Enhancing and Restoring Safety & Quality Cultures - Dave Litwiller - May 2024...
Power financials - how we work
1.
2. Service Offering:
To support Business Owners in the SME business sector with Management
Accounting services, Accounting systems support & operations, and Financial
and Business Management support.
Qualifications:
Bachelor of Business – CPA
Background:
2005 – now. Power Financials, Sunshine Coast, Qld. Providing financial
control advice and accounting system support to the SME sector.
2003 - 2004. Financial Controller – Juniper Development Group, Sunshine
Coast, Qld – 150 employees. Cashflow planning, budgeting, continual
improvement process of group systems and management reporting.
1990 – 2002. Finance Manager – Daikyo Group of Companies, Cairns, Qld.
Management accounts, staff supervision, budgeting, forecasting, project
feasibility financial analyses. Financial management of operations such as the
Golf Course, Major Hotel, Holiday Accommodation and plant nursery.
1986 – 1990. Management Accountant – Kern Corporation, Brisbane, Qld.
Monthly management reports, maintained job cost system, processed project
claims, prepared project feasibility financial analyses.
Financial Skills:
Considerable experience and understanding of…
- Finalizing month end accounts
- Explaining and interpreting your accounts
- Identifying issues that can affect cashflow and profitability
- Budgeting and Income / Stock Analysis
- Project Feasibility Financial Analysis
- Financial awareness in assessing performance of different business
operations
Software Skills:
- MYOB
- XERO Certified
- Microsoft Office: Excel, Outlook, Word
- OPTIMIST: Financial Impact Software
- CRM Goldmine
3. - JOBSPLUS : Equipment and Job Management System
- Mainframe Accounting / Project Management Systems – 1) Technology
One 2) Timberline
Industry Skills:
Special knowledge of…
- Property Development & Construction
- Hospitality : Hotels & Short Term Accommodation
- Small retail operations such as sporting goods, menswear
- Motor Vehicle sales & workshops, Mortgage Broking
- Labour Hire
Recent Industry Assignments:
- Advanced Refrigeration Technology: Refrigeration manufacture, T/O $6M
(2012- 2014). Manage cash flow, budgeting, analysis of staff productivity.
- Partner Foods: Manufacturer & Wholesaler of Chickpeas & Broadbeans.
T/O $2M (2007 – now). Analyze financials on monthly basis, budgeting,
cash flow forecasting, capital acquisition feasibility.
- Q Tank – manufacturer of Water Tanks: T/O $8.5M (2010 - 2013).
Analyze monthly financials, budgeting, staff productivity.
Achieved outcomes for employees & clients:
Partner Foods – Manufacturer/Wholesaler, Chickpeas & Broadbeans –
Maleny, Qld. 2011
“Steve Power has been our in-house accountant and de facto financial
controller for two years. He is confidential, easy going, and a competent
accountant. I recommend him without reservation to anyone seeking his
skills”.
Jonathan Davies, Owner Partner Foods, Maleny
Sportsco – Sporting Goods Retailer – Kawana Shoppingworld,
Sunshine Coast, Qld
"Steve showed us many areas that we could improve our business that we
would have otherwise not known. His valuable insights and suggestions have
helped our business grow in such a short time. Steve's methods assisted us in
achieving Kawana Shoppingworld's, 'Retailer of the Year' award for 2005.
Steve's service didn't finish once he had handed down his recommendations.
He continues to follow up on our progress on a regular basis. We would have
no hesitation is recommending him to any small business operator whether
they think they need help or not."
Steve & Leanne Garrard, Licensees, Sportsco Kawana.
Q Tank – Manufacturer of Water Tanks – Brisbane, Qld.
“Getting monthly business reports done by Steve at Power Financials has
enabled us to make accurate and timely financial business decisions. The
information and advice that Steve provides has significantly impacted our
profitability and I would recommend his services to all businesses.”
Toby Peacock, Owner Q Tank, Brisbane
4. Manufacturer & Wholesaler of Water Tanks
Assessment of Sales & Margin For Year Ended 20XX by Product
Round Slimline Round Slimline Underdeck Slimline Slim Stubby Round Round Round Round Round Round Round Round Round Round
Size 1,500LR 2,500LSL 3,000LR 3,000LSL 3,000LUD 5,000LSL 5,000SLSTU 5,000LRM 5,000LRSQ 5,000LRT 7,500LR 10,000LR 10,000LRSQSpace Case Accessories Other 15,000LR 22,700LR 25,000LR 30,000LR Total
No. of Sales 24 209 100 600 0 906 225 458 259 191 92 262 2 186 5381 31 55 12 23 3,449
Time to produce / tank (hours) 1.167 1.167 1.167 1.167 1.167 1.167 1.167 1.167 1.167 1.167 1.167 1.167 1.167 2.5 2.5 2.5 2.5
Total time to produce sold tanks 28 244 117 700 - 1,057 263 534 302 223 107 306 2 78 138 30 58 4,186
Avg Sales Price / Unit 545$ 751$ 629$ 847$ 1,257$ 1,141$ 675$ 696$ 737$ 937$ 1,163$ 1,135$ 242$ 175$ 1,578$ 1,955$ 2,314$ 2,939$
Total Revenue 13,076$ 156,859$ 62,893$ 508,305$ -$ 1,138,686$ 256,777$ 309,080$ 180,388$ 140,743$ 86,240$ 304,620$ 2,271$ 44,930$ 939,271$ 196,580$ 48,909$ 107,545$ 27,768$ 67,591$ 4,592,531$
% of Total Revenue 0.3% 3.4% 1.4% 11.1% 0.0% 24.8% 5.6% 6.7% 3.9% 3.1% 1.9% 6.6% 0.0% 1.0% 20.5% 4.3% 1.1% 2.3% 0.6% 1.5% 100%
Cost of Sales
C.O.S. per analyse sales item report 2,636$ 60,563$ 20,276$ 189,450$ -$ 477,618$ 98,889$ 144,658$ 81,279$ 59,738$ 40,080$ 127,965$ 991$ 37,209$ 740,831$ 124,782$ 21,284$ 57,330$ 13,518$ 31,029$ 2,330,125$
Material Usage -$
Freight In 7,360$ 7,360$
Light & Power 137$ 1,195$ 572$ 3,432$ -$ 5,182$ 1,287$ 2,620$ 1,481$ 1,093$ 526$ 1,499$ 11$ -$ -$ -$ 177$ 315$ 69$ 132$ 19,728$
Repairs & Maintenance 369$ 3,216$ 1,539$ 9,233$ -$ 13,942$ 3,462$ 7,048$ 3,986$ 2,939$ 1,416$ 4,032$ 31$ -$ -$ -$ 477$ 846$ 185$ 354$ 53,075$
Tools 72$ 624$ 299$ 1,792$ -$ 2,706$ 672$ 1,368$ 774$ 571$ 275$ 783$ 6$ -$ -$ -$ 93$ 164$ 36$ 69$ 10,303$
Wages Production Labour 1,960$ 17,069$ 8,167$ 49,003$ -$ 73,994$ 18,376$ 37,405$ 21,153$ 15,599$ 7,514$ 21,398$ 163$ -$ -$ -$ 5,424$ 9,623$ 2,100$ 4,024$ 292,971$
Delivery Wages 512$ 4,457$ 2,133$ 12,796$ -$ 19,322$ 4,799$ 9,768$ 5,524$ 4,073$ 1,962$ 5,588$ 43$ -$ -$ -$ 661$ 1,173$ 256$ 491$ 73,557$
Cleaning & Rubbish Removal 35$ 300$ 144$ 863$ -$ 1,302$ 323$ 658$ 372$ 275$ 132$ 377$ 3$ -$ -$ -$ 45$ 79$ 17$ 33$ 4,958$
Gas 688$ 5,993$ 2,868$ 17,206$ -$ 25,981$ 6,452$ 13,134$ 7,427$ 5,477$ 2,638$ 7,513$ 57$ -$ -$ -$ 889$ 1,577$ 344$ 660$ 98,907$
Total Cost of Sales 6,409$ 93,419$ 35,997$ 283,776$ -$ 620,049$ 134,261$ 216,659$ 121,996$ 89,765$ 54,543$ 169,154$ 1,305$ 37,209$ 740,831$ 132,142$ 29,049$ 71,108$ 16,524$ 36,790$ 2,890,986$
Gross Profit 6,667$ 63,439$ 26,896$ 224,530$ -$ 518,637$ 122,516$ 92,421$ 58,392$ 50,979$ 31,697$ 135,467$ 966$ 7,721$ 198,440$ 64,438$ 19,860$ 36,437$ 11,244$ 30,801$ 1,701,545$
GP % 51% 40% 43% 44% 46% 48% 30% 32% 36% 37% 44% 43% 17% 21% 33% 41% 34% 40% 46% 37%
Expenses 6,789$ 59,122$ 28,288$ 169,727$ -$ 256,288$ 63,648$ 129,559$ 73,266$ 54,030$ 26,025$ 74,114$ 566$ 7,511$ 157,016$ 32,862$ 8,769$ 15,558$ 3,395$ 6,506$ 1,173,038$
25.5%
Net Profit ($122) 4,318$ ($1,392) 54,802$ -$ 262,349$ 58,868$ ($37,138) ($14,874) ($3,051) $5,672 61,352$ 400$ $210 41,424$ $31,576 11,091$ $20,878 $7,849 $24,294 528,507$
Net Profit % -1% 3% -2% 11% 23% 23% -12% -8% -2% 7% 20% 18% 0% 4% 16% 23% 19% 28% 36% 12%
NP% compared to previous year up down up down down up down down down down up up new same down up new new new new up
% of Total Revenue: Slimline 45% Others 55%
% of Net Profit: Slimline 72% Others 28%
5. Business Analysis File : S POWER / POWER FINANCIALS
If Business
Present Scenerio = GM of 40% Increase Sales Price THEN ABLE TO Decrease
5% Sales Volume by 11.1%
& still maintain
same Gross Profit
Units Sold 100,000 Units Sold 100,000 Units Sold 88,889
Unit Selling Price 5.00$ Unit Selling Price 5.25$ Unit Selling Price 5.25$
Unit Purchase Cost 3.00$ Unit Purchase Cost 3.00$ Unit Purchase Cost 3.00$
Gross Margin 2.00$ Gross Profit 2.25$ Gross Profit 2.25$
GM % 40.0% GM % 42.9% GM % 42.9%
Sales 500,000 Sales 525,000 Sales 466,667
Cost of Sales 300,000 60% Cost of Sales 300,000 57% Cost of Sales 266,667
Gross Profit 200,000 Gross Profit 225,000 Gross Profit 200,000
40% 43% 43%
2nd Scenerio = GM of 30% Increase Sales Price THEN ABLE TO Decrease
5% Sales Volume by 14.3%
Units Sold 100,000 Units Sold 100,000 Units Sold 85,715
Unit Selling Price 5.00$ Unit Selling Price 5.25$ Unit Selling Price 5.25$
Unit Purchase Cost 3.50$ Unit Purchase Cost 3.50$ Unit Purchase Cost 3.50$
Gross Margin 1.50$ Gross Profit 1.75$ Gross Profit 1.75$
GM % 30.0% GM % 33.3% GM % 33.3%
Sales 500,000 Sales 525,000 Sales 450,001
Cost of Sales 350,000 70% Cost of Sales 350,000 67% Cost of Sales 300,001
Gross Profit 150,000 Gross Profit 175,000 Gross Profit 150,000
30% 33% 33%
3rd Scenerio = GM of 20% Increase Sales Price THEN ABLE TO Decrease
5% Sales Volume by 20.0%
Units Sold 100,000 Units Sold 100,000 Units Sold 80,000
Unit Selling Price 5.00$ Unit Selling Price 5.25$ Unit Selling Price 5.25$
Unit Purchase Cost 4.00$ Unit Purchase Cost 4.00$ Unit Purchase Cost 4.00$
Gross Margin 1.00$ Gross Profit 1.25$ Gross Profit 1.25$
GM % 20.0% GM % 23.8% GM % 23.8%
Sales 500,000 Sales 525,000 Sales 420,000
Cost of Sales 400,000 80% Cost of Sales 400,000 76% Cost of Sales 320,000
Gross Profit 100,000 Gross Profit 125,000 Gross Profit 100,000
20% 24% 24%
6. Motor Vehicle Workshop
Financial Analysis: Period July 06 to Feb 07
% of total
REVENUE - LABOUR 150,000$ 42% Revenue Lower than
parts
SALE OF PARTS 210,000$ 58%
360,000$ 100%
Cost of Sales - Labour 87,000$ 35%
Sale of Parts 163,000$ 65%
250,000$ 100%
GROSS MARGIN - LABOUR 63,000$ 57% Gross Margin Higher than
parts
SALE OF PARTS 47,000$ 43%
110,000$ 100%
Summary:
Labour Income is far more profitable.
New Car Servicing is preferred over older models due to the Invoice for work
being predominantly labour, therefore resulting in higher profit.
The above workshop could do better. For the period July to February, the
charge out % for Labour is 39%.
39% is the result of dividing the total number of hours charged to customers
by the total number of hours that the mechanics are at work (wages).
39% means on average that in an 8 hour work day, the mechanics are
charging customers a little over 3 hours in every working day.
So what is happening the rest of the day?
The industry average is around 60%.
The emphasis with this client has been to increase the charge out % in Labour Hours.
If the workers could have achieved an average of 4 hours in every day or
50% charge out %, then the Labour Revenue would have increased to
$192,000 or an extra $42,000 net profit.
7. Bus Manufacturer P/L
Calculation of BREAKEVEN Point
Assume the same Ratios as 2005. So Gross Profit = 25.5%
Overheads are split into a fixed and variable component.
Fixed $671,507 ( Major expenses are S&W, Rent, Depr & Amort. = 85% of total)
Variable $633,741 in 2005 S&W is Admin & Directors
In last 3 years the % overheads to Revenue has been :- 2003 2004 2005
Rev 6,258,087 7,645,122 6,116,287
O'heads 1,142,281 1,175,104 1,305,248
% 18.3% 15.4% 21.3%
Split between fixed and variable overheads Fixed 580,577 615,125 671,507
Variable 561,704 559,976 633,741
F 51% 52% 51%
V 49% 48% 49%
Revenue 4,844,109
COGS 3,608,861 74.5%
Gross Profit 1,235,248 25.5%
Overheads
- Fixed 671,507 13.9%
- Variable 563,741 11.6% taken into account $70,000 reduction
EBIT 0 0.0%
Looking at this from the number of Buses that need to be sold to BREAKEVEN
Average Invoice price is $200,000 (excl GST)
Total Revenue = 4,844,109
Therefore number of buses that need to be sold to breakeven 24
Looking at Current and Previous Years One Unit Analysis
Assumption: Average price of Buses has not increased (=$200,000)
2005 Price/Bus 2004 Price/Bus 2003 Price/Bus
No. of Buses 31 38 31
Sold
Revenue 30.6 200,000 38.2 200,000 31.3 200,000
COGS 22.8 148,997 28.5 149,182 21.5 137,541
Gross Profit 7.8 51,003 9.7 50,818 9.8 62,459
Overheads 6.5 42,296 5.9 30,741 5.7 36,506
EBIT 1.3 8,707 3.8 20,077 4.1 25,953
% 4.4% 10.0% 13.0%
The above is read as for 31 Buses sold in 2005, the EBIT forecasted is 1.3 Buses.
For BREAKEVEN, my calculations say 24 Buses need to sold with an EBIT = 0.
The above analysis is based on the same ratios and number of employees staying in place.
A decrease of $70,000 in overheads has been made above to coincide with changes made in Future Financials
to realise more profit in Coy.