The Finances Of A Business Finance Essay - Free Essay Example

Sample details Pages: 10 Words: 3129 Downloads: 2 Date added: 2017/06/26 Category Business Essay Type Analytical essay Did you like this example? Financial Management can be defined as the management of the finances of a business or organization in order to achieve financial objectives. Finance involves the management, creation and study  of money, banking, credit, investments, assets and liabilities. Specifically, Finance majors study cash flow, asset and risk management, capital markets, portfolio theory, international finance and forecasting and budgeting. Don’t waste time! Our writers will create an original "The Finances Of A Business Finance Essay" essay for you Create order The objective of financial management is to maintain and create economic value. Financial management concern with acquisition (buying, invest), financing (how to buy) and management (how to manage). It deals with all kind of financial decisions such as when to introduce a new product, when to invest in new assets, when to replace existing assets, when to borrow from banks, when to issue stocks or bonds, when to extend credit to a customer, and how much cash to maintain. The goal of the firm is to maximize the wealth of shareholder, by which maximization of the price of the existing common stock. Other possible goals include maximize sales, maximize costs, maximize profit and catch up competition survive. Task 1 Company Profile Melaleuca Refugee Centre is a community-controlled, not-for-profit association operating out of Darwin. This association was first established in 1996 as the Torture Trauma Survivors Service of the NT Incorporated to cater for the small numbers of r efugees and refuge seekers wanting to settle in the Northern Territory. In 2002, it expanded and became as Melaleuca Refugee Centre Torture Trauma Survivors Service of the NT Incorporated also known as Melaleuca Refugee Centre. Melaleuca Refugee Centre provides early settlement support services to people of refugee background, counseling services and facilitates significant community development programs in the areas of cultural transition, strengthening families and peace leadership. Introduction of Sources of Finance A finance source helps an organization meet short-term operating needs, such as paying for costs of materials, salaries and other administrative expenses. Financing also helps senior leadership plan for long-term expansion projects, such as mergers and acquisitions. Sources of finance can be classified into two categories which is internal and external sources. Internal sources are raised from within the organization, and external sources are raised from an outs ide source. There are 5 internal sources of finance which is owners investment, retained profit, sale of stock, sale of fixed asset and debt collection. Where, the external sources of finance include bank loan, additional partners, share issued, mortgage, leasing, hire purchase and government grant. Sources of Finance of Melaleuca Refugee Centre Melaleuca Refugee Centre is a not-for-profit organization, so their sources of finance are government grant. Government grant can be defined as payment by the Government towards the cost of local-authority services. These are either for particular purposes or services (specific grants) or to fund local services generally (revenue support grant). The advantage of government grants is the organizations do not need to repay it. The disadvantage is certain conditions may apply and not all businesses may be eligible for a grant. The sources of finance of Melaleuca Refugee Centre include: Australian Government Department of Immigration and Citizenship Department of Health and Ageing Department of Families, Housing, Community Services and Indigenous Affairs Northern Government Department of Children and Families Department of the Chief Minister, Office of Multicultural Affairs Department of Justice Department of Natural Resource, Environment, the Arts and Sport Foundation Honda Foundation Honda Foundation sponsors vehicle for use by Melaleuca. The foundation pays for the vehicle and servicing. This support demonstrates the Honda Foundations good corporate citizenship and community support and is very much appreciated by all at Melaleuca. Deckchair Cinema Task 2 Impact of Finance on Financial Statement Vision and Mission A vision statement looks into the future at least five years and defines a desired future state of the company where, a mission statement defines what a company currently does, and how it plans to achieve its vision. The vision statement of Melaleuca Ref ugee Centre is Melaleuca Refugee Centre is recognized as a leader in facilitating the recovery of refugee survivors of Torture and Trauma. Their mission statement is 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. Aim Melaleuca Refugee Centre aims to achieve its mission by  providing ethical, client focused services and referrals to refugee survivors, their families and communities in a climate of empowerment and self determination. Its promoting community awareness regarding issues for refugee survivors and involvement in activities conducted by the Centre by individuals, families, organizations and the wider community. Its aims to creating and maintaining a sustainable and respectful organization that values all stakeholders including employees, volunteers and the Management Committee. Melaleuca Refugee Centre provided culturally sensitive opportunities for client involvement in service development and strategic involvement in local, Territory and National networks. Responsibility of Committee of Management Melaleuca Refugee Centre has a Committee of Management (COM), which the members are responsible for the preparation of the financial report. The Committee of Managements responsibility include such internal control as the Committee determines is necessary to enable the preparation of financial report that is free from material misstatement, whether due to fraud or error. Currently, the Finance Manager of Melaleuca Refugee Centre is Peter Trayte and the Finance Assistant is Emma Cameron. Task 3 Profitability Ratio  Year 2011 Year 2012 Net Surplus Margin  Net Surplus  Net Surplus  Sales  Sales   = 755,436  = 937,325   4,375,160  5,090,820   = 0.17:01  = 0.18:01     Return on Total Assets  Surplus available to common shareholders  Surplus available to common shareholders      Total Assets  Total Assets   = 755,436  = 937,325   1,542,283  2,572,861   = 0.49:01  = 0.36:01     Return on Equity  Surplus available to common shareholders  Surplus available to common shareholders      Equity  Equity   = 755,436  = 937,325   949,757  1,887,070   = 0.8:01  = 0.5:01     Gross Surplus Margin  Gross Surplus  Gross Surplus   Sales  Sales   = 0  = 0   4,375,160  5,090,820   = 0:01  = 0:01     Table 1 (Value extract from Appendix a b) Liquidity Ratio   Year 2011   Year 2012  Current Ratio  Current Asset  Current Asset   Current Liabilities  Current Liabilities   = 1,516,902  = 2,568,059   592,538  1,887,070   = 2.56:01  = 1.36:01     Quick Ratio  Current Asset-Inventories-Prepayment  Current Asset-Inventories-Prepayment      Current Liabilities  Current Liabilities   = 1,516,902  = 2,568,059   592,538  1,887,070   = 2.56:01  = 1.36:01     Table 2 (Value extract from Appendix a b) Table 1 show the profitability ratio of Melaleuca Refugee Centre. Profitability ratio measure a companys ability to generate earnings relative to sales, assets and equity. These ratios assess the ability of a company to generate earnings, profits and cash flows relative to relative to some metric, often the amount of money invested (ReadyRatio.com, 2013). The Net Surplus Margin for year 2011 and 2012 is 0.17:01 and 0.18:01. Value of 0.17 and 0.18 represent the net surplus and value 1 represent the sales of Melaleuca Refugee Centre. This means that their net profit of year 2012 is higher than year 2011. The increases of donation and supporter might be one of the reasons for the differences of income for year 2011 and 2012. Return on total asset also known as return on asset (ROA) and is an indicator of how profitable a company is relative to its total assets.  Surplus on total assets gives an idea  as to how efficientÃ⠀šÃ‚  management is  at using its assets to generate earnings (INVESTOPEDIA, 2013). The ratio for return on total assets for year 2011 and 2012 is 0.49:01 and 0.36:01. Value of 0.49 and 0.36 represents the surplus available to common shareholders of Melaleuca Refugee Centre and value 1 representing the total assets. This means that the ratio for return on total assets has been decrease 0.13 from year 2011 to 2012. Return on Equity  measures a corporations profitability  by revealing how much  profit a company generates  with the money shareholders have invested. The ratio of surplus on equity for these 2 years is 0.8:01 and 0.5:01. Value 1 was representing the equity and value 0.8 and 0.5 representing surplus of Melaleuca Refugee Centre. The profit that Melaleuca Refugee Centre generates with the money shareholders have invested has been decrease 0.3 from year 2011 to year 2012. Gross Surplus Margin for year 2011 and 2012 is same, both is 0:0 1. The sales are 1 and the gross surplus is 0 for the both year 2011 and 2012. This means that there is no gross surplus for this organization. So, we can say that there is no gross surplus margin for this organization. Table 2 on above has shown the liquidity ratio of Melaleuca Refugee Centre for year 2011 and 2012. Liquidity ratio is a class of financial metrics  that  is used  to determine a companys ability to pay off its  short-terms debts obligations. Current ratio is the ratio of current assets of a business to its current liabilities. It is the most important and widely used test of liquidity of a business. The current ratio of Melaleuca Refugee Centre for year 2011 is 2.56:01, where for year 2012 is 1.36:01. The value of 2.56 and 1.36 represent current assets and 01 represent current liabilities. This mean that Melaleuca Refugee Centre have higher liquidity of money in year 2011 compare to year 2012 to cover their debts in next 12 month. Qu ick ratio also known as acid test ratio and it measures the ability of a company to pay its debts by using its cash and near cash current assets. Quick ratio is the ratio of Current Asset minus inventories minus prepayment to the current liabilities to the business. The quick ratio for year 2011 is 2.56:01; for year 2012 is 1.36:01. The ratio of quick ratio for year 2011 and 2012 is same to the current ratio for year 2011 and 2012. This is because there are no available of inventories and prepayment in year 2011 and 2012. In conclusion, Melaleuca Refugee Centre is able to cover their debt in the next 12 month, although their surplus is not high. Task 4 Introduction to Business Environment of Melaleuca Refugee Centre Melaleuca Refugee Centre has successfully reached and implements a new Enterprise Agreement with staff and their union, which the overwhelming majority of staff supported. This was approved by Fair Work Australia in February 2012. Committee of Management (COM) m embers also participated in governance training workshop in February 2012 to expand their knowledge on legal obligations of committee member and good governance practices. The COM is currently working in collaboration with key stakeholders and staff on the next strategic plan for the organization to set the direction for the short to medium term. Melaleuca Refugee Centre was recognized for its volunteer program by Volunteering SA-NT and was awarded the 2012 for Organizational Excellency Large Organization. Event held by Melaleuca Refugee Centre In year 2012, Melaleuca Refugee Centre was held 5 events. The past event includes Darwin World Refugee Day Festival Restoring Hope on 16 June 2012, Deckchair Film Fundraiser for Melaleuca on 26 July 2012, Working for Peace One Day on 20 September 2012, Annual General Meeting on 27 September 2012 and International Human Rights Day 10 December 2012. The 2012 Annual General Meeting (AGM) of Melaleuca Refugee Centre was held on Thursday 27 September 2012 at Melaleuca Refugee Centre. The Committee of Management members for 2012/2013  were elected. In year 2013, OzFusion Multicultural Australia Day  has been held. OzFusion 2013 multicultural Australia Day was a resounding success with around 600 attending. This was the first time Melaleuca was involved in this high profile event. Their clients were engaged in all aspects of the day and it was a great opportunity to meet other multicultural groups. Referral and Services Melaleuca Refugee Centre provides early settlement support services to people who have refugee background. They offer a uniquely integrated approach by hosting a range of services and programs under the same roof. These services include counseling and advocacy, early settlement support and community development. Counseling and Advocacy The counseling team at Melaleuca Refugee Centre provided support, counseling and advocacy services to refugee backgrounds individua ls and their families. People who experienced torture and trauma before coming to Australia might continue to suffer from effects of the extended exposure to human rights abuses, violence, war and physical hardship. Melaleuca recognizes the pre-migration experiences and the process of resettlement are important to psychosocial well being. Melaleuca offers initial counseling upon arrival and long term counseling for those individuals or families in need. The counseling and Advocacy Services provided include: Intensive Family Support Services (IFS) Torture and Trauma Counseling (Detention) (TT) Program of Assistance to Survivors of Torture and Trauma (PASTT client referral) Melaleuca Refugee Centre is one of the members of  The Forum of Australian Services for Survivors of Torture and Trauma (FASSTT).  When their clients are ready for counseling or other interventions, they can refer to Melaleuca at any time, whether they are new arrived or have been in Australia for many years. The interventions may be in short, medium or long-term which is depending on the clients needs and process of recovery. Newly Arrived Youth Support Services and Youth Program (YOUTH) Melaleucas youth program provides a multi-function program, offering a holistic, timely and culturally appropriate service to young peoples refugee and migration background from 12 to 21 years old. The youth program under RECONNECT supports young people who are at risk of homelessness and enhances refugee youth engagement with family, training, education and community. The youth team collaborates with other agencies to facilitate new networks for young people and provide them with important social connections and extra support. Early Settlement Support Melaleuca provides settlement services under the  Humanitarian Settlement Services (HSS)  program for people granted permanent Australian residency as Humanitarian entrants and for people on Bridging Visas assessed for settlement services. Melaleuca assists people arriving in Darwin on the  offshore  and  onshore humanitarian programs  to ensure their initial settlement support needs ar e met. Melaleuca combines components of voluntary and professional services to approximately  557 new arrivals each year, offering a uniquely integrated approach addressing settlement needs by hosting a range of services and programs under the same roof. Community Development Melaleuca Refugee Centre delivers a range of community development programs underpinned by the key principles and values of Community Development which is education, democracy, advocacy, participation, and strategies of community empowerment and strengthening that build up social and community capacity. Community Development accepts the impact of torture and state-sanctioned violence may result in disbelieve and conflict and then aims to build social cohesion and strength. It links the community with others in collaborative partnerships and empowers individuals and communities who are particularly disadvantaged within the resettlement country. The Community Development Programs include: Families in Cultural Transition (FICT) 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. Tips Ideas on Parenting Skills (TIPS) Melaleuca Refugee Centre has offered TIPS which is a parenting program to refugee families that have been living in Darwin for over 12 months 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. Alternatives to Violence (AVP) Community Liaison, Training and Education Refugee Support Network (RSN). Forum of Australian Services for Survivors of Torture and Trauma (FASSTT) 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 specialist rehabilitation agencies in the FASSTT network offer direct services which include psychological assessments, individual psycho-therapeutic interventions, youth activities, group and family therapy, natural therapies and community development to survivors of torture and trauma, their families and communities. FASSTT members also provide innovative and effective services to ensure the Australian community can play a significant role in diminishing the impact of torture on survivors and enhancing their opportunities to rebuild productive and meaningful lives. Management and Staff Melaleuca Refugee Centre has a community-based Committee of Management (C OM), which appoints the Director to manage the day-to-day operations of the organization. The Committee of Management and staff of Melaleuca have a legal and moral responsibility to manage the organization in the best interests of the community it serves. Committee of Management and staff demonstrate professional ethical behavior at all times in their responsibilities to the organization in their professional relationships with each other. Committee of Management is responsible o monitor the performance and management of the organization. Committee of Management is elected from and by Associate Members of the organization and is responsible for setting strategic directions. CONCLUSION As a conclusion, finance plays a very important role in the day-to-day lives of each individual or corporation. Finance is important to an organization as the firm has to know how viable it is and balance profit with costs. Finance includes planning of financial resources, making of optimum capit al structure and effective utilization of financial resources by  deep analysis of  cost of capital  and  capital budgeting  tool. If company obtains large amount through his network resource, but company has not made good financial planning regarding its effective utilization, then the company can reach at the stage of bankruptcy. This is because, if a company has not good plan for investment, it will unable to provide good return to its creditor and shareholder. Finance is important to an individual. Personal finance budgeting is an important part of long-term plans to gain financial stability, especially after retirement. Individual need to have a clear idea of what they want in future, such as the amount of money needed after retirement and the location of a place to live in. 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