Myob Assignment

Topics: Balance sheet, Generally Accepted Accounting Principles, Financial ratios Pages: 11 (2449 words) Published: April 14, 2013

EXECUTIVE SUMMARY Gone Fishing Pty Ltd is a small business which buys and sells fishing equipment. The report presents information about the financial performance of the business from 1 July 2010 to 31 January 2011. The report also provides analysis of the company’s profitability and financial position. As can be inferred from the financial statements, specifically Profit & Loss Statement for the seven-month period and Balance Sheet as of 31 January 2011, the main concern for the management is that the company is barely making profit. It only earned a net profit of $441.38 which only accounts for 0.20% of the total income to date. The primary reason for this is that the total revenue generated is not large enough to cover the corresponding cost of operations. Another notable finding is that a big portion of its expenses pertain to employment expenses. Moreover, the company has not been able to collect 15.50% of its total receivables within the allowed 30-day credit period. Therefore, Gone Fishing Pty Ltd should strive to increase its total revenue and control its costs so that the business will be more profitable.

Gone Fishing Pty Ltd Financial Performance Report



INTRODUCTION Business background Gone Fishing Pty Ltd is a small business which buys and sells fishing equipment for years. The structure of the business is that of a private company with a sole shareholder and director, Greg Hansen. The company strives to provide a high quality product and service to strengthen its financial condition and market share. In addition, the manager aims to maintain an adequate level of inventory, improve the accounts receivable collection, and pay the outstanding obligations on time. The business is registered for Goods and Services Tax (GST) with the Australian Taxation System (ATO). Accordingly, the accrual method of accounting is used for both accounting and GST purposes. The business also maintains a perpetual inventory system using the average method. Credit sale terms are normally net 30 days but prompt payment discounts are available to some customers. Bad debts are uncommon and are accounted for using the direct write-off method. Prepayments are recorded using the asset method. Reversing entries for accrued wages are also made at the beginning of the next period.



Purpose of the report The main purpose of the report is to present information about financial performance of the business and provide analysis about its profitability and financial position. The analysis section aims to help in the identification of the problem areas which need improvement. In addition, the report suggests recommendations to solve any problems identified.


Scope and limitations The financial information presented on the report is based only from the historical transactions of the company. Furthermore, the analysis section focuses mainly on the monthly comparison of data for the months of January 2011 and December 2010.

Gone Fishing Pty Ltd Financial Performance Report



FINANCIAL PERFORMANCE AND ANALYSIS Financial performance After seven months of operation, Gone Fishing Pty Ltd has earned a net profit of $441.38 which only accounts for 0.20% of the total income. Total income collected for the period amounted to $239,802 which is 99.50% sales. Cost to generate the income amounted to $132,307.03, making the gross profit to be only 44.80% of the total revenue. Expenses for the period amounted to $105,837.63. 73.97% of this amount pertained to employment-related expenses. Please refer to Appendix 2 for the Profit & Loss Statement (July 2010 through January 2011). As for the month of January, the Company incurred a net loss of $518.62. As presented in Appendix 3, total income generated for the month amounted to $32,735 while cost of sales and expenses totaled to $18,164.03 and $14,101.63 respectively. The main factor that contributed for a negative bottom figure is the incurrence of loss...

References: Hoggett, J., Edwards, L., Medlin, J., and Tilling, M. (2009). Financial accounting (7th
ed.). Milton: Wiley.
Pabst, W., & Perrin, B (2011). Gone fishing Pty Ltd: A computerised accounting practice
set using MYOB Version 19. Milton: Wiley.
Society for Human Resource Management: Salaries as a Percentage of Operating Expense website: ntageofOperatingExpense.aspx Bob Nelson, 40 Ways to Improve Retail Profit Margins website:
Gone Fishing Pty Ltd Financial Performance Report
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