Assessment Task 5.1

Brisbane State College Business Organisation and Management Students Name: Class:

Mr Taylor 2009

Year 11

Unit: Financial Management (FN)

Time: 60min

Task No.: 5.1

Task: Short Answer

Conditions: 60min No teacher assistance Exam conditions

Criteria Assessed: Knowledge and Understanding Reflection Processes

/30

Question 1 (2 Marks) List and explain the four (4) objectives of financial management. _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________

Question 2 (2 Marks) Explain two (2) of the reasons financial management is important. _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________

Question 3 (3 Marks) Provide the term for each of the following definitions: a)

Those assets which can be consumed or converted to another form (usually cash) within a current year.

_________________________________________________________ _________________________________________________________ b) The Net Sales minus the Cost of Sales _________________________________________________________ _________________________________________________________ c) An event or happening that changes financial position and/or earnings. _________________________________________________________ _________________________________________________________

Question 4 (3 Marks) Explain the concept of ‘under-capitalisation’ and state one effect that it may have on the business. _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________

Question 5 (3 Marks) Define risk management while explaining the two components of risk management. Give examples for each. _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________

Question 6 (3 Marks) Define financial management and explain why it is important for a business to make informed decisions and have quality control. _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________

Question 7 (3 Marks) Explain why and how the time taken to complete the cash flow cycle would differ between a convenience store and an antique shop.

_________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________

Question 8 (4 Marks) Determine whether a short or long term source of finance should be used for the following: A small business buying a building ___________________________ Extra funds needed for wages _______________________________ c) Inventories being bought on credit____________________________ d) A large company buying a new CEO a car______________________ a) b)

Question 9 (6 Marks) The owner of Scribble, an organisation that makes stationary, is concerned about the profitability of her business. She has asked you to give her some explanations and make some calculations for her. She has provided you with the following information: Based on the selling price of $4 per unit Costs: Rent $180 Advertising $ 50 Insurance $ 25 Cost of Materials Ink 25c Plastic tube 5c Metal spring an tip 35c Electricity $55 Wages $80

a) Calculate the fixed costs and explain what is meant by the term. _______________________________________________________ _______________________________________________________ _______________________________________________________

b) Calculate the variable costs and explain what is meant by the term. _______________________________________________________ _______________________________________________________ _______________________________________________________ c)

Calculate the break even point and explain what is meant by the term.

_______________________________________________________ _______________________________________________________ _______________________________________________________

Question 10 (11 Marks) Use the information below to prepare a Cash Budget for Thomas Smith for November and December 2009. The bank balance on the 1st of November is $5 000 (over draft) Cash Purchases Cash Sales Interest Received Wages Purchase of Equipment Operating Expenses

November 120 000 160 000 2 000 25 000 10 000

December 90 000 130 000 2 000 30 000 40 000 12 000

November

December