PART A: PREVIEW & ANALYZE FINANCIAL STATEMENTS

1.

Gross Profit = Revenue - Direct Labor

Gross Margin = Gross Profit / Revenue

FY 2017-
  Q1 Q2 Q3 Q4 18
53,280.0 53,280.0 53,280.0 53,280.0 213,120.0
CS - PC 0 0 0 0 0
20,520.0 20,520.0 20,520.0 20,520.0
CS - PTC 0 0 0 0 82,080.00
73,800.0 73,800.0 73,800.0 73,800.0 295,200.0
Revenue 0 0 0 0 0

21,002.1 21,002.1 21,002.1 21,002.1

DL - PC 6 6 6 6 84,008.64
DL - PTC 8,645.00 8,645.00 8,645.00 8,645.00 34,580.00
DL - WorkCover 1,541.65       1,541.65
31,188.8 29,647.1 29,647.1 29,647.1 120,130.2
DL 1 6 6 6 9

42,611.1 44,152.8 44,152.8 44,152.8 175,069.7

Gross Profit 9 4 4 4 1
Gross Margin 57.74% 59.83% 59.83% 59.83% 59.31%

2.

Net Income = Gross Profit - Total Expenses

Profit Margin = Net Income / Revenue

  Q1 Q2 Q3 Q4 FY 2017-18
Total Expenses 47,736.62 42,918.44 42,918.44 42,918.44 176,491.94
Net Income -5,125.43 1,234.40 1,234.40 1,234.40 -1,422.23
Profit Margin -6.95% 1.67% 1.67% 1.67% -0.48%

3.

Debt Ratio = Total Liability / Total Asset

 Total Asset         57,378.00

Total Liabilities 92,800.00

Debt Ratio         1.62

4. Cash Flows indicates the decrease the cash in a course of over the year. Revenues needs to be
strengthened so that the cash in hand can be increased at the end of a period. Need to work on the cost
controls as well.

PART B: FINANCIAL REPORT TO THE MANAGEMENT

Part A: Current Status

After analyzing the current financial conditions of 2017-2018 & studying the business plan of Harmony
Counselling Pty Ltd, the company needs to work critically increasing the revenue. As from previous
financial year of 2016-2017, the company haven’t able to increase the revenue via Principal Counsellor
which was same as 213,120 in both years. Only incremental revenue is from the part time counsellor
which increases the total revenue by 38.5% from last year.

As revenue is raised through the part time counsellor, the direct cost is also increased by 48.2% from last
year causing incremental gross profit by 32.6% but dropping the Gross margin to 59.31% from 61.97% in
2016-2017.

As revenue are increased the net loss is drop to -1422 which was -34054 in last year. Loss margins are
reduced to 0.48% which was around 16% in last year.

Debt ratio indicates that the company has more liabilities than its assets and company isn’t able to
payoff its debts even after selling of its assets. It might affect the operations of the company as well.

Cash flows also indicates the decrease in cash from the operational activities.

Part B: Recommendations

1. It is recommended to gain the opportunity to have the fund announced by the Government of
$10,000 per annum for three years in-order to utilize this amount to incremental business and
generating additional revenues as additional space is readily available for lease too.
2. Having the excellent support and strong partnership with the community new clients can be
engaged, provided, new skilled staff and improving the business processes particularly in areas
of administrative and financial.
3. Funds can be raised by floating shares as company is facing higher debt ratio which is due to the
long-term loan which is 1.6 times the assets.
4. Income streams needs to review and increased accordingly as it was same in previous years
5. Wages & superannuation makes up to 101,398.76 which is around 57% of the total expenses
which can be reduced to increase the profit margins of the company.