CPPREP5006 - Financial Evaluation Report v1.0 - MATTHEW TEMBO - COMPLETED (1)
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CPPREP5006 - Manage operational finances in the property industry (Release 2)
Financial Evaluation Report Financial Evaluation Report
What you need to do: Answer the questions below by writing in the space provided. Page | 1
of
4
© Real Estate Academy Australia
Version 1.0 – October 2021
RTO 32426
CPPREP5006 - Manage operational finances in the property industry (Release 2)
Financial Evaluation Report You are required to answer all questions correctly. If correct, you will see
‘Satisfactory’ or if incorrect you will see ‘Not Satisfactory’ in your grades section of
your learner portal next to the assessment name. The assessor will provide
feedback and a Record of Results in the assessment task once graded. You will be
required to resubmit your work for any ‘Not Satisfactory’ assessment tasks. What you will need: Use the learner material provided in your online student portal as well as research
materials such as books, internet, magazines, workplace documentation etc. to
assist you in gaining the knowledge required to answer the questions. Remember
that the assessment is completely self-paced and open book, so you can use
whatever resources you have to answer the questions.
What you need to submit: Your answers to these questions.
How to Submit your Assessment:
Upload your completed document into the “CPPREP5006 - Financial Report
Analysis Project” Online Assessment [6] in your learner portal. You can drag and
drop the file into the window or use the add file icon in the top left of the submission
window and select the file your wish to upload by using the browse/choose file
option. Click on finish attempt to submit it for grading.
Managing and evaluating financial performance of the organisation is an integral part
to the organizations’ survival. Report on the financial position of the organisation by reviewing the ratio calculations
completed in the previous assessment task. Ensure that you refer to the ratios that you have chosen for each of the aspects listed below and;
a)
explain the results of the evaluation data and what it means for the organisation
b)
determine and record areas of improvement for implementation by the organisation to enable better financial results for the new financial year.
1. Liquidity
Page | 2
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© Real Estate Academy Australia
Version 1.0 – October 2021
RTO 32426
CPPREP5006 - Manage operational finances in the property industry (Release 2)
Financial Evaluation Report The current ratio of 1.75 indicates that the organization has $1.75 in current assets for every $1 in current liabilities. This suggests that the organization has a healthy liquidity position, meaning it has enough short-term assets to cover its short-term liabilities. The working capital of $30,250 also supports this, as it shows
that the organization has excess current assets after covering its current liabilities.
Overall, the organization seems to have adequate liquidity to meet its short-term obligations.
Areas of Improvement for Liquidity:
●
Despite having a good current ratio and positive working capital, the organization could further improve its liquidity by managing its inventory and receivables more efficiently to convert them into cash more quickly.
●
Establishing a line of credit or maintaining a cash reserve for unexpected expenses can further strengthen the organization's liquidity position
2. Profitability
The contribution margin ratio of 89% is very high, indicating that the organization
generates a significant amount of revenue from each sale after covering its
variable costs. Additionally, the net profit margin of 39% indicates that the
organization is able to convert a large portion of its revenue into profit after
covering all expenses. The return on equity (ROE) of 176% is also impressive,
indicating that the organization is generating a high return for its shareholders'
equity.
Areas of Improvement for Profitability:
●
While the organization's profitability metrics are already strong, there is always room for improvement. Implementing cost-saving measures, such as negotiating better supplier contracts or reducing overhead expenses, can
help increase profitability even further.
●
Exploring opportunities for revenue growth, such as expanding into new markets or offering additional services, can also boost profitability. Page | 3
of
4
© Real Estate Academy Australia
Version 1.0 – October 2021
RTO 32426
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CPPREP5006 - Manage operational finances in the property industry (Release 2)
Financial Evaluation Report 3. Leverage
The debt-to-equity ratio of 265% indicates that the organization has a high level of debt relative to its equity. Similarly, the total debt-to-assets ratio of 52% suggests that more than half of the organization's assets are financed by debt. While some level of leverage can be beneficial for business growth, too much debt can increase financial risk.
Areas of Improvement for Leverage:
●
The organization should focus on reducing its reliance on debt financing by paying down existing debt and avoiding taking on additional debt unless absolutely necessary.
●
Increasing equity through retained earnings or attracting new investors can help lower the debt-to-equity ratio and improve the organization's financial stability
Page | 4
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© Real Estate Academy Australia
Version 1.0 – October 2021
RTO 32426
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