67695 – ASSIGNMENT 1ASSIGNMENT 1 of 5 – LOAN SUBMISSION [20 Marks]INSTRUCTIONS

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ASSIGNMENT 1ASSIGNMENT 1 of 5 – LOAN SUBMISSION [20 Marks]INSTRUCTIONS Read the scenario provided and using the information and data supplied, prepare a formal loan submission for a lender using the following headings. Use subheadings where appropriate to ensure your submission will be easily read and understood by the lender.The client file should contain the standard client information and data that would be included in a typical submission for a loan of this complexity. Your lender submission should include as a minimum the following headings:1. Borrower’s Details2. Background3. Loan Purpose4. Facility Details5. Funds Position6. Servicing Capacity7. Security8. Risk Assessment and Management (according to lender policy, guidelines and relevant legislation). Consideration must be given to any environmental, heritage or native title implications9. Recommendations10. List of Attachments** Attachments which would normally be included in a submission to a lender need only be listed for the purpose of this assignment. You will not need to create “dummy” supporting documents.Overview The purpose of this task is to allow you to demonstrate that you can complete the major steps required in broking or writing a moderately complex loan for a customer – through identification, development and implementation of loan options while assessing and managing risks. The samples provided online in Appendix a) and b) will prove helpful. Remember that what you prepare would, in the real world, need to be presented to the client orally and thus must be understood by them.SCENARIOApplicant’sInformationWork History Andrew Bisset has been a real estate agent for over 20 years and jointly with his wife Jane own 6 shops at 55 Park Road, Belmont. Mr and Mrs Bisset own the shopping centre under the Bisset Family Trust. The property was valued 2 years ago at $1,450,000 and has a current ABZ Bank Mortgage of $625,000.Five of the shops are rented out for $96,000. The sixth shop is occupied by Mr Bisset’s real estate business, Bisset’s Real Estate Pty Ltd, which pays annual rental of $42,000 to the family trust. For tax purposes Bisset’s Real Estate pays rent which is $20,000 in excess of the fair market rental value of the shop it occupies.Bisset’s Real Estate Pty Ltd was formed at the beginning of the last financial year to take over the real estate agency business, which was previously conducted by a partnership between Mr Bisset and Joseph Hooper. Bisset’s Real Estate Pty Ltd took over the business when Mr Hooper retired; Andrew Bisset is the sole director of Bisset’s Real Estate Pty Ltd.Mr and Mrs Bisset now wish to acquire 3,000m2 of land near their existing shopping centre and hold it for 1 – 2 years pending rezoning. The purchase price is $600,000. The land was previously used as a State Government Health and Dental Centre, but the building was demolished when it became obsolete. The land is currently zoned ‘Special Purpose’, but the local council earmarked the land for future ‘Commercial’ use in it recently released Town Planning Scheme. The land is located at 423 Belmont Road, Belmont and has a two street frontage with considerable passing traffic.The Bissets have contracted to purchase the property in their capacity as trustees of their family trust and settlement is due with 60 days. They wish to raise 100% of the purchase price plus $25,000 for stamp duty, financing and conveyancing costs. They are willing to offer both the land and their existing shopping centre as security for the proposed loan. They will contribute a further $20,000 over the next 1-2 years to cover the costs associated with re-zoning of the property and obtaining approval to develop another shopping centre.ABZ Bank policy does not allow lending against land zoned ‘Special Purpose’ and cannot assist with the purchase. The Bissets have appointed you to approach an alternative lender to refinance their ABZ Bank Loan and obtain the additional funds required.Assume an interest rate of 7% for a commercial loan, 9% for an overdraft.Andrew Mark Bisset – DOB 29/07 1965 DL # 2945758Jane Elizabeth Bisset – DOB 15/06 1967 DL # 2786454Married with three adult children (one working in the real estate business)Address: 12 Currumbin Close, Carindale QLD 4152Accountant – Ainslie and Partners Telephone – 07 3349 9999Andrew has been a real estate agent for 22 years in the Brisbane South East area, he specialises in commercial and industrial property (rent roll comprises 75% commercial and industrial properties). His gross salary last financial year was $78,000. In the previous financial year he drew $55,000 from the partnership with Joseph Hooper.FinancialInformation Jane has worked as the property manager since Bisset’s Real Estate Pty Ltd took over the agency after the partnership. Her salary last financial year was $43,000. She did not work in the previous financial year.Last Financial year Bisset’s Real Estate Pty Ltd recorded the following financial results:Gross Revenue $346,000Net Profit $ 72,000Depreciation $ 14,000Director Superannuation $ 11,000In the previous financial year the partnership of Andrew Bisset and Joseph Hooper trading as Bisset’s Real Estate recorded the following financial results:Gross Revenue $422,000Net Profit $ 84,000Depreciation $ 16,000Director Superannuation $ 11,000The Bisset Family Trust purchased the shopping centre at Park Road Belmont 18 months ago and its financial statements for the past financial year are as follows:Gross Rental Income $138,000Loan Interest $ 52,000Management Fees $ 11,000 (paid to Bisset’s RE Pty Ltd)Net Profit $ 50,000Depreciation $ 25,00Financial Position – Andrew and Jane BissetASSETSHouse at 12 Currumbin Close Carindale QLD 0$560,000Share Portfolio (Blues Chip Listed Shares) $345,000Motor Vehicles $ 60,000Furniture $ 85,000Cash at Bank $ 45,000LIABILITIESHome Loan with ABZ Bank $190,000ABZ Bank Credit Card (Limit $20,000) $ 10,000TIPThe servicing calculations need to be conducted manually showing all workings. Net profit minus tax. Show addbacks. Then calculate outgoings including the new facilities, and lastly using the correct formula provided in the course material calculate the DSCR.FinancialInformationContinued … Financial Position of Bisset’s Real Estate Pty LtdASSETSBusiness Goodwill $250,000Plant & Equipment $ 35,000Debtors $ 30,000LIABILITIESABZ Bank Overdraft (limit $40,000 secured by residence) $25,000(Keep in mind that, in the absence of actual tax returns which would confirm the income distribution of the trust, any profit would be distributed and taxed in the hands of the beneficiaries. For the purposes of this assignment, assume company tax of 27.5%, even though in -real life- of course you cannot assume and thedistributions would be clear in “real life” financials.)Property being purchasedVacant Land423 Belmont Road, Belmont QLD 4171Lot 84 on RP 9564Zoning “Special Purpose”Area 3000m2Existing PropertyShopping Centre55 Park Road, Belmont QLD 4171Lot 43 on RP 9542Zoning “Commercial”Area 1850m2TenanciesTenant Rent Term Rent ReviewJ & R BlendT/A Blend News $22,000 pa net 3 + 3 years Annually by CPICopelin Accounting Pty Ltd $18,000 pa net 1 + 1 + 1 years Annually by CPIR SpragosT/A Roger’s Deli $28,000 pa net 5 + 5 years Annually by CPIVu NguyenT/A Care Pharmacy $20,000 pa net 3 + 3 years Annually by CPIM GoodsonT/A Good Alterations $8,000 pa net 3 + 3 years Annually by CPIBisset’s Real Estate Pty Ltd $42,000 pa net 3 + 3 years Annually by CPIASSIGNMENT 2ASSIGNMENT 2 of 5 – LOAN SUBMISSION for EQUIPMENT FINANCE [20 Marks]INSTRUCTIONS The assessment for this module is to prepare TWO submissions (see A and B below):Task A: This first submission is for the client so that they have the facts on all their obligations and fees and the structure of the loan. Remember that what you prepare would, in the real world, need to be presented to the client orally and thus must be understood by them.Task B: This second submission is for the lender – a loan application to the lender in order to gain pre-approval.PART A – THE CLIENT1. Prepare a list of questions that you would need to ask your clients about the proposed transaction, that is, prepare your needs analysis (ie. Fact Find).2. In a suitable format, prepare a submission for the clients ie. a Proposal document.What your client submission should include:1. The parties to the loan2. The security3. The facility details4. Lender details (options, recommendations) that are able to lend5. Confirmation of the client’s complex requirements6. The personnel that may be involved: eg. the clients solicitor, accountant, financial advisor7. The client’s responsibilities, so the client fully understands the loan8. An outline as to the process timing and what the client needs to arrange9. The documentation needed to commence the borrowing10. The name in which the client will sign the contract to purchase11. A summary of all fees and charges12. Your notes detailing how you have provided appropriate contact with the client throughout the complex broking processThe samples in Appendix a) and b) will assist.PART B – THE LENDERPrepare a loan submission to the lender for pre-approval.Your submission should include as a minimum the following headings:1. Borrower’s Details2. Background3. Loan Purpose4. Facility Details5. Funds Position6. Servicing Capacity7. Security8. Risk Assessment and Management (according to lender policy, guidelines and relevant legislation). Consideration must be given to any environmental, heritage or native title implications9. Recommendations10. List of Attachments** Attachments which would normally be included in a submission to a lender need only be listed for the purpose of this assignment. You will not need to create “dummy” supporting documents.EVIDENCEREQUIREMENTS In order to be deemed competent, you will need to evidence the ability to:• Develop detailed broking options designed to maximise the client’s outcomes and reach client objectives which incorporate elements from research and which address complex needs and issues• Identify and describe key assumptions upon which the plan is based• Provide a detailed analysis of research strategies and findings• Test and make appropriate checks on a proposed plan for its integrity and compliance• Assess the impacts of taxation, social security, economic and other government policies on client investment and financial requirements• Interpret and comply with industry regulations and codes of practice• Identify the roles of associated financial advisers and work effectively with them• Assess broking options, financial markets and investment characteristics• Use appropriate sales and marketing methodologies and provide justification and research evidence• Gain client feedback on and/or agreement to the plan• Prepare materials and personnel to effectively implement complex loan structures• Establish appropriate audit trails and effectively document records and data.SCENARIO Commercial Equipment Finance for Ray Henley and Steve ManningThe clients you met with this morning have been referred to you by another commercial client.They are joint company owners Ray Henley and Steve Manning and they run a successful and growing transport company. They have a diverse client base spread over many industry sectors which is a conscious management strategy to ensure that they do not have significant business risk to a specific market segment or client. All contracts are written with 30 day payment terms. Background industry checks as well as credit history checks are completed on all new business prospects to ensure that there are no adverse issues that may impact on future trading arrangements.Whilst they have only been trading for 34 months they have a solid business plan with actual results to date exceeding projected sales and profit estimates included in their plan.The business was established with unsecured (apart from Personal Guarantees) Seed Capital of $500k from a private investor based on a guaranteed return of $45k pa, and an overall term of 5 years which also requires a principal reduction of $100k pa. The loan can be repaid at any time without penalty.Ray and Steve’s RequirementsTo accommodate new contracts in hand and planned future expansion, the applicants require establishment of an Equipment Finance Limit of $500k to purchase Trucks and Dog Trailers in the next 12 months. On the advice of their accountant, a new entity, Henman Holdings Pty Ltd ATF The Henman Discretionary Trust, has been established to purchase equipment which will be internally hired to Henman Transport Pty Ltd (the trading entity). Hire charges will equate to finance payments. Ray and Steve are directors of both companies. The longer term intention is for the Trust to acquire premises to be occupied by Henman Transport Pty Ltd.As part of this expansion the company has leased a second depot at a cost of $6,000pm and will also retain the existing depot.They currently have 5 employees and where needed are using sub-contract operators to fill shortfall in their delivery capacity. Purchase of new additional trucks and trailers will provide additional capacity and flexibility and reduce reliance on sub-contractors who can be unreliable.Whilst a limit is being sought, purchases will only proceed where additional work has been contracted or older equipment is being replaced. Applicants are happy to provide half yearly management accounts as an approval covenant to give a lender comfort that projected sales and profits are in line with budgets.Applicants are keen to reduce debt as quickly as possible and have therefore decided to finance all new equipment over a 48 month term, without a balloon/residual and will commit a refund of GST Input Credits as additional repayments built into the contracted loan structure.Initial Fact Find Ray and Steve have both been in the transport industry for many years each being Financial Controllers for major transport companies. Ray has an MBA and Steve a marketing degree. These combined skills complement each other and assist in the effective management of the business. Ray is married and has no dependants. His wife is a school teacher and she will be retiring at the end of the year.Steve is single and is presently completing a HR degree as they feel that as the business grows these skills will be required.Steve and Ray have provided the last two year’s financial accounts for the trading business, as well as interim accounts for the current financial year.(Note: You need to calculate the required servicing for the new debt and surplus required for lender comfort. Assume an interest rate of 10% for the proposed debt)Financial accounts? Year 1- Sales $700k Net Profit $240,000? Year 2- Sales $812k Net Profit $358,000? Current year interim indication- Sales $1.125m Net Profit $506,000 (10 months); Operating Costs include – Depreciation $86,000, Interest $52,000, Sub-contractors $71,000, Directors’ Superannuation $60,000? Wages to partner one $100,000 (paid as Fully Franked Dividend)? Wages to partner two $100,000 (paid as Fully Franked Dividend)? Payment to private investor (flat fee) $45,000- Expensed in P&L as Finance Cost? Existing Equipment Finance (Chattel Mortgages) repayments of $5,000pmApplicantInformationKey BalanceSheet Items ? Ray Henley net income $100,000 (paid as fully franked dividend), owner occupied property $850,000 with debt of $250,000 (assume 7.2% P&I), credit card limit $25,000 (with debt of $15,000, assume at 3.8%), contents $100,000, superannuation $550,000, motor vehicle $40,000 with nil debt.? Steve Manning – net income $100,000 (paid as Fully Franked Dividend), owner occupied property $500,000 with debt of $350,000 (assume 7.2% P&I), credit card limit $10,000 (with debt of $3,000, assume at 3.8%), contents $85,000, superannuation $150,000, motor vehicle $25,000 with debt of $15,000 (assume five year debt at 9%).? Cash in business account $25,000.Cash $25,000Debtors $220,000Creditors $100,000Notes:They currently meet all creditor payments at 30-day terms.Debtor collection has been solid with active management of debtors and pre-contract investigation of new clients.They have just signed a delivery contract with Organic Flower Growers who supply to Coles Supermarkets state-wide. To accommodate this work their initial purchase will be a refrigerated Pantec truck at a cost of $145,000. Projected net profit from this contract is $60k pa.TIPThe servicing calculations need to be conducted manually showing all workings. Net profit minus tax. Show addbacks, then calculate outgoings including the new facilities, and lastly using the correct formula provided in the course material calculate the DSCR. P.T.O. for additional Tips on this assignment.TIPS1. In this Assignment 2, your submission can be either:a) Consolidation of all income and debt in assessing servicing capacity ORb) Separate residential and commercial calculations.2. Presentation – Although in real life you may well present the client part of this assignment in person to the client/verbally, for the purposes of this assignment please present your submission in a written report format. Remember to include Part A, the list of questions that you would need to ask your clients about the proposed transaction, that is, prepare your needs analysis/Fact Find. Then make use of Appendix a) and b) for guidance on layout.Note that Appendix b) has key content points on page 3.3. Risk management is the forecasting and evaluation of financial risks together with the identification of procedures to avoid or minimize their impact. If you take a look at Ray and Steves requirements and the -fact find- area in the scenario, this will assist you in providing possible risks and the relevant information to mitigate these risks, for example strong servicing, short loan term with no balloon, etc.4. Funds Position – As explained in Appendix b), the Funds Position should include a calculation of required funds including purchase price and costs to ensure that borrowings and equity are sufficient to complete the transaction. The clients are potentially buying equipment costing $500,000 and it would be reasonable to say 100% borrowing requested. Brokerage is payable by the lender and included in the loan repayments to them so there is no additional cost in relation to brokerage.5. Loan Repayments – If the loan is $500,000 and you calculate the P&I repayment amount of $21.25 (showing under the 5 Years column in the Monthly Repayment Calculator table in Appendix m), you would get a monthly repayment figure of $10,625 per month. However the scenario in this Assignment 2 is based around a 4 year term not a 5 year term so your calculation of the repayment amount would be a higher figure per month. If preferred, you may also, or instead, source and utilise an online Chattel Mortgage repayment calculator.6. Servicing Capacity – You can assume that the lender will allow you to use three addbacks: Depreciation, Interest and the full amount of Directors’ superannuation (because they are paying themselves in the form of fully franked dividends, not salary). Remember also to use the rate of 27.5% when you work out the taxation on income. So simplistically you will have income less tax, then add back the addbacks, take away their commitments and you’ll be left with the servicing surplus and the DSCR.7. Security – Security in the way of a mortgage over the homes of the Directors could be taken but it is probably unnecessary in this case. The more likely security would comprise of the Goods (trucks and trailer), the Directors Guarantees and the GSA from Henman Transport Pty Ltd.ASSIGNMENT 3ASSIGNMENT 3 of 5- THEORY ASSESSMENT [30 Marks]– 5 marks for each questionWhen responding to the following questions you are to describe the processes and resources used in each situation. Please provide evidence of any templates, organisational material or technology used and/or provided to the client in each situation. All references to written material or websites used must be provided (simple format).Question # Question Detail1. Describe how you gather the information required when establishing the client’s complex lending requirements?In answering this question you should refer to:• Explanation of the services provided to the client• Listening and questioning techniques you employ• Your use of language appropriate to any cultural differences• Your interpersonal skills and how you would deal with any emotive issues sensitively• Your ability to build/establish rapport• Your professionalism• Your communication skills• Your provision of appropriate contact with client throughout the complex broking process2. Describe how you record and document your interaction with clients?In answering this question you must refer to:• Templates used to gather information in initial interview• Diarising or recording telephone conversations• Procedures that are established for critical implementation, timing and priorities• The documentation gathered• Any technology used to record or gather information.• How you access and use appropriate specialist software, organisational templates, spreadsheets and databases• How your recommendations and loan structures, as presented to clients, are documented according to organisation guidelines and procedures3. Describe how you research and consider complex broking solutions based on the clients’ needs?In answering this question you must refer to:• How special or complex features of a clients situation and objectives are discussed, reviewed and clarified• The analysis of the client situation to determine opportunities and constraints• Research into loan structures or options including those which are new or non-standard• Consideration of financial issues in terms of economic, legislation, taxation, legal, insurance• In what conditions would the broker need to refer clients to a Tier One advisor (eg. financial advisor or accountant)• How possible loan structure or options are analysed, modeled, prioritised and measured• The process used to reject inappropriate options including checks to ensure compliance with relevant Acts• Assessment of options to successfully achieve the client’s objectives• How you liaise with others, share information, listen and understand.4. Describe and/or provide evidence of how you identify and manage risk when dealing with clients with complex loan requirements?In answering this question you must consider:• Risk evaluation criteria eg. undertaking risk categorisation and determining the level of risk• Risk assessment tools (eg. valuation practices)• Communication of the aspects of the valuation result/s to clients• Discussion on the issues around an adverse valuation• Establishment of the probability of risk including the severity and/or impact• Identification of stakeholders and how throughout the loan process o you seek their views o provide pertinent risk information – clearly describe risks o recommend amendments to existing controls and report any need for new controls• How would you as a professional in the industry ensure that you comply with industry and government requirements and professional codes of practice?• How would you read and interpret organisational and industry information?5. Provide an example of how you present the loan options to the client, including an explanation of why you chose that option or options. This also must state the name of the lender and an explanation of why you chose that lender.In answering this question you must consider: how you guide the client through options including:• Discussion of impact – advantages, disadvantages, risks and financial implications• Fees charges and commissions inclusive of any fees paid by the lender directly to the broker• How would you explain to the client the lender conditions as they comply with relevant legislation, regulatory guidelines, industry sector compliance requirements and the lenders policy• Research and documentation provided to the client• Consultation required with other financial services professionals(eg. accountants, lawyers, financial planners, valuers, etc.)• Confirmation that the client understands the options presented and any concerns are addressed• Providing information on complaints resolution procedures (internal and external) as included in the information provided to the client.6. Prior to presenting the loan options to the client did you identify any concerns that the client may raise? What preparation was completed to respond to these concerns?Consider:• Research/documentation materials• Alternative recommendations• Regulatory limits and financier guidelinesIn your answer you should also refer to your ability to:• Identify and respond appropriately to client concerns• Exercise restraint when dealing with clients in conflict situations• The process used to gain agreement to proceed from the client.ASSIGNMENT 4ASSIGNMENT 4 of 5- SERVICING AND RESEARCH ASSESSMENT [30 Marks]– 5 marks for each questionQuestion 1In this exercise we are analysing some financial statements in preparation for completing a submission to a financier. The scenario is provided below and an income statement and balance sheet is then provided for Wholesale Butchers.You will then have 3 tasks to complete – A, B and C below. TIP: You may wish to reference the INT Services Practice Activity which you completed in Part 1 of the course learning guide:A. Using the 2 financial statements provided for Wholesale Butchers Pty Ltd, calculate the ratios in the table provided and comment as to the risk using Low/Medium/High rating:B. Complete the manual Serviceability Analysis for Wholesale Butchers Pty Ltd by inserting the figures into the table providedC. List your comments on the outcome from your completed Serviceability Analysis as you would if presenting this in a submission to a lender.Scenario:Mr Brett Olsen has owned his wholesale butcher company “Wholesale Butchers” for the past four years. He is the sole director and shareholder of the company. The past six months has seen an influx in orders and, to keep up with demand, he requires another refrigerated van in order to maintain delivery standards and turnaround times to his respective buyers.Mr Olsen wants to purchase a secondhand van, 1 year old, from RV Dealers for $55,000 and is considering a 5 year Chattel Mortgage (CM), with an interest rate of 9% and monthly repayments of $1,133.21. He has opted not to provide a deposit and is not seeking any balloon at the end of the loan term. As no deposit is to be applied, repayments will be monthly in advance.Mr Olsen’s only business debts are an overdraft with CBA with a limit of $25,000 and current balance of $2,800 at 9% and his CM with 6% loan with Esanda for his existing refrigerated van, with monthly repayments of $1,058 pm and 2 years remaining.His financials for the financial years ending 2018 and 2019 are provided here for yourperusal and assessment (only $ are shown in financials, not cents, so there is some rounding in totals).Wholesale Butchers Pty LtdIncome Statement For the financial year ending 30 June 20192018 2019$ $Sales 485,000 509,250Cost of Goods Sold 291,000 305,550Gross Profit 194,000 203,700Operating Expenses Advertising 1,250 1,300Amortisation 500 500Depreciation 9,000 7,650Interest 4,372 3,735Office Equipment 1,000 1,100Rent 29,100 30,555Salaries (Directors) 32,000 35,000Stationery 800 925Utilities 25,000 26,000Vehicle Expenses 9,700 10,185Wages/Staff 48,500 50,925Total Operating Expenses 161,222 167,875Net Profit 32,778 35,825Wholesale Butchers Pty LtdBalance Sheet For the financial year ending 30 June 20192018 2019ASSETS $ $Current Assets Cash 22,945 25,078Receivables 4,042 4,244Stock on Hand (inventory) 5,596 5,876Total Current Assets 32,582 35,197Non-Current Assets Plant and equipment 24,000 21,600Vehicles 35,000 29,750Other Non-Current Assets 2,348 2,574Intangibles (Formation Costs) 6,250 5,750Total Non-Current Assets 67,598 59,674Total AssetsLIABILITIES 100,180 94,871Current Liabilities Creditors 11,192 11,752Overdraft CBA (Limit $25,000) 3,600 2,800CM Esanda Current Portion ($1058×12) 12,696 12,696Provisions Employees 4,042 4,244Other 598 637Total Current Liabilities 32,128 32,129Non-Current Liabilities CM Esanda Long Term Portion 22,256 11,295Total Liabilities Total Non-Current Liabilities 22,256 11,295and Provisions 54,384 43,424NET ASSETS (Owners’ Equity or Shareholders’ funds) 45,796 51,448NB. Notes to the balance sheet and income statement have been omitted for this exercise however must be provided with every loan submission.Part A – RatiosUsing the financial statements provided – Wholesale Butchers Pty Ltd – you should fill in the table below by calculating the 9 different ratios for each of the 2018 and 2019 years. Then in the Risk Rating column please state whether the risk rating would be LOW, MODERATE or HIGH, for each of the ratios.RATIO 2018 2019 Risk Rating1. Current Ratio2. Quick Ratio (Acid Test)3. Return on Equity (ROE)4. Return on Assets (ROA)5. Debt to Equity Ratio6. Debt to Assets Ratio7. Leverage Ratio8. Interest Coverage Ratio(ICR) – Existing Debts9. Debt Servicing CoverageRatio (DSCR) – Existing Debt 1Part B – Serviceability AnalysisNotes1 Generally only operational income is included unless non operational revenue is regular and reliable in which case comments should support inclusion2 Amortisation refers to the write-down of intangible assets such as patents, licenses or copyright3 Only include if there is above superannuation guarantee levy and is thus discretionary. Salaries generally infers payment to owners whereas Wages infers employees’ remuneration4 Relates to one off items such as a gain or loss on sale of assets which reflect in the net profit but will not recur5 Principal Repayments come from after-tax earnings so allowance needs to be made6 Interest is a tax deductible expense and therefore the ratio does not require any allowance for taxation7 New purchase will attract taxation deductions for depreciation and interest with a consequent reduction in the Net profit and the taxation liability and therefore enhance the repayment ability somewhat. Usually comment if DSCR is below 1.2Using the financial statements provided – Wholesale Butchers Pty Ltd – complete the Serviceability Analysis below.30 June 20__ 30 June 20__Net Profit Before Tax (Note 1)Plus Potential Add Backs:InterestDepreciation + Amortisation (Note 2)Additional Superannuation (Note 3)Extraordinary or non-recurring expenses (may bePlus or Minus) (Note 4)Earnings Before Interest, Taxation, Depreciation, and Amortisation (EBITDA)Less Taxation* calculated on Net Profit Before Tax figure above (Note 5)Available for Debt Service (ie. EBITDA less tax above)Interest Cover Ratio:Proposed Deductible Interest Costs:Existing Overdraft (Base on $25k limit)Existing CM Interest (Current + Long Term)[Hint: $34,952 @ 6% for 2018]Plus Proposed facility ($55k @ 9%)Total Proposed Interest CostsProposed Interest Coverage Ratio (Note 6)(EBITDA divided by Total Proposed Interest Cost)Debt Service Cover Ratio:Existing Overdraft from above, interest onlyExisting Loan Repayments ($1,058pm)Proposed Loan Repayments ($1,133.21pm)Total Commitment ProposedDSCR (Note 7) (Amount available for Debt Service divided by Total Commitment Proposed)* Corporate tax rate used is 27.5%Part C – CommentsComplete some comments on the outcome from your completed Serviceability Analysis for Wholesale Butchers Pty Ltd, as you would if presenting this in a submission to the financier.Comments may include but are not limited to:Question 2.Please research the Internet (eg. Google) on the subjects below and review the course material, then provide comprehensive answers to the following:A TRUSTS• What is a Unit Trust?• What is a Discretionary Trust?• What is a Hybrid Trust?• What is a Discretionary Family Trust?• What is a Trustee?• Define the differences of each type of Trust, including the obligation/s of the Trustee• Provide an example of when each type of Trust would be used.B COMPANY• What are the legal requirements of a company?• What are the personal obligations of directors by law (please summarise)?• Can anyone be a director of a company?• What is the minimum number of directors required?Question 3:From your research in the course and the Internet please provide answers to the following (from a Financial Accounting perspective):• What is a Balance sheet?• What is a Profit and Loss statement?• What is Depreciation?• What is Liquidity Ratio?• What is Current Ratio?• What is Debt to Equity Ratio?• What is a Cashflow Statement?• What is an Asset?• What is Liability?• How is a Net Profit determined?• How would you define Equity?• Under Australian taxation conditions, what are allowable expenses (provide 3 acceptable examples)?Question 4:From your research in the course and the Internet please provide a definition of the following 4 products and give examples:• Commercial Bank Bill• Invoice or Factoring Finance• Chattel Mortgage• Asset Finance product or Equipment FinanceQuestion 5:In the Australian Standard ISO 31000:2018 there are 8 Principles of Risk Management. A) Please list six (6) of them and B) briefly state what each one is about.Principle Outline of PrincipleA BQuestion 6:There are many ways that an Industry Analysis can be completed. We have provided a sample below of a simple process to categorise the overall risk of any business/industry that you may choose to analyse. Please review the entries below. To simplify the process some factors have been grouped together to alleviate any overlap of impact.Task: In approximately 200 words, explain why you believe it is necessary to categorise risksIndustry Risk Factor Low Risk Moderate Risk High RiskLife Cycle Mature Industry Mature or Saturated Decline or IntroductorySocial/Demographic Stable trends Unstable trends Very unstable – strong trend impactCost Structure Lower Fixed costs -Higher Variable Costs Fixed Costs Higher than Variable Very High Fixed Costs, Very Low Variable CostsEconomicEnvironment Not impacted by Business Cycle Some impact byBusiness Cycle Heavily impacted by Business CyclePoliticalEnvironment None to little influence, some regulation Some to heavy,Influenced by regulation Strong Influence – heavily regulatedBuyer Impact Many Buyers Fewer Buyers Few buyers, large search effort, high budget requiredSupplier Impact Many Suppliers Limited or Few Suppliers Dependent on one or few, large input valueThreat of NewEntrant High barriers to entrant. Lower start up costs, access to market No new entrant barriers- very low costsThreat ofSubstituteProduct/Service No Substitution Some substitutes – low cost to switch High level of substitutes no switching costsASSIGNMENT 5ASSIGNMENT 5 of 5- SUSTAINABILITY PLANNING ASSESSMENT [30 Marks]Task: Please construct a written plan for sustainability for your business (or proposed business). Your plan should be for a business which is finance in nature eg. mortgage broking. Please incorporate all the points below into your plan. Length should be more than 1000 words ie. two typed pages. Note, if you are in, or propose to be in, a sole trader business or working within a structure that has their own business plan, then not all of the points may be applicable to you however they should be covered in your assignment. Simply say after the point “may not be applicable to my business” however most points should be. Also please note that profitability is crucial to sustainability and should be considered in any plan.Additional assistance:- We provide a document about Sustainability in Business in Appendix k – You can utilise the internet to assist with your research – A useful framework to use is the Triple Bottom Line concepts.Points to cover in your plan:• Define scope of sustainability policy – what do you want to achieve.• Gather information from a range of sources to plan and develop policy.• Identify and consult stakeholders as a key component of the policy development process.• Include appropriate strategies in policy at all stages of work for minimising resource use, reducing toxic material and hazardous chemical use and employing life cycle management approaches.• Make recommendations for policy options based on likely effectiveness, timeframes and cost.• Develop policy that reflects the organisation’s commitment to sustainability as an integral part of business planning and as a business opportunity.• Agree to appropriate methods of implementation, outcomes and performance indicators.• Promote workplace sustainability policy, including its expected outcome, to key stakeholders.• Inform those involved in implementing the policy about expected outcomes, activities to be undertaken and assigned responsibilities.• Develop and communicate procedures to help implement workplace sustainability policy.• Implement strategies for continuous improvement in resource efficiency.• Establish and assign responsibility for recording systems to track continuous improvements in sustainability approaches.• Document outcomes and provide feedback to key personnel and stakeholders.• Investigate successes or otherwise of policy.• Monitor records to identify trends that may require remedial action and use to promote continuous improvement of performance.• Modify policy and or procedures as required to ensure improvements are made.This concludes your five assignments.Please see the introduction for how to submit to NFIMandatory Feedback QuestionnaireProvided next is a questionnaire which forms part of your personal assessment of this course. This questionnaire is an AQTF stand-alone document which is separated from your assessment once received by NFI. Only your responses are input into the Department of Education & Training’s statistical website – NO NAMES NOR ANY METHOD OF TRACKING RESPONSES IS RETAINED OR REQUIRED BY THE DEPARTMENT.Please return the completed, double sided questionnaire provided, returning at the same time as your Assessment submission by either uploading or emailing.We thank you for your co-operation with this Departmental requirement.[This page intentionally blank]

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