Colledge's regular forum for Automotive Accountants. This was presented in October 2008 and discussed Global Financial Crisis, Luxury Car Tax, Parts, Cash Flow, Industry Benchmarks

1. Automotive Accountants’ Network Forum For Accountants. By Accountants.

2. Now is not the time to panic! 22 October 2008 Presenter: Angelo Sirianni, Colledge’s FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM

3. This presentation has been prepared by Colledge’s for the general information of its clients and seminar attendees. While the information herein has been prepared with all reasonable care and derived from sources believed to be accurate, no responsibility or liability is accepted by Colledge’s or any of its affiliations, for any errors or omissions including liability to any person of negligence or otherwise. Recommendations may not be appropriate in all circumstances and clients must consider their own personal objectives and financial advice before acting on recommendations in this presentation . Colledge’s (ABN 52 439 950 641) FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM

4. We are all inventors, each sailing out on a voyage of discovery, guided each by a private chart, of which there is no duplicate. The world is all gates, all opportunities. Ralph Waldo Emerson (19 th Century American essayist, philosopher and poet) FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM

20. FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM

25. Inefficient Parts Inventory (cont) Example: Inventory $432,708 Turns 8 GP 21.9% Therefore required Sales and Gross Profit should be: $432,708 Inventory x 8 Turns = $3,461,664 Cost of Sales 78.1% Revenue = ($3,461,664 / (1-21.9% = 78.1%) = $4,432,348 Gross Profit = $ at 21.9% = $970,684 FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM

31. Cash flow Analysis Net cash = Cash sources versus Cash demands Cash Sources Cash on Hand Cash at Bank Finance contacts Marketable Security Vehicle Receivables Cash Demands Accounts Payable Customer Deposits Service Contracts Overdraft FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM

33. Cash flow Analysis The Cash Flow Statement Example: “Home Town Motors” Year ended 30 June 2008 Profit $931,872 ROS% 4.4% GP% of Sales 13.1% Working Capital 1.4 : 1 Net Change in Cash Held $96,142 Why has cash held increased only by $96,142? FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM

35. Basic Cash Flow Analysis Net profit Add back Non-Cash item (Depreciation / Amortisation) = Cash from Operations Cost Generation +/- Changes in Current Assets: Decrease = Cash Inflow Increase = Cash Outflow +/- Changes in Current Liabilities: Increase = Cash Inflow Decrease = Cash Outflow = Cashflow generated from Operations FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM

36. Basic Cashflow Analysis (cont) +/- Addition or Reduction of Fixed Assets = Cashflow for Investing Activities +/- Long-term Liabilities = Cashflow for Financial Activities = Cashflow Statutory Method FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM

40. Benchmarks View Colledge’s and AutoTeam Australia’s Automotive Industry Benchmarks FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM