Watt Hours
        W.D.V. Pl. & M/cy
        Tot Wages & Salaries

        x 4%
        x 6%
        x 8%
        x 1.25%

        569
        4,235
        3,467
        2,709

        10,980
        Selling & Dist. Expenses
        Freight & Couriers
        Advertising
        Vehicle Expenses
        Debt Collection

        Total Selling & Dist. Variable Exp.

        Sales
        Sales
        Sales
        Sales

        x 2.50%
        x 1.75%
        x 0.25%
        x 0.10%

        9,269
        6,488
        927
        371

        17,055
        Administration Expenses
        Stationery & Postage
        Telephone
        General Expenses

        Total Administration Variable Exp.

        Sales
        Sales
        Sales

        x 0.35%
        x 0.50%
        x 0.20%

        1,298
        1,854
        742

        3,893



         

      4. Establish relevant allocation tables used for allocating costs and expenses to cost centres.

        Figure 16:- Allocation Bases to Cost Centres

        Figure 16 illustrates some typical examples of bases used to allocate costs to departments and cost centres

         

        ALLOCATION BASES to COST CENTRES

        Basis Description
        Basis
        No.
        Process
        1
        Process
        2
        Process
        3
        General
        Factory
        Total
        Factory
        Sales
        & Dist.

        Admin.
        Total
        Company
        Power (K.W. Hours)
        Total Process Hours
        Floor Area (sq mtrs)
        Pl. & M/cy (W.D.V)
        Fixt. & Fittings(W.D.V)
        Total Wages & Salaries ($)
        Sales ($)
        2
        3
        4
        5
        6
        7
        8
        1,000
        7,681
        132
        3,250
        1,130
        153,821
        49,677
        3,943
        265
        20,151
        1,130
        0
        19,194
        2,611
        210
        11,267
        753
        0
        710

        32
        4,334
        1,506
        30,764
        70,581
        14,235
        639
        39,002
        4,519
        184,585


        21
        2,167
        1,130
        21,000
        370,755


        38
        2,167
        1,883
        14,000
        70581
        14,235
        698
        43,336
        7,532
        219,585
        370755



         

      5. Analyse (allocate) the operating cost to cost centres, either directly , by estimation, by calculation or by using an appropriate allocation table. Total and balance the figures.

        Figure 17:- Allocation of Operating Costs to Departments and Cost Centres

        Figure 17 illustrates a table, detailing the allocation of operating costs to departments and cost centres.

         

        ALLOCATION of OPERATING COSTS to DEPARTMENTS and COST CENTRES

        Operating Costs($)
        Fixed
        Var.

        Basis
        Process
        1
        Process
        2
        Process
        3
        General
        Factory
        Total
        Factory
        Sales
        & Dist.

        Admin.

        Total
        Wages
        Direct Wages
        Ancillary Wages
        Holiday Pay

        Total Wages

        v
        v
        v

        Calc.
        Direct
        Calc.

        139,030

        14,790

        153,821

        0

        0

        0

        0

        0

        0


        27,806
        2,958

        30,764

        139,030
        27,806
        17,749

        184,585



        0

        0



        0

        0

        139,030
        27,806
        17,749

        184,585
        Factory Variable Exp.
        Cleaning & Laundry
        Power
        Repairs & Maint.
        A.C.C. Levies

        Total Fact. Variable Exp.

        v
        v
        v
        v

        Direct
        2
        5
        7


        60
        260
        1,923

        2,243


        2,981
        1,612
        0

        4,593


        1,152
        901
        0

        2,053

        569
        43
        347
        385

        1,343

        569
        4,235
        3,120
        2,307

        10,232


        0
        173
        226

        400


        0
        173
        175

        348

        569
        4,235
        3,467
        2,709

        10,980
        Factory Fixed Exp.
        Lased Equipment
        Light & Heat
        Insurance
        Rates
        Rent
        Depreciation Buildings
        Depreciation Pl. & M/cy
        Depreciation Fixtures

        Total Factory Fixed Exp.

        f
        f
        f
        f
        f
        f
        f
        f

        Est.
        4
        5
        4
        4
        4
        5
        6

        300
        284
        165
        227
        1,180
        131
        510
        316

        3,114

        650
        569
        1023
        456
        2,369
        264
        3,164
        316

        8,811


        451
        572
        361
        1,877
        209
        1,769
        211

        5,451


        69
        220
        55
        286
        32
        680
        422

        1,764

        950
        1,373
        1,980
        1,099
        5,713
        636
        6,124
        1,265

        19,139


        45
        110
        36
        188
        21
        340
        316

        1,056


        82
        110
        65
        340
        38
        340
        527

        1,502

        950
        1,500
        2,200
        1,200
        6,240
        695
        6,804
        2,108

        21,697
        Total Factory Expenses 159,177 13,404 7,504 33,871 213,956 1,456 1,850 217,262
        Sls & Dist.Variable Exp.
        Freight & Couriers
        Advertising
        Vehicle Expenses
        Debt Collection

        Total Sls & Dist. Var. Exp.

        v
        v
        v
        v

        8
        8
        8
        8

        0
        0
        0
        0

        0

        0
        0
        0
        0

        0

        0
        0
        0
        0

        0

        0
        0
        0
        0

        0

        0
        0
        0
        0

        0

        9,269
        6,488
        927
        371

        17,055

        0
        0
        0
        0

        0

        9,269
        6,488
        927
        371

        17,055
        Sls & Dist. Fixed Exp.
        Salaries
        Office Expenses

        Total Sls & Dist. Fixed Exp.

        f
        f

        8
        8

        0
        0

        0

        0
        0

        0

        0
        0

        0

        0
        0

        0

        0
        0

        0

        18,100
        2,900

        21,000

        0
        0

        0

        18,100
        2,900

        21,000
        Total Selling & Distribution Expenses 0 0 0 0 0 38,055 0 38,055
        Admin. Variable Exp.
        Stationary & Postage
        Telephone
        General Exenses

        Total Admin. Var. Exp.

        v
        v
        v

        Est.
        Est.
        Direct





        0





        0





        0


        185


        185

        0
        185
        0

        185

        649
        1298


        1,946

        649
        371
        742

        1,761

        1,298
        1,854
        742

        3,893
        Administation Fixed Exp.
        Salaries
        Accountancy
        Bank Charges
        Fees
        Software
        Licences
        Subscriptions

        Total Admin. Fixed Exp.

        f
        f
        f
        f
        f
        f
        f

        Est.
        Direct
        Direct
        Direct
        Direct
        Direct
        Direct









        0









        0









        0









        0

        0
        0
        0
        0
        0
        0
        0

        0









        0

        14,000
        1,900
        800
        39
        600
        45
        560

        17,944

        14,000
        1,900
        800
        39
        600
        45
        560

        17,944
        Total Administration Expenses 0 0 0 185 185 1,946 19,705 21,837
        Total Operating Costs 159,177 13,404 7,504 34,057 214,141 41,457 21,555 277,153



         

      6. Analyse the figures between fixed and variable expenses, and balance to the total.
      7. Choose the basis to calculate cost rates. Usually related to the means of measuring output, which in the case of the illustration is process hours, for production departments and total product costs, for selling and administration.
      8. Calculate the cost rates by dividing the costs by the chosen basis.

        Figure 18:- Variable and Fixed Cost Analysis and the Calculation of Cost rates

        Figure 18 illustrates the analysis of costs between variable and fixed and the calculation of the cost rates

         

        ANALYSIS OF COSTS BETWEEN VARIABLE and FIXED
        CALCULATION of COST RATES

         
        Process
        1
        Process
        2
        Process
        3
        General
        Factory
        Total
        Factory
        Sales
        & Dist.

        Admin.

        Total
        Variable and Fixed Cost Analysis($)
        Variable
        Fixed

        Total

        156,064
        3,114

        159,177

        4,593
        8,811

        13,404

        2,053
        5,451

        7,504

        32,293
        1,764

        34,057

        195,002
        19,139

        214,141

        19,401
        22,056

        41,457

        2,109
        19,446

        21,555

        216,512
        60,641

        277,153
        Cost Rate Base Unit
        Process Hours
        Factory Cost plus Materials($)

        6,679

        3,428

        2,271

        12,378

         


        259,478


        259,478

         
        Calculated Cost Rates
        Variable
        Fixed

        Total

        $23.3651
        0.4662

        $23.8313

        $1.3396
        2.5701

        $3.9097

        $0,9041
        2.4003

        $3.3044

        $2.6088
        0.1425

        $2.7513

         

        7.48%
        8.50%

        15.98%

        0.81%
        7.49%

        8.31%

         



         

    7. Product Costs
      1. Calculate the product costs. The quantity data relating to materials is taken from the Product Specification and is multiplied by the costs as detailed on Figure 14 - Raw Material Costs and Stock Levels.
        The Labour & Overhead Cost is arrived at by multiplying the process hour details from the Product Specification by the cost rates calculated on Figure 18 - Calculation of Cost Rates.

        Figure 19:- Product Cost Presentation

        Figure 19 illustrates a typical product cost presentation for products which embody the characteristics of the products in the plan

         

        PRODUCT COST
        Product - C Revised : 5/4/99

        MATERIALS

        Qty

        Unit
        Cost/
        Unit
        Variable
        Cost

         
        Fixed
        Cost
        Total
        Cost

        Material 1
        Material 2
        Material 3
        Total Materials

        2.35
        0.75
        4

        Kgs
        Kgs
        Units
        ---$---
        0.7500
        0.3500
        0.0600
        ---$---1.7625
        0.2625
        0.2400
        2.2650

         
        ---$--- ---$---
        1.7625
        0.2625
        0.2400
        2.2650


        PROCESSES

        Process
        Hrs

         
        Cost
        Rates
        Variable

         
        Cost
        Rates
        Fixed

         

         
        Process 1
        Process 2
        Process 3
        General Factory
        Total Factory
        0.175
        0.150
        0.075
        0.400
        Lab Hrs
        M/c Hrs
        Cure Hrs
        Tot Hrs
        23.3651
        1.3396
        0.9041
        2.6088
        4.0889
        0.2009
        0.0678
        1.0435
        5.4012
        0.4662
        2.5701
        2.4003
        0.1425
        0.0816
        0.3855
        0.1800
        0.0570
        0.7041
        4.1705
        0.5865
        0.2478
        1.1005
        6.1053
        Total Production Cost 7.662
         
        0.7041 8.373
        Selling and Administration
        Sales & Distribution
        Administration

        7.48%
        0.81%

        0.6258
        0.0680

        8.50%
        7.49%

        0.7115
        0.6273

        1.3373
        0.6953
        TOTAL COST 8.3600
         
        2.0429 10.4029
        Product Profitability

        Selling Price
        Contribution
        Contribution per Process Hour
        Gross Margin
        Gross Margin %
        Mkt 1
        ---$---
        15.75
        7.39
        18.47
        7.38
        46.9%
        Mkt 2
        ---$---
        15.00
        6.64
        16.60
        6.63
        44.2%
        Mkt 3
        ---$---
        13.50
        5.14
        12.85
        5.13
        38.0%
        Average
        ---$---
        14.70
        6.34
        15.81
        6.33
        43.0%



         

      2. Contribution and gross margin calculations shown on Figure 19 - Product Cost, are not essential for the compilation of the Business Plan for your Payroll Department, but are useful for assessing the relative profitability of different product groupings.
        The variable cost indicates the lowest selling price that can be accepted for a product without detriment to the company's operating profit. The more a company sells of a product, at a price below the variable cost level, the more it will lose.
      3. Figure 19 shows the production cost of Product - C to be $8.3703. The production cost of Product - A is $9.7798 and for Product - B is $7.871


       

    8. Finished Goods
      The finished goods stock, opening and closing, and the cost of production and sales, can now be calculated, by multiplying the quantities from the Quantity Planning Schedule by the Production Cost of the product.
      The illustration below also provides for incorporating a stock write down reserve into the stock value calculations. Stock write down reserves are applied to stock if the estimated realisable value or replacement value of the stock is less than the cost value of the stock. Actual realisable values are adjusted downwards, to reflect the cost of selling and administration yet to be incurred, before arriving at the realisable value to be applied to stocks. If it is anticipated that, during the plan year, the level of obsolete stock will be reduced, then a reduction in the write down reserve should be incorporated into the plan. Note however that in such a case the incidence of the clearance of obsolete stock should be included in the sales estimates. In the illustration there is a small release of stock write down reserve due to the overall reduction in stock levels. The estimate of the proportion of stock value to be included in the reserve has not changed.

      Figure 20:- Finished Goods Stock; Required Production Cost and Cost of Sales Calculations

      Figure 20 illustrates the calculations which determine the value of opening and closing finished goods stock, the cost of required finished production and the cost of sales.

       

      FINISHED GOODS VALUES
      Stock; Required Production and Cost of Sales

      Prod
      Code


      Description

      Product
      Quantity

      Product
      Cost
      Product
      Cost
      Value
      Write
      Down
      Reserve
      Write
      Down
      Value

      Net
      Value

      1
      2
      3
      Opening Stock
      Product - A
      Product - B
      Product - C
      Total

      2,315
      3,475
      1,928
      7,718
      --$--9.7798
      7.8751
      8.3703
      --$--
      22,640
      27,366
      16,138
      66,144
      --%--
      10.0%
      7.5%
      12.0%
      --$--
      2,264
      2,052
      1,937
      6,253
      --$--
      20,376
      25,314
      14,201
      59,891

      1
      2
      3
      Required Production
      Product - A
      Product - B
      Product - C
      Total

      9,082
      13,633
      7,562
      30,277

      9.7798
      7.8751
      8.3703

      88,821
      107,361
      63,296
      259,478

       

       

      88,821
      107,361
      63,296
      259,478

      1
      2
      3
      Calculated Cost of Sales
      Product - A
      Product - B
      Product - C
      Total

      9,260
      13,900
      7,711
      30,871

      9.7798
      7.8751
      8.3703

      90,561
      109,464
      64,543
      264,569

       

      -174
      -158
      -150
      -481

      90,387
      109,306
      64,393
      264,087

      1
      2
      3
      Closing Stock
      Product - A
      Product - B
      Product - C
      Total

      2,137
      3,208
      1,779
      7,124
      9.7798
      7.8751
      8.3703

      20,900
      25,263
      14,891
      61,054

      10.0%
      7.5%
      12.0%

      2,090
      1,895
      1,787
      5,772

      18,810
      23,369
      13,104
      55,282


       

    Return to top


     

  11. PROFIT & LOSS ACCOUNT
    1. All the figures are now available to complete the Profit and Loss Account up to the Operating Profit stage and can be copied from the schedules compiled so far.
      .Current year estimates are for comparison purposes. They are not part of the calculations (apart from stocks) and are simply best estimates.
      It is assumed that the Business Plan for your Payroll Department will be completed prior to the start of the Plan Year. The Current Year will therefore not be completed when the plan is being compiled, consequently figures relating to it will be partially actual and partially estimated

      Figure 21:- Operating Profit

      Figure 21 illustrates a typical presentation of a Profit and Loss A/c up to the Operating Profit stage. In addition the details are referenced to the "Figure Illustration" in which the basis for arriving at the value of the item is detailed. "Est." (estimate) indicates there is no basis other than "Best Estimates". "Act" (actual) indicates that the information should be available from the Company's actual accounting records

       

      OPERATING PROFIT
      Current Year Item Description Plan Year
      Fig
      Ref
      Est/Act
      $
      Plan
      $
      Fig
      Ref
      Est 320,000 Total Sales 370,755 6


      Act
      Act

      Est


      12
      12


      5,600
      6,300

      39,837


      5,786
      6,752
      Materials Consumed
      Opening Stock
      Raw Materials
      Work in Progress
      Add:-
      Purchases
      Less:-
      Closing Stock
      Raw Materials
      Work in Progress
      --$--

      5,786
      6,752




      4,821
      5,786



      12,538

      43,406



      10,607


      12
      12

      12


      12
      12

       
      39,199 Materials Consumed 45,337 12
      280,801 Added Value 325,418

      Est
      Est
      Est
      Est
      Est
      Est
      Est
      Est
      Est
      Est
      Esr
      Est
      Est
      Est



      Act
      20

      125,438
      25,400
      16,047
      321
      3,365
      4,972
      1,995
      950
      1,489
      2,150
      1,165
      6,240
      3,500
      495
      193,527


      52,789
      59,891
      Factory Cost
      Direct Wages
      Ancillary Wages
      Holiday Pay
      Cleaning and Laundry
      Power
      Repairs and Maintenance
      A.C.C. Levies
      Leased Equipment
      Light Heat
      Insurances
      Rates
      Rent
      Depreciation
      Deprecation Additions
      Total Factory Cost

      Finished Goods Stock
      Add:- Opening Stock
      Less:- Closing Stock
      --$--
      139,030
      27,806
      17,749



      184,586
      569
      4,235
      3,467
      2,709
      950
      1,500
      2,200
      1,200
      6,240
      6,540
      3,067
      217,262


      55,891
      55,282

      15
      15
      15
      15
      15
      15
      15
      15
      14
      14
      14
      14
      14
      10
      10


      20
      20

       
      225,624 Cost of Sales 267,208
       
      94,376 Gross Profit 103,547

      Est
      Est
      Est
      Est
      Est
      Est

      8,000
      6,000
      800
      389
      17,700
      2,800
      Selling & Distribution Expenses
      Freight & Couriers
      Advertising
      Vehicle Expenses
      Debt Collection
      Salaries
      Office Expenses

      9,269
      6,488
      927
      371
      18,100
      2,900

      15
      15
      15
      15
      14
      14

       
      35,689 Total Selling & Distribution Expenses 38,055
       

      Est
      Est
      Est
      Est
      Est
      Est
      Est
      Est
      Est
      Est

      1,200
      1,600
      700
      13,600
      1,880
      958
      39
      1,200
      45
      550
      Administrtion Expenses
      Stationery & Postage
      Telephone
      General Expenses
      Salaries
      Accountancy
      Bank Charges
      Fees
      Computer Software
      Licenses & Registrations
      Subscriptions

      1,298
      1,854
      742
      14,000
      1,900
      800
      39
      600
      45
      560

      15
      15
      15
      14
      14
      14
      14
      14
      14
      14

       
      21,772 Total Administration Expenses 21,837
       
      36,915 Operating Profit 43,655



       

    2. To complete the Profit and Loss Account requires the calculation of:-
      • Non trading items, such as profit or loss on sale of fixed assets and abnormal expenditure or income.
      • Finance costs, which can be related to long term finance arrangements (e.g. Term Loans) and short term arrangements (e.g. Overdraft)
      • Taxation
      • Dividends


       

    3. The Plan has two non trading items:-
      • Profit on sale of Fixed Assets $1,445 (see Figure 9)
      • Abnormal costs relating to the acquisition of ABC Ltd $4,000 (see Figure 8).
        Comprising $3,000 restructuring costs and $1,000 of goodwill written off.


       

    4. Term Loan finance usually involves the repayment of a fixed amount at regular intervals, which will comprise an element of both capital repayment and interest. In each repayment the proportion of the interest payment will decrease and the capital repaid will increase as the loan is paid off. If the Company has a substantial amount of finance on this type of arrangement then a reasonably effort should be made to establish the correct proportion of interest and capital repayment that will apply for the plan year. If the amount does not merit a sophisticated calculation then best estimates will suffice.

      Figure 22:- Term Loan Calculations

      Figure 22 illustrates the calculations required to include accurate values separately for the interest and capital portions of the monthly repayments.

       

      TERM LOAN CALCULATIONS
      Term
      Months
      Loan
      Amount
      Interest
      Rate
      Monthly
      Repayment

       
      36 $10,000.00 11% $327.39
      The amount of the monthly repayment can be obtained by the use of the Microsoft "PMT"
      or the Lotus "@PMT" spreadsheet functions. If the term loan is an existing arrangement,
      the provider of the loan will usually advise the amount of the repayment
      Schedule of Interest and Capital Repayments

      Month
      Amount
      Owing
      Monthly
      Interest
      Monthly
      Repayment
      Capital
      Repaid

      1
      2
      3
      4
      --$--
      10,000.00
      9,764.28
      9,526.40
      9,286.34
      --$--
      91.67
      89.51
      87.33
      --$--
      327.39
      327.39
      327.39
      --$--
      235.72
      237.88
      240.06
      Calculation
      Method
      =Amount Owing
      minus
      Capital Repaid
      =Amount Owing
      Times
      Interest Rate
      Divided by 12

       
      =Monthly Payment
      minus
      Monthly Interest
      Continuing these calculation to month 36, results in a total repayment of $11,785.94. The total payment
      comprising an interest payment of $1,785.94 and a capital repayment of the $10,000 term loan
      Months 12 to 24 are included in the Business Plan for your Payroll Department Example. The schedule of payments are detailed below

      Month
      Amount
      Owing
      Monthly
      Interest
      Monthly
      Repayment
      Capital
      Repaid

      12
      13
      14
      15
      16
      17
      18
      19
      20
      21
      22
      23
      24
      --$--
      7,284.90
      7,024.29
      6,761.30
      6,495.89
      6,228.05
      5,957.75
      5,684.98
      5,409.70
      5,131.90
      4,851.56
      4,568.64
      4,283.13
      3,995.01
      --$--
      66.78
      64.39
      61.98
      59.55
      57.09
      54.61
      52.11
      49.59
      47.04
      44.47
      41.88
      39.26
      Total 638.75
      --$--
      327.39
      327.39
      327.39
      327.39
      327.39
      327.39
      327.39
      327.39
      327.39
      327.39
      327.39
      327.39
      Total 3,928.68
      --$--
      260.61
      263.00
      265.41
      267.84
      270.30
      272.77
      275.27
      277.80
      280.34
      282.91
      285.51
      288.13
      Total 3,289.89



       

    5. If the overdraft level is relatively low, or the company does not have significant seasonal variations in the level of overdraft, it is probable that a reasonable estimate of the interest paid can be made fairly simply. In these circumstance best estimates may well be adequate. If the opposite is true, the interest calculation is reasonably sophisticated. It relies on an estimate of the opening overdraft and therefore in effect
      • Completion of the estimate for the current year including the opening balance sheet
      • An analysis of the cash movement for each accounting period.

      This more sophisticated calculation will be illustrated when the procedure for analysing the plan into accounting periods is added to this paper. The exercise continues for now on the basis that a "Best Estimate" of interest cost for the year will be reasonably accurate.

    6. The remainder of the items which adjust Operating Profit to Retained Profit for the year can now be established and are illustrated in Figure 23 below.

      Figure 23:- Retained Profit

      Figure 23 illustrates the adjustment of Operating Profit to Retained Profit. Details are referenced to the "Figure Illustration" in which the basis for the item is illustrated. "Est." (estimate) indicates there is no other basis than "Best Estimates". "Act" (actual) indicates that the information should be available from the Company's actual accounting records
       

       

      PROFIT RETAINED
      Current Year Item Description Plan Year
      Fig
      Ref
      Est/Act
      $
      Plan
      $
      Fig
      Ref
      21

      Est
      Est


      22
      Est



      Calc


      Act
      36,915



      0

      886
      11,250
      12,136

      24,779
      8,177

      16,602
      11,068

      5,534
      Operating Profit
      Non Trading Items

      (Profit)Loss on Sale of Assets
      Abnormal
      Total Non Trading Items</>
      Finance Charges

      Interest Term Loan
      Bank Interest
      Total Finance Charges

      Profit Before Taxation
      Taxation*

      Net Profit
      Dividends Paid**

      Retained Profit
      --$--

      (1,445)
      4,000


      639
      12,482
      43,655



      2,555



      13,121

      27,979

      9,233

      18,746
      12,000

      6,746
      21

      9
      8


      22
      Est



      Calc


      Est
      *Taxation is the Trading Profit Before Tax, times a tax rate of 33%. It assumes that
      the directors monthly income is included in the salary costs.

      **Dividend paid depends entirely on the policy. In the case of the exercise, two
      thirds is distributed. For the sake of simplicity, dividends are not accrued.


       

    Return to top


     

  12. BALANCE SHEET
    Most of the information required to complete both the opening and closing balance sheets is available from the calculations and estimates that have already been done or should be available from actual accounting records.
    Estimates and calculations to establish Debtor and Creditor levels and the owed or owing position relating to indirect and direct taxation still need to be done.
    1. Debtors consist of Trade Debtors; (amounts owed-by customers etc.) plus any prepayments, that is bills or expenses paid in advance. The method of calculating the trade debtors, is to:-
      • Estimate the sales for the last 2 to 3 months of the year. Do not overlook non trading sales such as assets sales.
      • Estimate of weeks sales that are owed by customers (Debtor Ratio - see Figure 3 Company Objectives). Note that the debtor levels will include indirect taxes (GST in New Zealand, VAT in Europe; sales taxes in some states of the USA), so ensure that the debtor ratio reflects this
      • Calculate the debtors by dividing the sales by the number of weeks and multiplying by the Debtor Ratio.

      Figure 24:- Trade Debtors

      Figure 24 illustrates the estimates and calculations required to establish a trade debtor figure. Where applicable, details are referenced to the "Figure Illustration" in which the basis for the item is illustrated. "Est." (estimate) indicates there is no other basis than "Best Estimates". "Act" (actual) indicates that the information should be available from the Company's actual accounting records.

       

      TRADE DEBTORS
      Current Year Item Description Plan Year
      Fig
      Ref

      Est/Act

      Plan
      Fig
      Ref

      Est
      Est
      Est

      $83,000
      0
      0
      Sales (for the last 3 month of the year)
      Trade Sales
      Asset Sales
      Other Sales

      $96,396
      1,265
      0

      Est
      9
      Est

      Act
      3
      $83,000
      13
      8.9
      Total Sales for 3 months
      Number of weeks
      Debtor Ratio - weeks
       
      $97,661
      13
      8.0

      Act
      3
      $56,823 Calculated Debtors $60,999
      The calculation is:- 97,661 ÷ 13 x 8.0 = 60,999



       

    2. The level of prepayments has no particular pattern. Items prepaid are often expenses such as rents and insurance, but they could also include special trading arrangements. If they are substantial then they should be estimated and scheduled separately for inclusion in the balance sheet. For smaller companies a "Best Estimate" based on previous accounting records will often be accurate enough. The amount to be included in the balance sheet is the amount remaining prepaid at the balance sheet date. The same calculation should be applied to estimates for the Current Year for expenses items which are prepaid. Figure 25 illustrates a simple schedule of prepayments.

      Figure 25:- Prepayments

      Figure 25 illustrates the estimates and calculations required to establish a prepayment figure. Where applicable, details are referenced to the "Figure Illustration" in which the basis for the item is illustrated. "Est." (estimate) indicates there is no other basis than "Best Estimates". "Act" (actual) indicates that the information should be available from the Company's actual accounting records

       

      PREPAYMENTS
      Current Year Item Description Plan Year
      Fig
      Ref

      Prepayment
      Fig
      Ref
      Annual
      Amount
      Prepayment
      Period

      Prepayment

      21
      21
      --$--
      1,613
      520

      Insurance
      Rent

      14
      14
      --$--
      2,200
      6,240

      9 months
      1 month
      --$--
      1,650
      520
      2,133 Total Prepayment 2,170
      Calculation example:- 2,200 ÷ 12 x 9 = 1,650



       

    3. Creditors consist of Trade Creditors; (amounts owed-to suppliers of goods and services) plus any Other Creditors, that is expenses or costs incurred and included in the Profit and Loss Account but are not yet billed or discharged.
      The method of arriving at the level of trade creditors is virtually the same as that for debtors:-
      • Estimate the purchases and expenses for the last 2 to 3 months of the year. Do not overlook non trading items, such as fixed asset purchases.
      • Estimate the number of weeks credit you will be taking (Creditor Ratio). Note that calculated creditor levels must include GST, so ensure that the creditor ratio reflects this.
      • Calculate the creditors by dividing the sales by the number of weeks and multiplying by the Creditor Ratio.

      Figure 26:- Trade Creditors

      Figure 26 illustrates the estimates and calculations required to establish a trade creditor figure. Where applicable, details are referenced to the "Figure Illustration" in which the basis for the item is illustrated. "Est." (estimate) indicates there is no other basis than "Best Estimates". "Act" (actual) indicates that the information should be available from the Company's actual accounting records

       

      TRADE CREDITORS
      Current Year Item Description Plan Year
      Fig
      Ref

      Est/Act

      Plan
      Fig
      Ref

      Est
      Est
      25

      $17,000
      0
      1,613
      Purchases and Expenses (for the last 3 month of the year)
      Trade Purchases and Expenses
      Asset Purchases
      Prepayment Adjustment

      $21,070
      0
      1,650

      Est
      9
      25

      Act
      3
      $18,613
      13
      6.2
      Total Purchases and Expenses for 3 months
      Number of weeks
      Creditor Ratio - weeks
       
      $22,720
      13
      6.5

      Act
      3
      $8,877 Calculated Creditors $11,360
      The calculation is:- 22,720 ÷ 13 x 6.5 = 11,360



       

    4. The level of "Other Creditors" has no particular pattern. In addition to the items illustrated, other items outstanding can be bills paid in arrears on a regular (say) quarterly basis. If they are substantial then they should be estimated and scheduled separately for inclusion in the balance sheet. For smaller companies a "Best Estimate" based on previous accounting records will often be accurate enough.
      The items included below are related to the payment of wages and salaries to employees, and the payment of Pay As You Earn (PAYE) liabilities to the Inland Revenue Department (IRD). It is assumed that wages are paid one week in arrears; tax deductions from employees average 28% and are paid to the IRD monthly.
      Figure 27 illustrates a simple schedule of "Other Creditors".

      Figure 27:- Other Creditors

      Figure 27 illustrates the estimates and calculations required to establish the "Other Creditors" figure. Where applicable, details are referenced to the "Figure Illustration" in which the basis for the item is illustrated

       

      OTHER CREDITORS
      Current Year Item Description Plan Year
      Fig
      Ref
      Annual
      Amount
      Amount
      Owed
      Fig
      Ref
      Annual
      Amount
      Owed
      Period
      Amount
      Owed

      21
      21
      21
      --$--
      125,438
      25,400
      16,047
      --$--
      1,738
      351
      222
      Net Wages Owing
      Direct Wages (Gross)
      Ancillary Wages (Gross)
      Holiday Pay (Gross)

      15
      15
      15
      --$--
      139,030
      27,806
      17,749

      1 week
      1 week
      1 week
      --$--
      1,925
      385
      246
      2,311 Total Net Wages Owing 2,556

      21
      21
      21
      21
      21
      --$--
      125,438
      25,400
      16,047
      17,700
      13,600
      --$--
      3,377
      684
      432
      413
      317
      PAYE Taxes Owing
      Direct Wages (Gross)
      Ancillary Wages (Gross)
      Holiday Pay (Gross)
      Salaries - Selling & Distribution
      Salaries - Administration

      15
      15
      15
      14
      14
      --$--
      139,030
      27,806
      17,749
      18,100
      14,000

      5 weeks
      5 weeks
      5 weeks
      1 month
      1 month
      --$--
      3,743
      749
      478
      422
      327
      5,223 Total PAYE Taxes Owing 5,719
      7,535 Total Other Creditors 8,274
      Calculation example:-
      Net Wages Owing: 139,030 ÷ 52 x (1 - 28%) = 1,925
      PAYE Taxes Owing: 139030 ÷ 52 x 5 x 28% = 3,743



       

    5. Indirect taxes, are typically taxes on sales or value added type taxes such as Value Added Tax (VAT) in Europe and General Services Tax (GST) here in New Zealand. How the amount of indirect tax owing to the IRD at any particular balance sheet date is calculated will depend entirely on the local rules.
      Illustrated below are the calculations based on the rules for the collection and payment of GST. Being a value added type tax, the calculations are reasonably sophisticated. They are therefore a good example of the type of calculations necessary to establish a balance sheet value for these type of taxes.
      Companies have various options to chose from. The option illustrated is based on the one most commonly adopted.
      Basic elements:-
      • The tax rate is 12.5%.
      • The tax period is 2 months.
      • The tax is added to the invoiced sales to the home market.
      • Tax is included on almost all the bills the company pays for supplies and services.
      • In the month following the tax period, the Company pays to the IRD the GST on the cash received from sales offset by the GST included on the purchases and expenses paid.

      Figure 28:- Indirect Taxes

      Figure 28 illustrates the estimates and calculations required to establish a GST tax owing at the balance sheet date. Where applicable, details are referenced to the "Figure Illustration" in which the basis for the item is illustrated. "Est." (estimate) indicates there is no other basis than "Best Estimates

       

      INDIRECT TAXES
      Current Year Item Description Plan Year
      Fig
      Ref

      Est/Act

      Plan
      Fig
      Ref

      Est
      9
      Est

      Est
      24
      --$--
      60,500
      0
      0
      60,500
      43,556
      50,509
      53,547
      Related to Sales of the Last 2 months
      Product Sales
      Asset Sales
      Other Sales
      Total Sales
      Add:- Opening Debtors (excluding tax)
      Less:- Closing Debtors (excluding tax)
      Sales Cash Received (excluding tax)
      --$--
      70,443
      0
      0
      70,443
      46,214
      53,421
      63,236

      Est
      9
      Est

      Est
      24
      6,693 GST on Cash Received from Sales @ 12.5% 7,905

      Est
      9
      Est

      Est

      Est
      26

      13,800
      0
      0
      13,800
      372
      13,428
      7,733
      7,891
      13,270
      Related to the Purchases and Expenses of the Last 2 months
      Purchases and Expenses
      Capital Expenditure
      Other Purchases
      Sub Total
      Less: Prepayment Adjustment
      Total Purchases
      Add:- Opening Creditors (excluding tax)
      Less:- Closing Creditors (excluding tax)
      Purchases and Expenses Cash Paid (excluding tax)

      17,317
      0
      0
      17,317
      381
      16,936
      10,745
      10,098
      17,583

      Est
      9
      Est

      Est

      Est
      26
      1,659 GST on Cash Paid for Purchases and Expenses @ 12.5% 2,198
      5,034 GST Owing 5,707
      Calculation Examples
      Debtors and creditors are adjusted to exclude the GST element as follows:-
      Closing Debtors: 60,099 ÷ (1 + 12.5%) = 53,421 (Figure 24 refers)
      Closing Creditors: 11,360 ÷ (1 + 12.5%) = 10,098 (Figure 26 refers)



       

    6. Direct taxation is the tax charged on the profit the company generates. The owed or owing position to be included in the balance sheet will depend on the local rules and which vary enormously from country to country. The rules plus the history of previous years, showing the liability or otherwise at the balance sheet date, should provide the basis for calculating or estimating a relevant tax figure.
      Figure 29 below illustrates the relevant calculations assuming the company is domiciled in New Zealand.
      Tax Rules:-
      • Tax rate on profits is 33%
      • The country has a system of Provisional Tax, which attempts obtain payment for the tax on profits, with 3 equal payments during the tax year.
      • Provisional Tax payments are determined by:-
        • The company estimating its likely liability. If it underpays using this method, penalties can be imposed.
        • A payment based on the previous year's tax liability plus 5%. If the company underpays using this method no penalties are imposed. Established companies with a consistent profit record, tend to opt for this method

      If the system works correctly, tax owed or owing for a financial year that coincides with the tax year should not be substantial

      Figure 29:- Direct Taxation

      Figure 29 illustrates the calculations required to establish the Direct Taxation at the balance sheet date. Where applicable, details are referenced to the "Figure Illustration" in which the basis for the item is illustrated. "Est." (estimate) indicates there is no other basis than "Best Estimates. "Act" (actual) indicates that the information should be available from the Company's actual accounting records

       

      DIRECT TAXATION
      Current Year Item Description Plan Year
      Fig
      Ref
      Est/Act
      $
      Plan
      $
      Fig
      Ref
      23 24,779 Profit Before Taxation $ 27,208 23
      23 8,177 Taxation
      Terminal Tax (Current Year)
      Tax Liability for the Year
      Provisional Tax Paid
      Terminal Tax Paid
      Total Tax Paid
      9,233
      221

      8,586
      221


      9,454


      8,807
      23
      Act

      Calc
      Act
      Act 221 Tax Owing 647
      Calculation Example
      Provisional Tax Paid: 8,177 x (1+5%) = 8,586



       

    7. All the information is now available to complete the balance sheet. The balance sheet is analysed showing the total of the capital employed required to run the business and the financial structure which finances the capital employed.
      • Capital employed is the total of:-
        • Fixed Assets at cost less Depreciation.
        • Stock Values of Raw Material, Work in Progress and Finished Goods.
        • Debtors and prepayments.
        • Creditors
        • Indirect Taxes owing. As the Company is acting as a tax collector, these balances are classified as part of the operational
      • The financing of capital employed is the total of:-
        • Shareholders Equity; comprising Issued Capital; Capital Reserves; Share Premium Account; General Reserve; Retained Earnings and Shareholders Current Accounts.
        • Direct Taxation owing or owed. Classified as finance because it is related to an appropriation of profit rather than its generation.
        • Term Loans
        • Overdraft or in hand balances.

      Figure 30 shows the balance sheet analysed in this way.

      Figure 30:- Balance Sheet

      Figure 30 illustrates the content and the recommended analysis of the Balance Sheet. Where applicable, details are referenced to the "Figure Illustration" in which the basis for the item is illustrated. "Act" (actual) indicates that the information should be available from the company's actual accounting records.

       

      BALANCE SHEET
      Current Year Item Description Plan Year
      Fig
      Ref
      Est/Act
      $
      Plan
      $
      Fig
      Ref

       
      FIXED ASSETS

      10
      10
      10

      10
      10
      10

      10
      10
      10

      10
      10

      60,000
      5,000
      55,000

      61,000
      24,000
      37,000

      21,000
      14,000
      7,000

      142,000
      43,000
       
      Land & Buildings
      Cost
      Depreciation Reserve
      Written Down Value
      Plant & Machinery
      Cost
      Depreciation Reserve
      Written Down Value
      Fixtures & Fittings
      Cost
      Depreciation Reserve
      Written Down Value
      Total Fixed Assets
      Cost
      Depreciation Reserve
      --$--
      73,000
      2,695


      72,200
      28,864


      22,240
      14,708


      167440
      42,267



      70,305



      43,336



      7,532



       

      10
      10
      10

      10
      10
      10

      10
      10
      10

      10
      10
      10 99,000 Fixed Assets - Written Down Value 121,173 10

       
      NET CURRENT ASSETS


      12
      12
      20


      24
      25



      26
      27
      28


      5,786
      6,752
      58,891
      72,429

      56,823
      2,170
      131,422


      8,877
      7,534
      5,034
      21,445
      Current Assets
      Stocks
      Raw Materials
      Work in Progress
      Finished Goods
      Total Stock

      Trade Debtors
      Prepayments
      Total Current Assets

      Less: Current Liabilities

      Trade Creditors
      Other Creditors
      Indirect Taxation
      Total Current Liabilities
      --$--

      4,821
      5,786
      55,282





      65,889

      60,099
      2,170
      128,158


      11,360
      8,274
      5,707
      25,341


      12
      12
      20


      24
      25



      26
      27
      28
      109,977 Total Net Current Assets 102,818
      208,977 CAPITAL EMPLOYED 223,991

       
      FINANCED BY:-

      Act
      Act
      Act
      23

      Act


      29


      22
      Calc

      35,000
      12,345
      37,685
      5,534
      90,564
      16,813
      107,377

      221


      7,285
      94,094
      101,379
      Shareholder's Equity
      Issued Capital
      General Reserve
      Profit & Loss A/c B/fwd
      Retained Profit
      Equity
      Shareholder's Current A/c
      Total Shareholder's Equity

      Taxation

      Borrowings

      Term Loan
      Bank Overdraft
      Total Borrowings

      35,000
      12,345
      43,219
      6,746







      3,995
      105,225





      97,310
      16,813
      114,123

      647




      109,220

      Act
      Act
      Calc
      23

      Act


      29


      22
      Calc
      208,977 CAPITAL EMPLOYED 223,991
      Calculations
      Profit & Loss A/c B/fwd is: 37,685 + 5534 = 43,219
      The level of capital employed has been calculated. All elements of financing are known
      or have been established, with the exception of the overdraft level, which logically
      is the balancing figure.


       

    Return to top


     

  13. CASH FLOW
    The Cash Flow statement is calculated from the data already available in the Profit & Loss Account and Balance Sheet. A presentation on a source and use of funds basis is preferred.. The source and use of funds presentation is more informative and shows more clearly how management has used the funds the company has generated. Figure 31 illustrates a cash flow statement prepared on this basis.

    Figure 31:- Cash Flow

    Figure 31 illustrates the content and the recommended analysis of a Cash Flow - Source and Use of Funds Statement. Where applicable, details are referenced to the "Figure Illustration" in which the basis for the item is illustrated.

     

    CASH FLOW
    Item Description Plan Year
    Plan
    $
    Fig
    Ref
    Cash from Operations
    Operating Profit
    Add:
    Profit/(Loss) on Sale of Assets
    Abnormal Items
    Total Non Trading Items
    Depreciation
    Total Cash from Operations

    Use of Funds

    Current Asset Movement
    Capital Expenditure
    Less Disposals
    Net Capital Expenditure
    Finance Charges
    Loan Repayment

    Taxation Payment
    Dividends Paid
    Total Use of Funds

    TOTAL CASH FLOW IN/(OUT)

    FINANCED BY:-
    Increase/(Decrease) in Overdraft
    --$--


    1,445
    (4,000)






    32,000
    220

    43,655



    (2,555)
    9,607
    50,707


    (7,159)


    31,780
    13,121
    3,290

    8,807
    12,000
    61,839

    (11,131)


    11,131

    21

    9
    8

    21



    30
    10
    10

    23
    22

    29
    23



     

  14. ANALYSIS BY ACCOUNTING PERIOD
    It may be desirable that the Plan is analysed into accounting periods. This could be particularly important for companies which have a very definite seasonal trend, which cause significant variations in working capital and therefore finance requirements during the course of the year. Most companies will have a seasonal trend, if only due to the influence of holiday periods, in particular the direct or indirect effect of the economic activity generated by the Christmas period. Analysis by accounting period in effect creates a detailed budget for the plan year, which provides the basis for monitoring actual performance compared with budget. It also provides information for a more accurate calculation of finance charges. The method of analysis is as follows:-

    1. Decide the basis for your accounting periods. This can be on a strictly monthly basis or as the exercise a pattern of two periods of 4 weeks and one of 5 weeks for each quarter. Often weeks are chosen to avoid "middle of the week" closing dates for a period, when many expenses are incurred on a weekly basis.
    2. Determine the various bases on which Sales, Production and expenses will occur. Typical examples are:-
      • Accounting Period Weeks
      • Working Days (allowing for closed holiday days)
      • Holiday Days
      • Month
      • Sales Pattern (reflecting expected seasonal trends)
      • Purchasing Pattern (reflecting maybe contractual purchasing arrangements).

      Figure 32:- Allocation Bases to Accounting Periods

      Figure 32 illustrates the allocation bases which are used to analyse annual amounts into accounting periods.

       

      ALLOCATION TABLES TO ACCOUNTING PERIODS
      Description Table
      No.

      Total
      Period
      1
      Period
      2
      Period
      3
      Period
      4
      Period
      5
      Period
      6
      Period
      7
      Period
      8
      Period
      9
      Period
      10
      Period
      11
      Period
      12
      Period Weeks
      Working Days
      Holiday Days
      Month
      Sales Pattern
      Purchase Pattern
      1
      2
      3
      4
      10
      11
      52
      235
      25
      12
      100%
      100%
      4
      17
      3
      1
      8.5%
      9.0%
      4
      20
      0
      1
      8.5%
      9.0%
      5
      22
      3
      1
      9.0%
      9.0%
      4
      20
      0
      1
      7.0%
      9.0%
      4
      20
      0
      1
      8.0%
      9.0%
      5
      23
      2
      1
      10.0%
      9.0%
      4
      19
      1
      1
      8.0%
      9.0%
      4
      19
      1
      1
      9.0%
      9.0%
      5
      15
      10
      1
      6.0%
      9.0%
      4
      15
      5
      1
      7.0%
      0.0%
      4
      20
      0
      1
      8.0%
      9.0%
      5
      25
      0
      1
      11.0%
      10.0%



       

    3. Allocate the annual cost of production and the calculated cost of sales to accounting periods. The figures for the year are taken from the Finished Goods Calculations (see Figure 20 above) This provides the basic data for the calculation of the movement in finished goods stock in each accounting period. Cost of sales in the Profit and Loss A/c can be distorted by the inclusion of items that are not strictly part of the product cost. It is for this reason that this exercise is done separately. Figure 33 illustrates these calculations.

      Figure 33:- Calculated Stock Movement - Finished Goods

      Figure 33 illustrates the results after using the relevant allocation bases to calculate, from annual data, the finished goods stock values that are applicable to each accounting period.

       

      CALCULATED STOCK MOVEMENT - FINISHED GOODS
      Description Net
      Cost
      Value

      Alloc
      Table

      Period
      1

      Period
      2

      Period
      3

      Period
      4

      Period
      5

      Period
      6

      Period
      7

      Period
      8

      Period
      9

      Period
      10

      Period
      11

      Period
      12
      Opening Stk
      Req Production
      Cost of Sales
      Closing Stk
      59,891
      259,478
      264,087
      55,282

      2
      10
      59,891
      18,771
      22,447
      56,215
      56,215
      22,083
      22,447
      55,850
      55,850
      24,292
      23,768
      56,374
      56,374
      22,083
      18,486
      59,971
      59,971
      22,083
      21,127
      60,927
      60,97
      25,396
      26,409
      59,914
      59,914
      20,979
      21,127
      59,767
      59,767
      20,979
      23,768
      56,978
      56,987
      16,562
      15,845
      57,695
      56,795
      16,562
      18,486
      55,771
      55,771
      22,083
      21,127
      56,728
      56,728
      27,604
      29,050
      55,282
      Allocation Table refers to those illustrated in Figure 32
      Calculation example - Period 1:-
      Req Production: 259,478 ÷ 235 x 17 = 18,771 : Cost of Sales: 264,087 x 8.5% = 22,447
      Closing Stk: 59,891 + 18,771 - 22,447 = 56,215



       

    4. Most items of sales, costs and expenses can be allocated to accounting periods on the basis of the tables illustrated in Figure 32. Where the item can occur randomly separate analysis will be required. Examples of such an items are:-
      • Depreciation on capital purchases, which occurs from the month of purchase.
      • Profit or loss on the sale of assets, which occurs at the date of disposal.
      • Abnormal or non recurring items of expense

      Figure 34 gives an indication of the type of analysis required for depreciation on capital expenditure, which is required for the analysis up to the operating profit stage. The other items will be dealt with later.

      Figure 34:- Depreciation on Capital Expenditure

      Figure 34 illustrates the results of the analysis of the depreciation related to capital purchases. From the month of purchase, depreciation is allocated on the basis if accounting period weeks.

       

      DEPRECIATION ON CAPITAL EXPENDITURE
      Fig
      Ref
      Description Mnth
      Pur
      Dep
      Yr
      Per
      1
      Per
      2
      Per
      3
      Per
      4
      Per
      5
      Per
      6
      Per
      7
      Per
      8
      Per
      9
      Per
      10
      Per
      11
      Per
      12

      9
      9
      Land & Buildings
      Item A
      Item B
      Total L & B

      Aug
      Oct

      60
      35
      95

      0
      0
      0

      0
      0
      0

      0
      0
      0

      0
      0
      0

      7
      0
      7

      9
      0
      9

      7
      5
      12

      7
      5
      12

      9
      7
      16

      7
      5
      12

      7
      5
      12

      9
      7
      16

      9
      9
      9
      9
      Plant & M/cy
      Item A
      Item B
      Item C
      ABC Ltd
      Total Pl & M/cy

      Jun
      Jun
      Nov
      Oct

      1,280
      720
      270
      324
      2,594

      0
      0
      0
      0
      0

      0
      0
      0
      0
      0

      145
      82
      0
      0
      227

      116
      65
      0
      0
      182

      116
      65
      0
      0
      182

      145
      82
      0
      0
      227

      116
      65
      0
      50
      232

      116
      65
      49
      50
      281

      145
      82
      61
      62
      351

      116
      65
      49
      50
      281

      116
      65
      49
      50
      281

      145
      82
      61
      62
      351

      9
      Fix & Fittings
      Item A
      Total Fix & Fitt

      Jul

      378
      378

      0
      0

      0
      0

      0
      0

      39
      39

      39
      39

      48
      48

      39
      39

      39
      39

      48
      48

      39
      39

      39
      39

      48
      49
      9 Total Depreciation 3,067 0 0 227 221 227 284 283 332 415 332 332 415
      Note that the slight differences in the totals, is due to rounding.
      Calculation example - Plant & M/cy; Item A:-
      Weeks owned = 44
      Depreciation Period 3: 1,280 ÷ 44 x 5 = 145



       

    5. The operating profit for each accounting period can now be calculated. Each item is allocated to a particular period on the basis of the allocation table, judged to be relevant to that particular item. Note that all the items requiring allocation are shown in Figure 21. he exercise in effect creates a budget for each accounting period, against which actual results can be monitored. Figure 35 illustrates the results of the allocation.

      Figure 35:- Allocation of Operating Profit to Accounting Periods

      Figure 35 illustrates the results of allocating to accounting periods, Sales; Costs and Expenses using the chosen allocation basis.

       

      ALLOCATION TO ACCOUNTING PERIODS - OPERATING PROFIT
      Item Description Plan
      Year
      $

      Alloc
      Basis
      Per
      1
      $
      Per
      2
      $
      Per
      3
      $
      Per
      4
      $
      Per
      5
      $
      Per
      6
      $
      Per
      7
      $
      Per
      8
      $
      Per
      9
      $
      Per
      10
      $
      Per
      11
      $
      Per
      12
      $
      Total Sales 370,755 10 31,514 31,514 33,368 25,953 29,660 37,075 29,660 33,368 22,245 25,953 29,660 40,783
      Materials Consumed
      Opening Stock
      Raw Matls & WIP
      Add:-
      Purchases
      Less:-
      Closing Stock
      Raw Matls & WIP


      12,538

      43,406


      10,607




      11


      Calc


      12,538

      3,907


      13,164


      13,164

      3,907


      13,213


      13,213

      3,907


      12,875


      12,875

      3,907


      12,923


      12,923

      3,907


      12,971


      12,971

      3,907


      12,440


      12,440

      3,907


      12,682


      12,682

      3,907


      12,923


      12,923

      3,907


      13,935


      13,935

      0


      11,042


      11,042

      3,907


      11,090


      11,090

      4,341


      10,607
      Materials Consumed 45,337 2 3,280 3,858 4,244 3,858 3,858 4,437 3,666 3,666 2,894 2,894 3,858 4,823
      Added Value 325,418
       
      28,234 27,656 29,124 22,094 25,802 32,638 25,995 29,702 19,351 23,059 25,802 35,960
      Factory Cost
      Direct Wages
      Ancillary Wages
      Holiday Pay
      Cleaning and Laundry
      Power
      Repairs and Maintenance
      A.C.C. Levies
      Leased Equipment
      Light Heat
      Insurances
      Rates
      Rent
      Depreciation
      Deprecation Additions
      Total Factory Cost

      Finished Goods Stock
      Add:- Opening Stock
      Less:- Closing Stock

      139,030
      27,806
      17,749
      569
      4,235
      3,467
      2,709
      950
      1,500
      2,200
      1,200
      6,240
      6,540
      3,067
      217,262


      59,891
      55,282

      2
      2
      3
      1
      2
      2
      1
      4
      2
      1
      1
      4
      1
      Fig34



      Fig33
      Fig33

      10,058
      2,012
      2,130
      44
      306
      251
      208
      79
      109
      169
      92
      520
      503
      0
      16,480


      59,891
      56,215

      11,832
      2,366
      0
      44
      360
      295
      208
      79
      128
      169
      92
      520
      503
      0
      16,598


      56,215
      55,850

      13,016
      2,603
      2,130
      55
      396
      325
      260
      79
      140
      212
      115
      520
      629
      227
      20,707


      55,850
      56,374

      11,832
      2,366
      0
      44
      360
      295
      208
      79
      128
      169
      92
      520
      503
      221
      16,819


      56,374
      59,971

      11,832
      2,366
      0
      44
      360
      295
      208
      79
      128
      169
      92
      520
      503
      227
      16,825


      59,971
      60,927

      13,607
      2,721
      1,420
      55
      414
      339
      260
      79
      147
      212
      115
      520
      629
      284
      20,804


      60,927
      59,914

      11,241
      2,248
      710
      44
      342
      280
      208
      79
      121
      169
      92
      520
      503
      283
      16,841


      59,914
      59,767

      11,241
      2,248
      710
      44
      342
      280
      208
      79
      121
      169
      92
      520
      503
      332
      16,891


      59,767
      56,978

      8,874
      1,775
      7,099
      55
      270
      221
      260
      79
      96
      212
      115
      520
      629
      415
      20,621


      56,978
      57,695

      8,874
      1,775
      3,550
      44
      270
      221
      208
      79
      96
      169
      92
      520
      503
      332
      16,734


      57,695
      55,771

      11,832
      2,366
      0
      44
      360
      295
      208
      79
      128
      169
      92
      520
      503
      332
      16,930


      55,771
      56,728

      14,790
      2,958
      0
      55
      451
      369
      260
      79
      160
      212
      115
      520
      629
      415
      21,012


      56,728
      55,282
      Cost of Sales 267,208
       
      23,437 20,821 24,428 17,080 19,728 26,254 20,655 23,345 22,797 21,551 19,832 27,281
      Gross Profit 103,547
       
      8,077 10,964 8,940 8,873 9.933 10,822 9,006 10,023 (552) 4,401 9.829 13,502
      Sell & Dist Exp
      Freight & Couriers
      Advertising
      Vehicle Expenses
      Debt Collection
      Salaries
      Office Expenses

      9,269
      6,488
      927
      371
      18,100
      2,900

      2
      4
      2
      10
      4
      1

      671
      541
      67
      32
      1,508
      223

      789
      541
      79
      32
      1,508
      223

      868
      541
      87
      33
      1,508
      279

      789
      541
      79
      26
      1,508
      223

      789
      541
      79
      30
      1,508
      223

      907
      541
      91
      37
      1,508
      279

      749
      541
      75
      30
      1,508
      223

      749
      541
      75
      33
      1,508
      223

      592
      541
      59
      22
      1,508
      279

      592
      541
      59
      26
      1,508
      223

      789
      541
      79
      30
      1,508
      223

      986
      541
      99
      41
      1,508
      279
      Total Sell & Dist Exp 38,055
       
      3,041 3,171 3,316 3,166 3,169 3,363 3,126 3,130 3,001 2,949 3,169 3,453
      Admin Expenses
      Stationery & Postage
      Telephone
      General Expenses
      Salaries
      Accountancy
      Bank Charges
      Fees
      Computer Software
      Licenses & Registrations
      Subscriptions

      1,298
      1,854
      742
      14,000
      1,900
      800
      39
      600
      45
      560

      1
      1
      1
      4
      1
      4
      4
      4
      1
      1

      100
      143
      57
      1,167
      146
      67
      3
      50
      3
      43

      100
      143
      57
      1,167
      146
      67
      3
      50
      3
      43

      125
      178
      71
      1,167
      183
      67
      3
      50
      4
      54

      100
      143
      57
      1,167
      146
      67
      3
      50
      3
      43

      100
      143
      57
      1,167
      146
      67
      3
      50
      3
      43

      125
      178
      71
      1,167
      183
      67
      3
      50
      4
      54

      100
      143
      57
      1,167
      146
      67
      3
      50
      3
      43

      100
      143
      57
      1,167
      146
      67
      3
      50
      3
      43

      125
      178
      71
      1,167
      183
      67
      3
      50
      4
      54

      100
      143
      57
      1,167
      146
      67
      3
      50
      3
      43

      100
      143
      57
      1,167
      146
      67
      3
      50
      3
      43

      125
      178
      71
      1,167
      183
      67
      3
      50
      3
      54
      Total Admin Exp 21,837
       
      1,779 1,779 1,902 1,779 1,779 1,902 1,779 1,779 1,902 1,779 1,779 1,902
      Operating Profit 43,655
       
      3,257 5,744 3,722 3,929 4,985 5,557 4,101 5,115 (5,455) (326) 4,880 8,147



       

    6. To totally complete the profit and loss account per accounting period, to the retained profit figure, requires the inclusion of the relevant figure for the accounting period of the items detailed in Figure 23. Non trading items, such as profit or loss on sale of fixed assets and abnormal items, can be included in the accounting period relevant to when the item occurs. The interest relating to long term loan finance can be calculated for each accounting period, in accordance with the repayment schedule. Interest on overdraft per accounting period however, requires that the closing overdraft level of the previous period is known. To calculate the overdraft level, requires the calculation of the balance sheet. The tax liability per accounting period can only be arrived at after calculating the interest for each accounting period. It is therefore necessary to complete all the calculations, including those relating to the balance sheet for each accounting period, before moving on to complete the calculations for the next accounting period. The recommended procedure to complete the analysis, is to:-
      1. First calculate the value per accounting period for all those items, relating to both the profit and loss account and balance sheet, that can be determined at this juncture.
      2. Calculate the interest per accounting period, based on the closing overdraft level of the previous period.
      3. Calculate the tax liability per accounting period.
      4. Complete the profit and loss account to the retained profit level.
      5. Complete the balance sheet for the accounting period.
      6. Repeat the calculations b. to e. above for the next accounting period.

      The procedure is detailed below.

    7. The profit and loss items that can be determined, unaffected by the overdraft level are shown in Figure 36.

      Figure 36:- Analysis of Profit and Loss Items

      Profit and loss items after Operating Profit, that at this juncture can be analysed into accounting periods. The Figure reference indicates the source of the analysis.

       

      ANALYSIS TO ACCOUNTING PERIODS - PROFIT and LOSS ITEMS
      Item Description Plan
      Year
      $

      Fig
      Ref
      Per
      1
      $
      Per
      2
      $
      Per
      3
      $
      Per
      4
      $
      Per
      5
      $
      Per
      6
      $
      Per
      7
      $
      Per
      8
      $
      Per
      9
      $
      Per
      10
      $
      Per
      11
      $
      Per
      12
      $
      Sale of Assets
      Proceeds
      Less:- W D V
      Disposal Profit(Loss)

      1,665
      220
      1445

      9
      9
      9

      0
      0
      0

      0
      0
      0

      300
      160
      140

      0
      0
      0

      0
      0
      0

      0
      0
      0

      0
      0
      0

      0
      0
      0

      100
      60
      40

      1,265
      0
      1,265

      0
      0
      0

      0
      0
      0
      Abnormal 4,000 8 0 0 0 0 0 0 4,000 0 0 0 0 0
      Interest - Term Loan 639 22 67 64 62 60 57 55 52 50 47 44 42 39



       

    8. The information is available to analyse or calculate the value per accounting period of the items which make up the operating capital employed. The procedures for calculating the various items per accounting period, are the same as those detailed in Paragraph 12 - Balance Sheet. Figure 37 illustrates the analysis of the operating capital employed per period

      Figure 37:- Operating Capital Employed - Analysis to Accounting Periods

      Figure 37 details the analysis of capital employed to accounting periods. Where applicable, details are referenced to the "Figure Illustration" in which the source of the analysis or the information required to do the calculations is illustrated. "Calc" (calculation) indicates that the figure is calculated, based on the information in the current or referenced figure.

       

      OPERATING CAPITAL EMPLOYED - ANALYSIS TO ACCOUNTING PERIODS
      Item Description Plan
      Year
      $

      Fig
      Ref
      Per
      1
      $
      Per
      2
      $
      Per
      3
      $
      Per
      4
      $
      Per
      5
      $
      Per
      6
      $
      Per
      7
      $
      Per
      8
      $
      Per
      9
      $
      Per
      10
      $
      Per
      11
      $
      Per
      12
      $
      Fixed Assets - Cost
      Opening Balance

      Additions
      Less: Disposals
      Closing Balance

      Depreciation Reserve
      Opening Balance

      Depreciation Charge
      Less: On Disposals
      Closing Balance

      Written Down Value

      142,000
      32,000
      6,560
      167,440


      43,000
      9,607
      6340
      46,267

      121,173

      10
      9
      9
      10


      10
      35
      9
      10

      Calc

      142,000
      0
      0
      142,000


      43,000

      503
      0
      43,503

      98,497

      142,000
      0
      0
      142,000


      43,503

      503
      0
      44,006

      97,994

      142,000
      7,200
      1,560
      147,640


      44,006

      856
      1,400
      43,462

      104,178

      147,640
      2,800
      0
      150,440


      43,462

      724
      0
      44,186

      106,254

      150,440
      9,000
      0
      159,440


      44,186

      730
      0
      44,916

      114,524

      159,440
      0
      0
      159,440


      44,916

      913
      0
      45,829

      113,610

      159,440
      10,000
      0
      169,440


      45,829

      786
      0
      46,615

      122,825

      169,440
      3,000
      0
      172,440


      46,615

      835
      0
      47,450

      124,990

      172,440
      0
      2,000
      170,440


      47,450

      1,044
      1,940
      46,554

      123,886

      170,440
      0
      3,000
      167,440


      46,554

      835
      3,000
      44,389

      123,051

      167,440
      0
      0
      167,440


      44,389

      835
      0
      45,224

      122,217

      167,440
      0
      0
      167,440


      45,224

      1,044
      0
      46,267

      121,173
      Closing Stock Value
      Raw Matl. & WIP
      Finished Goods
      Total Closing Stock

      10,607
      55,282
      65,889

      35
      33
      Calc

      13,164
      56,215
      69,379

      13,213
      55,850
      69,063

      12,875
      56,374
      69,249

      12,923
      59,971
      72,894

      12,971
      60,927
      73,889

      12,440
      59,914
      72,355

      12,682
      59,767
      72,448

      12,923
      56,978
      69,900

      13,935
      57,695
      71,630

      11,042
      55,771
      66,813

      11,090
      56,728
      67,817

      10,607
      55,282
      65,889
      Trade Debtors
      Sales - Last 3 Months

      Trade Sales
      Asset Sales
      Other Sales
      Total Sales for 3 mths

      Debtor Ratio - Wks

      Calculated Debtors


      96,396
      1,265
      0
      97,661

      8.000

      60,099


      35
      36

      Calc

      3/Est

      Calc


      92,014
      0
      0
      92,014

      8.825

      62,463


      98,028
      0
      0
      98,028

      8.750

      65,981


      96,396
      300
      0
      96,696

      8.675

      64,526


      90,835
      300
      0
      91,135

      8.600

      60,289


      88,981
      300
      0
      89,281

      8.525

      58,548


      92,688
      0
      0
      92,688

      8.450

      60,248


      96,395
      0
      0
      96,395

      8.375

      62,101


      100,103
      0
      0
      100,103

      8.300

      63,912


      85,273
      100
      0
      85,373

      8.225

      54,015


      81,566
      1365
      0
      82,931

      8.150

      51,991


      77,858
      1,365
      0
      79,223

      8.075

      49,210


      96,396
      1,265
      0
      97,661

      8.000

      60,099
      Prepayments
      Insurances
      Opening Balance & Due
      Accrual
      Closing Balance

      Rent (1 month)

      Total Prepayments


      3,850
      2,200
      1,650

      520

      2,170


      25
      35
      Calc

      25

      Calc


      1,650
      169
      1,481

      520

      2,001


      1,481
      169
      1,312

      520

      1,832


      1,312
      212
      1,100

      520

      1,620


      1,100
      169
      931

      520

      1,451


      931
      169
      762

      520

      1,282


      762
      212
      550

      520

      1,070


      550
      169
      381

      520

      901


      381
      169
      212

      520

      732


      212
      212
      0

      520

      520


      2,200
      169
      2,031

      520

      2,551


      2,031
      169
      1,862

      520

      2,382


      1,862
      212
      1,650

      520

      2,170
      Trade Creditors
      Pur/Exp-Last 3 Mths

      Purch & Expenses
      Capital Expenditure
      Total Purch 3 mths

      Creditor Ratio - Wks

      Calculated Creditors


      22,720
      0
      22,720

      6.500

      11,360


      35
      9
      Calc

      3/Est

      Calc


      21,089
      0
      21,089

      6.225

      10,098


      22,563
      0
      22,563

      6.250

      10,847


      23,910
      7,200
      31,660

      6.275

      15,016


      24,152
      10,000
      34,152

      6.300

      16,550


      24,150
      19,000
      43,150

      6.325

      20,994


      24,236
      11,800
      36,036

      6.350

      17,602


      24,157
      19,000
      43,157

      6.375

      21,164


      24,078
      13,000
      37,078

      6.400

      18,254


      23,403
      13,000
      36,403

      6.425

      17,991


      21,363
      3,000
      24,363

      6.450

      12,088


      21,442
      0
      21,442

      6.475

      10,679


      22,720
      0
      22,720

      6.500

      11,360
      Other Creditors
      Wages & Hol Pay
      Period Wks
      Owed Weeks
      Net Wages Owing

      PAYE Taxes Owing

      Gross Salaries

      Wages(Period Wks)
      Salaries(1 month)
      PAYE Taxes Owing

      Total Other Creditors

      17,749
      5
      1
      2,556


      2,675

      4,970
      749
      5,719

      8,274

      35


      27/Calc


      35

      27/Calc
      27/Calc
      27Calc

      27/Calc

      14,199
      4
      1
      2,556


      2,675

      3,976
      749
      4,725

      7,280

      14,199
      4
      1
      2,556


      2,675

      3,976
      749
      4,725

      7,280

      17,749
      5
      1
      2,556


      2,675

      4,970
      749
      5,719

      8,274

      14,199
      4
      1
      2,556


      2,675

      3,976
      749
      4,725

      7,280

      14,199
      4
      1
      2,556


      2,675

      3,976
      749
      4,725

      7,280

      17,749
      5
      1
      2,556


      2,675

      4,970
      749
      5,719

      8,274

      14,199
      4
      1
      2,556


      2,675

      3,976
      749
      4,725

      7,280

      14,199
      4
      1
      2,556


      2,675

      3,976
      749
      4,725

      7,280

      17,749
      5
      1
      2,556


      2,675

      4,970
      749
      5,719

      8,274

      14,199
      4
      1
      2,556


      2,675

      3,976
      749
      4,725

      7,280

      14,199
      4
      1
      2,556


      2,675

      3,976
      749
      4,725

      7,280

      17,749
      5
      1
      2,556


      2,675

      4,970
      749
      5,719

      8,274
      Indirect Taxes
      Product Sales
      Asset Sales
      Other Sales
      Total Sales
      Add: Opening Drs*
      Less: Closing Drs*
      Sales Cash Received*

      GST on Sales


      Purch & Expenses
      Capital Expenditure
      Other Purchases
      Sub Total
      Less: Prepayments
      Tot Purch & Exp
      Add: Opening Crs*
      Less: Closing Crs*
      Total Cash Paid*

      GST on Purch

      GST Owing (2 mths
      cycle)

      70,443
      0
      0
      70,443
      46,214
      53,421
      63,236

      7,905


      17,317
      0
      0
      17,317
      381
      16,936
      10,745
      10,098
      17,583

      2,198

      5,707

      27/35
      27/36

      Calc
      37/Calc
      37/Calc
      27/Calc

      27/Calc

      35/Calc
      9/37

      Calc
      27/35
      Calc
      37/Calc
      37/Calc
      27/Calc

      27/Calc

      27/Calc

      31,514
      0
      0
      31,514
      50,509
      55,523
      26,500

      3,313


      7,830
      0
      0
      7,830
      169
      7,661
      7,891
      8,976
      6,577

      822

      2,491

      31,514
      0
      0
      31,514
      55,523
      58,650
      28,387

      3,548


      8,078
      0
      0
      8,078
      169
      7,909
      8,976
      9,642
      7,243

      905

      5,134

      33,368
      300
      0
      33,668
      58,650
      57,356
      34,962

      4,370


      8,552
      7,200
      0
      15,752
      212
      15,540
      9,642
      13,348
      11,834

      1,479

      2,891

      25,953
      0
      0
      25,953
      57,356
      53,590
      29,719

      3,715


      8,072
      2,800
      0
      10,872
      169
      10,703
      13,348
      14,711
      9,340

      1,167

      5,438

      29,660
      0
      0
      29,660
      53,590
      52,043
      31,207

      3,901


      8,076
      9,000
      0
      17,076
      169
      16,907
      14,711
      18,661
      12,957

      1,620

      2,281

      37,075
      0
      0
      37,075
      52,043
      53,554
      35,564

      4,446


      8,638
      0
      0
      8,638
      212
      8,426
      18,861
      15,646
      11,441

      1,430

      5,297

      29,660
      0
      0
      29,660
      53,554
      55,201
      28,013

      3,502


      7,993
      10,000
      0
      17,993
      169
      17,824
      15,646
      18,812
      14,658

      1,832

      1,669

      33,368
      0
      0
      33,368
      55,201
      56,811
      31,758

      3,970


      7,997
      3,000
      0
      10,997
      169
      10,828
      18,812
      16,226
      13,414

      1,677

      3,962

      22,245
      100
      0
      22,345
      56,811
      48,013
      31,143

      3,893


      7,963
      0
      0
      7,963
      212
      7,751
      16,226
      15,992
      7,985

      998

      2,895

      25,953
      1,265
      0
      27,218
      48,013
      46,214
      29,017

      3,627


      3,753
      0
      0
      3,753
      (2,031)
      5,784
      15,992
      10,745
      11,031

      1,379

      5,143

      29,660
      0
      0
      29,660
      46,214
      43,742
      32,132

      4,017


      8,076
      0
      0
      8,076
      169
      7,907
      10,745
      9,492
      9,160

      1,145

      2,872

      40,783
      0
      0
      40,783
      43,742
      53,421
      31,104

      3,888


      9,241
      0
      0
      9,241
      212
      9,029
      9,492
      10,098
      8,423

      1,053

      5,707

      Capital Employed
       

      223,991
       

      Calc
       

      212,471
       

      211.607
       

      213,391
       

      211,619
       

      217,696
       

      216,110
       

      228,162
       

      230,037
       

      220,891
       

      219,895
       

      220,793
       

      223,991
       
      *Excluding GST Indirect Tax



       

    9. The financial structure that supports the Operating Capital Employed, (that is the remainder of the balance sheet) requires some calculations that rely on the figures from the previous accounting period. To complete the task necessitates calculating the following for each accounting period, before proceeding with the calculations for the next accounting period:-
      1. The calculation of retained profit per accounting period. This requires the inclusion of the
        • Abnormal items
        • Calculation of the interest charge
        • Charge for direct taxation
        • Amount paid out in dividends to shareholders
      2. The completion of the balance sheet for each accounting period, by:-
        • Adjusting the shareholders' equity for the amount of retained profit. Assuming there are no plans for distribution of, or the introduction of new capital by the shareholders.
        • Calculating the amount of direct taxation owed.
        • Including the amounts owed on long term loans.
        • Calculating the overdraft level. In effect the balancing figure, to balance to the Operating Capital Employed, when all other balances have been determined.
    10. Calculating the interest payment is the key to being able to calculate the other figures. The method illustrated, bases the interest charge for the accounting period on the closing overdraft level of the previous period. If in the nature of the business, the overdraft level varies considerable during the course of an accounting period, it may be necessary to "load" the interest rate to calculate a figure which will reflect the actual payment. This "Interest adjustment factor" can only be determined by an intimate knowledge of the overdraft movements characteristic to the particular company.
    11. Having calculated the interest rate, the direct taxation charge can be calculated, dividends to shareholders included in the accounting periods they occur, and the retained profit figure determined. The balance sheet for each of the accounting period can now be completed. Figure 38 illustrates the results of these calculations.

      Figure 38:- Finance Structure - Analysis to Accounting Periods

      Figure 38 illustrates the detail of the analysis to accounting periods of the retained profit figure and the financial structure of the company. Where applicable, details are referenced to the "Figure Illustration" in which the source of the analysis or the information required to do the calculations is illustrated. "Calc" (calculation) indicates that the figure is calculated, based on the information in the current or referenced figure. "Act" indicates that the figure should be available from the actual accounts and will not normally change for each accounting period. "Est" indicates that there is no calculated basis for the analysis to accounting periods, the analysis should be in accordance with normal practice for that particular item.

       

      RETAINED PROFIT & FINANCIAL STRUCTURE - ANALYSIS TO ACCOUNTING PERIODS
      Item Description Plan
      Year
      $

      Fig
      Ref
      Per
      1
      $
      Per
      2
      $
      Per
      3
      $
      Per
      4
      $
      Per
      5
      $
      Per
      6
      $
      Per
      7
      $
      Per
      8
      $
      Per
      9
      $
      Per
      10
      $
      Per
      11
      $
      Per
      12
      $
      Overdraft Prev Period
       
      30/Calc 94,094 95,599 90,275 89,652 88,038 90,337 90,651 103,836 104,825 102,731 102,151 99,739
      Retained Profit
      Operating Profit
      Non Trading Items

      (Profit)Loss Asset Sales
      Abnormal (ABC Ltd)
      Total Non Trading
      Finance Charges

      Interest Term Loan
      Bank Interest
      Total Finance Charges

      Profit Before Tax

      Taxation

      Net Profit
      Dividends Paid

      Retained Profit

      43,655


      (1,445)
      4,000
      2,555

      639
      12,482
      13,121

      27,979

      9,233

      18,746
      12,000

      6,746

      35

      9/36
      8/36


      22/36
      Calc



      23/Est


      23/Est
       

      3,257


      0
      0
      0

      67
      941
      1,008

      2,250

      742

      1,507
      0

      1,507

      5,744


      0
      0
      0

      64
      956
      1,020

      4,723

      1,559

      3,165
      0

      3,165

      3,722


      (140)
      0
      (140)

      62
      1,128
      1,190

      2,672

      882

      1,790
      0

      1,790

      3,929


      0
      0
      0

      60
      897
      956

      2,972

      981

      1,992
      0

      1,992

      4,985


      0
      0
      0

      57
      880
      937

      4,047

      1,336

      2,712
      0

      2,712

      5,557


      0
      0
      0

      55
      1,129
      1,184

      4,373

      1,443

      2,930
      6,000

      (3,070)

      4,101


      0
      4,000
      4,000

      52
      907
      959

      (855)

      (283)

      (575)
      0

      (575)

      5,115


      0
      0
      0

      50
      1,038
      1,088

      4,027

      1,329

      2,698
      0

      2,698

      (5,455)


      (40)
      0
      (40)

      47
      1,310
      1,357

      (6,772)

      (2,235)

      4,537
      0

      4,537

      (326)


      (1,265)
      0
      (1,265)

      44
      1,027
      1,072

      (133)

      (44)

      (89)
      0

      (89)

      4,880


      0
      0
      0

      42
      1,022
      1,063

      3,817

      1,260

      2,557
      0

      2,557

      8,147


      0
      0
      0

      39
      1,247
      1,286

      6,861

      2,264

      4,597
      6,000

      (1,403)
      Capital Employed
      Financed By:-
      S/Holders' Equity

      Issued Capital
      General Reserve
      P & L A/c - B/fwd
      Retained Profit (cum)
      Equity
      S/Holders' Current A/c
      Total Equity

      Taxation
      (cumulative)
      Tax Paid (cumulative)

      Borrowings
      Term Loan
      Bank Overdraft
      Total Borrowings

      Capital Employed



      35,000
      12,345
      43,219
      6,746
      97,310
      16,813
      114,123

      647




      3,995
      105,225
      109,220

      223,991



      Act
      Act
      30
      38/Calc

      Act


      23/Calc
      29/Calc


      22
      Calc


      37



      35,000
      12,345
      43,219
      1,507
      92,071
      16,813
      108,884

      963
      0


      7,024
      95,599
      102,623

      212,471



      35,000
      12,345
      43,219
      4,672
      95,236
      16,813
      112,049

      2,522
      0


      6,761
      90,275
      97,036

      211,607



      35,000
      12,345
      43,219
      6,462
      97,026
      16,813
      113,839

      3,404
      0


      6,496
      89,652
      96,148

      213,391



      35,000
      12,345
      43,219
      8,454
      99,018
      16,813
      115,831

      4,385
      (2,862)


      6,228
      88,038
      94,266

      211,619



      35,000
      12,345
      43,219
      11,165
      101,729
      16,813
      118,542

      5,720
      (2,862)


      5,958
      90,337
      96,295

      217,696



      35,000
      12,345
      43,219
      8,095
      98,659
      16,813
      115,472

      7,163
      (2,862)


      5,685
      90,651
      96,336

      216,110



      35,000
      12,345
      43,219
      7,521
      98,085
      16,813
      114,898

      6,880
      (2,862)


      5,410
      103,836
      109,246

      228,162



      35,000
      12,345
      43,219
      10,218
      100,782
      16,813
      117,595

      8,209
      (5,724)


      5,132
      104,825
      109,957

      230,037



      35,000
      12,345
      43,219
      5,681
      96,245
      16,813
      113,058

      5,974
      (5,724)


      4,852
      102,731
      107,583

      220,891



      35,000
      12,345
      43,219
      5,592
      96,156
      16,813
      112,969

      5,931
      (5,724)


      4,569
      102,151
      106,720

      219,895



      35,000
      12,345
      43,219
      8,149
      98,713
      16,813
      115,526

      7,190
      (5,945)


      4,283
      99,739
      104,022

      220,793



      35,000
      12,345
      43,219
      6,746
      97,310
      16,813
      114,123

      9,454
      (8,807)


      3,995
      105,225
      109,220

      223,991
      Calculation Examples
      Bank Interest Period 1 = Overdraft Per 12 Prev Yr x Interest Rate x Int Adj Factor ÷ Weeks in Year x Weeks in Period (94,094 x 13% x 1.0000 ÷ 52 x 4 = 941)
      Taxation Period 1 = Profit Before Taxation x Tax Rate (2,250 x 33% = 742)
      Taxation in the balance sheet is the accumulation of the tax charge in the profit and loss account offset by the cumulative amount paid (Total for the Year = 647)

      Note that the calculation of the interest charge, is the key to calculating the remaining elements of the profit and loss account, to arrive at the retained profit
      for the period. The balance sheet has to be completed for each period in order to arrive at an overdraft level, which is the basis for calculating the
      interest charge for the next period.



       

    12. Now that the profit and loss account and balance sheet for each accounting period has been completed, the Cash Flow per period can be analysed using the methods and presentation 1llustrated in Paragraph 13 and Figure 31 above. Figure 39 illustrates the cash flow analysis to accounting periods.

      Figure 39:- Cash Flow

      Figure 39 illustrates the format of the analysis of the cash flow to accounting periods. Where applicable, details are referenced to the "Figure Illustration" in which the source of the analysis or the information required to do the calculations is illustrated. "Calc" (calculation) indicates that the figure is calculated, based on the information in the current or referenced figure.

       

      CASH FLOW - ANALYSIS TO ACCOUNTING PERIODS
      Item Description Plan
      Year
      $

      Fig
      Ref
      Per
      1
      $
      Per
      2
      $
      Per
      3
      $
      Per
      4
      $
      Per
      5
      $
      Per
      6
      $
      Per
      7
      $
      Per
      8
      $
      Per
      9
      $
      Per
      10
      $
      Per
      11
      $
      Per
      12
      $
      Cash from Operations
      Operating Profit
      Non Trading Items
      Depreciation

      Total from Operations

      43,655
      (2,555)
      9,607

      50,707

      35
      36/38
      35

      3,257
      0
      503

      3,761

      5,744
      0
      503

      6,247

      3,722
      140
      856

      4,719

      3,929
      0
      724

      4,652

      4,985
      0
      731

      5,715

      5,557
      0
      913

      6,470

      4,101
      (4,000)
      786

      886

      5,115
      0
      835

      5,949

      (5,455)
      40
      1,044

      (4,371)

      (326)
      1,265
      835

      1,774

      4,880
      0
      835

      5,715

      8,147
      0
      1,044

      9,191
      Use of Funds
      Current Asset Movement
      Capital Expenditure
      Asset Disposals WDV
      Finance Charges
      Term Loan Repay