1. Session 5 Case studies and Solutions Nursery Management Understanding and Managing Finance

2. Mc Laney and Atrill 2.6 Original Balance Sheet

3. Mc Laney and Atrill 2.6 Trans- actions

4. Mc Laney and Atrill 2.6 Revised Balance Sheet

5. Cost of Sales Example At the start of January, a small furniture retailer held £35,000 worth of stock. During the month, a further £12, 000 was bought in, and at the end of the month, the stock level was £27,000. Calculate the cost of Sales for January. Opening stock:£35,000 Purchases:£12,000 Total£47,000 less Closing stock:£27,000 Cost of materials:£20,000

6. Cost of Sales (2) In service and some manufacturing industries, The cost of sales may also include other Direct Costs. These are costs directly incurred as a result of making the sale, manufacturing the item, or in carrying out the service. Direct Costs: Cost of Materials Labour costs incurred Transportation costs Fuel and other costs

7. P and L Example Spreadsheet

8. P and L Example – Solution Part 1 January Stock Take figure February Stock Take figure Total of all Purchases for February Opening Stock + Purchases - Closing Stock Opening Stock + Purchases - Closing Stock

9. P and L Example – Solution Part 2

10. Total of all Sales for February Total of Wages, Gas/Electric, Rent/Rates, Petrol for February Total of Wages, Gas/Electric, Rent/Rates, Petrol for February

11. Mc Laney and Atrill Ex 3.8 P and L Account

12. Mc Laney and Atrill Ex 3.8 Points to note Increase in Sales Value and Gross profit Increase in Salaries and Distribution Costs Increase in Bad debts Decline in Net Profits

13. Mc Laney and Atrill Ex 3.8 Analysis There has been an increase in turnover and Gross profits There has not been a corresponding increase in net profits because: There has been a significant rise in overheads Increase in sales achieved only through greater marketing effort Increase in bad debt suggest that sales being offered to poor credit risk customers This seems to mark a sales policy shift from the previous year, and has not been successful.