How Much Finance Is Required Finance Essay - Free Essay Example

Often the hardest part of starting a business is raising the money to get going. As a newly appointed Finance Manager of Melaleuca Refugee Company distributor in Malaysia with the Head office at Bangsar, Kuala Lumpur, present an idea of how to turn it into a successful business by having other outlets. You need to decide: How much finance is required? When and how long the finance is needed for? What security (if any) can be provided? The finance needs of a start-up should take account of these key areas: Set-up costs (the costs that are incurred before the business starts to trade) Starting investment in capacity (the fixed assets that the business needs before it can begin to trade) Working capital (the stocks needed by the business- e.g. raw materials + allowance for amounts that will be owed by customers once sales begin) Growth and development (e.g. extra investment in capacity) Task 1 Make a thorough research on the above company. Identify and briefly explain the sources of finance available for the expansion in the distribution of its line of products and highlight the implications of such sources of finance. Task 2 From the above, explain the importance of financial planning for Melaleuca Products and describe the impact of finance on the financial statements. Task 3 Obtain a Financial Statements of the company showing its two (2) consecutive latest annual statements. Compute for its profitability and liquidity ratio. Compare and comment on the result of your two (2) years calculations. Task 4 Analyse Melaleucas business environment through its consolidated results as shown in the Financial Statements. Introduction Sources of finance are ways in which a business can get additional funds in order to finance various things. These include start-up, for example raw materials, machinery and buildings; expansion, for example buying more equipment and larger buildings; and to help with cash flow problems, for example in periods when the business is short of cash. They are different type of sources of finance. The first is bank loan; bank loan is a long term loan and will often be for large amount ofÂÂ  money for starting up a business or to expanding. Business will agree with the bank to pay instalment monthly fees with interest charge. Secondly is long term loan, Long term Loan is a loan which is often being for a large sum of money and usually the payment period is more than 15 years. Usually is used for starting up new business, for expansion, buying new fixed assets for the business. Loans are usually paid on a monthly instalments plus agreed fixed interest charge. Besides is short term loan Short term loan is loan that is for a small amount within the period ofÂÂ  5 years, plus agreed interest charge. Other than that, interest also one of the sources of financial. Banks provide services by lending money in the form ofÂÂ  overdrafts and loans and bank will charge for this service. The extra charge is called interest, these are the profit made.ÂÂ  The Bank of England sets an interest rate at which it lends to financial in situations. This interest rate then affects the whole range of interest rates set by commercial banks, building societies and other institutions for their own savers and borrowers. It also tends to affect the price ofÂÂ  financial assets, such as bonds and shares, and the exchange rate, which affect consumer and business demand in a variety of ways. Lowering or raising interest rates affects spending in the economy. The last is Joint Venture, joint venture also called Issue shares two or more parities join together to start up a business; hoping it will grow, make a profit and will be a going concern business. The joined parties will share revenue, expenses and control of the business. Task 1 Profile of Melaleuca Refugee Centre Melaleuca Refugee Centre Torture Trauma Survivors Service of the NT Incorporated is a community controlled and a non-profit association operating out of Darwin. This association was first established in 1996 as the Torture Trauma Survivor of the NT Incorporated to cater for the small number of refugees and asylum seekers wanting to settle in the Northern Territory. In 2002 it expended and become known as the Melaleuca Refugee Centre Torture Survivors Service of the NT Incorporated (Melaleuca Refugee Centre). Sources of finance of Melaleuca Refugee Centre Melaleuca Refugee Centre is a non-profitable association, so that most of the money they get it from the donation or sponsor. Since the World War II they have accepted over a number of refugees and other people in need of humanitarian assistance into the Australian community. The Melaleuca Refugee Centre have a very strong fund bodies and they are easier to help other people who need the help. The centre gets fund from the federal and northern territory Governments. Australian government I. Department of Immigration and Citizenship II. Department of Health and Ageing III. Department of Families, Housing, Community IV. Services and Indigenous Affairs Northern Territory Government I. Department of Children and Families II. Department of the Chief Minister, Office of Multicultural Affairs Foundations I. The Honda Foundations The Honda Foundation draws on voluntary contributions from Hondas Australia-wide network of dealers, from Honda Australia itself and from private donors. The Honda Foundation operates independently and aims to engender goodwill for the benefit of Australian communities. Operating as a charitable trust, The Honda Foundation provides financial assistance to needy people. The Honda foundations sponsored a vehicle for use by Melaleuca. The foundation pays for the servicing and vehicles. Task 2 Vision Melaleuca Refugee Centre is recognized as a leader in facilitating the recovery of refugee survivors of torture and trauma. Mission Melaleuca Refugee Centre provides an environment for resettlement and healing of refugee survivors of torture and trauma, their families and community through confidential, high-quality and holistic services. Importance of Financial Planning for Melalueca Refugee Company In general, financial planning is a series of steps or use personal or business goals, the extent of the progressive and cumulative, in order to complete a financial goal or a set of circumstances, such as the elimination of debt, retirement preparation, which usually include a personal budget, organization, sometimes even including the specific target of a series of steps or spending and saving future income. Different types of fees of the plan for the future distribution of income, such as rent or utilities, but also retains some of the short-term and long-term savings income. Sometimes referred to as the investment plans of the financial plan, but in personal finance, financial plan can focus on specific areas such as risk management, heritage, university, or retirement. The companys financial manager for Melalueca Refugee Company is Peter Trayte and assistant financial Emma Cameron. Basis of preparation of a member of the management committee, he is responsible for the preparation of financial reports and has determined, in order to meet the requirements of the Association Act of 2003, it is appropriate to meet the needs of the membership. The responsibility of the management of the Committee, including the decision of the Internal Control Committee is necessary to enable the preparation of the financial report to material misstatement, whether due to fraud or error. Task 3 Profitability Ratio of Melaleuca Refugee Company Profitability Ratio YEARS 2011 2012 Net Surplus Margin = 0.17 : 1 =0.18 : 1 (Net Surplus / Sales) Return on Total Assets = 0.49 : 1 = 0.36 : 1 ( Surplus Available to Common Shareholders / Total Assets) Return on Equity = 0.8 : 1 = 0.5 : 1 ( Surplus Available to Common Shareholders / Equity) Gross Surplus Margin = 0 = 0 ( Gross Surplus / Sales) Table 1: Comparison of Profitability Ratio (Values extract from Appendix 1 2) Liquidity Ratio of Melaleuca Refugee Company Liquidity Ratio YEARS 2011 2012 Current Ratio = 2.56 : 1 = 3.74 : 1 (Current Assets / Current Liabilities) Quick Ratio = 2.56 : 1 = 3.74 : 1 ((Current Assets Inventories Prepayment) / Current Liabilities ) Table 2: Comparison of Liquidity Ratio (Values extract from Appendix 1 2) Explanation of the Comparison of the Profitability Ratios Net Surplus Margin Based on the table 1 above, the net surplus margin is showing the net surplus margin for year 2011 and 2012. The ratio for the years of 2011 and 2012 to 1 that mean if there is increase of sales then there will be 0.17 surpluses and 0.18 surpluses for the both years. Based on the table 1, we can know that the net surplus margin for 2012 is increase from net surplus margin for 2011, that is only 0.01. This is because the funding or the donation for the company is lesser in 2011. Return on Total Assets Base on the table 1 above, The ratio for the both year is 1. When there is 1 dollar for total assets, then there will be a 0.49 and 0.36 of surplus to the same shareholders for both years. The total asset is decrease 0.13 from year 2011 to year 2012. Return on Equity The ration in the year 2011 and 2012 is 1. Therefore if there is 1 dollar of equity then there will be 0.8 and 0.5 of surplus to the same shareholder. The different of the return on equity between 2011 and 2012 is based on the surplus available to the common shareholder and the equity. Gross Surplus Margin There is 0 for the gross surplus margin due to devoid of gross surplus for this company. This might say that the gross surplus margin is not valid for this company Explanation of Comparison of the Liquidity Ratio Current Ratio From the table on above, we can know that both year ration value is 1, it is mean if there is 1 dollar of current liabilities, then there will be 2.56 dollar and 3.74 dollar of current assets for the both year 2011 and 2012. The table is showing that the ratio of the year 2012 is higher compared to 2011. This is because of the current liabilities of 2012 is much increased compared to year 2011. Quick Ratio The table 2 above we can see the quick ratio is equal to the current ratio. This happened due to the insufficient of inventories and prepayment of the company. Task 4 Melaleuca Refugee Centre is a member of The Forum of Australian Services for Survivors of Torture and Trauma (FASSTT). Clients can be referred to Melaleuca at any time they are ready for counselling or other interventions whether they are newly arrived or have been in Australia for many years. Interventions may be short, medium or long-term depending on the clients needs and process of recovery. Referrals are formally assessed and if accepted, clients may be seen immediately or put on a managed wait list. Anyone can refer someone to Melaleuca (eg HSS providers, schools, GPs or the client themselves). Melaleucas counselling services use professional interpreters when needed and are free, confidential and voluntary. The Forum of Australian Services for Survivors of Torture and Trauma (FASSTT) is a network of Australias eight specialist rehabilitation agencies that work with survivors of torture and trauma who have come to Australia from overseas. The eight agencies are ASeTTS (Association for Services to Torture and Trauma Survivors), Companion House, Foundation House (Victorian Foundation for Survivors of Torture), Melaleuca Refugee Centre (Torture and Trauma Survivors Service of the NT), Phoenix Support Service for Survivors of Torture and Trauma, QPASTT (Queensland Program of Assistance to Survivors of Torture and Trauma), STARTTS (Service for the Treatment and Rehabilitation of Torture and Trauma Survivors), and also STTARS (Survivors of Torture and Trauma Assistance and Rehabilitation Service). There is one FASSTT member agency in each state and territory of Australia. The eight agencies in the FASSTT network offer direct services to survivors of torture and trauma, their families and commu nities. These include psychological assessments, individual psycho-therapeutic interventions, group and family therapy, youth activities, natural therapies and community development. FASSTT members also provide innovative and effective services to ensure that the Australian community can play an important role in diminishing the impact of torture on survivors and enhancing their opportunities to rebuild productive and meaningful lives. These services include professional development and capacity building for service providers such as workers in the health, housing, education and settlement fields, networking, research, volunteer programs and case consultations. Besides that, the Melaleuca Refugee Centre also have the program call Youth Support and Service. Melaleucas youth program provides a multi-function program, offering a holistic, timely and culturally appropriate services to young people of refugee and migration background aged 12 to 21 years. The young people who are at risk of homelessness will get supported by RECONNECT under this youth program and enhances refugee youth engagement with family, education, training and community. The youth team collaborates with other agencies to facilities new networks for young people and provide them with important social connection and extra support. The counselling team at Melaleuca Refugee Centre provides support, counselling and advocacy services to individuals and their families from refugee background. People who have experienced torture and trauma before coming to Australia might continue to suffer from effects of the prolonged exposure to human rights abuses, violence, war and physical ha rdship. Settling into a foreign country can be a very traumatising experience. Melaleuca recognises that peoples pre-migration experiences and the process of resettlement are important to psychosocial well-being. Melaleuca offers initial counselling upon arrival and long term counselling for those individuals or families in need. Next, Melaleuca delivers a range of community development programs underpinned by the key principles and values of Community Development: education, participation, democracy, advocacy and strategies of community empowerment and strengthening that build social capital and community capacity. In the case of survivors of torture and trauma, community development rebuilds resilience which may have been eroded by past experiences. Community Development accepts that the impact of torture and state-sanctioned violence may result in distrust and conflict, and aims to build social cohesion and strength. It identifies and builds on individual and community assets. It links the community with others in collaborative partnerships, and empowers individuals and communities who are particularly disadvantaged within the resettlement country. There are 4 categories of community development; there are Families in Cultural Transition (FICT), Alternatives to Violence Program (AVP), Tips Ideas on Parent ing Skills Program (TIPS) and Education Training Program. Families in Cultural Transition (FICT) Program is a series of workshops for those who have met their initial basic needs and now face the challenge of settling into a vastly different culture. Participants find out about Australian culture and systems, identify their own cultural strengths, explore the effect of trauma and change and learn where to get help. It builds on existing strengths and skills, gives concrete information and helps people make friends and connect with community groups. In addition, in 2011 until 2012 Melaleuca Refugee Centre is doing a pilot project that adapts an internationally recognised model of building peace to emerging communities from refugee background in Darwin. The workshops build the capacity of community members to meet individual and family needs, maintain harmony and foster non-violence. Program Coordinator, Justine Mickle is arranging the workshops and will support the bi-cultural facilitators. The Northern Territory Department of Health and Families funded the 18 month project to be delivered to: Burundi, Congolese, Liberian, Karen, Somali and Sudanese community members. This program is underpinned by the international Alternatives to Violence Project (AVP) model, an innovative, preventative approach to engage with communities to reduce of the impact of violence and increase community harmony. TIPS is a parenting program that is offered by Melaleuca Refugee Centre to refugee families that have been living in Darwin for over 12 mont hs, and usually have completed the Families in Cultural Transition (FICT) Program offered to newly arrived refugee families. The TIPS Program at Melaleuca Refugee Centre is funded by the Northern Territory Department of Children Families. This program includes the importance of fellings, communicating in families, listening, tantrums, behaviour management, responsibility and honestly, parental self-esteem and parenting teenagers. Lastly, Melaleuca Refugee Centre offers professional development training to staff and volunteers working in a range of government and non-government organisations to respond sensitively and effectively to people of refugee background. The workshops and presentations are relevant to people who occasionally work with people of refugee background as well as those working on a regular basis. Depending on resource availability, Melaleucastaff are able to visit your organsiation and deliver training tailored to suit your needs in regards to working with people of refugee background. Some examples of training areas include mental health issues, accidental counselling, working with children, working with youth, and the effects of torture and trauma. All training sessions are free unless otherwise negotiated. Recent training sessions have been provided to Charles Darwin University, Centrelink, Kormilda College, Sanderson Middle School and St Johns Ambulance. Conclusion From this assignment, I have learnt more about financing. I think it is very useful in my future life. Besides, through this assignment, I learn about how a non-profit organization operate and know how a non-profit organization to calculated their profitability. This is a great exercise in my study life. Bibliography https://www.melaleuca.org.au/documents/annual_reports/Annual_Report_1011.pdf https://www.melaleuca.org.au https://www.melaleuca.org.au/Counselling.html https://www.melaleuca.org.au/Settlement.html https://www.melaleuca.org.au/CommunityDevelopment.html https://www.melaleuca.org.au/Youth.html https://www.melaleuca.org.au/FASSTT.html Appendix 1