What Security if any Can be Provided Finance Essay

Often the hardest part of starting a business is raising the money to get going. As a newly appointed Finance Manager of Melaleuca Refugee Company distributor in Malaysia with the Head office at Bangsar, Kuala Lumpur, present an idea of how to turn it into a successful business by having other outlets.


You need to decide:

How much finance is required? When and how long the finance is needed for? What security (if any) can be provided?

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The finance needs of a start-up should take account of these key areas:

Set-up costs (the costs that are incurred before the business starts to trade) Starting investment in capacity (the fixed assets that the business needs before it can begin to trade) Working capital (the stocks needed by the business- e.g. raw materials + allowance for amounts that will be owed by customers once sales begin) Growth and development (e.g. extra investment in capacity)

Task 1

Make a thorough research on the above company. Identify and briefly explain the sources of finance available for the expansion in the distribution of its line of products and highlight the implications of such sources of finance.

Task 2

From the above, explain the importance of financial planning for Melaleuca Products and describe the impact of finance on the financial statements.

Task 3

Obtain a Financial Statements of the company showing its two (2) consecutive latest annual statements. Compute for its profitability and liquidity ratio. Compare and comment on the result of your two (2) years calculations.

Task 4

Analyze Melaleuca’s business environment through its consolidated results as shown in the Financial Statements.

Table of Contents





Task 1


Task 2


Task 3


Task 4






Introduction to Finance

Finance is a broad term that describes two related activities: the study of how money is managed and the actual process of acquiring needed funds. Because individuals, businesses and government entities all need funding to operate, the field is often separated into three sub-categories: personal finance, corporate finance and public finance. All three categories are concerned with activities such as pursuing sound investments, obtaining low-cost credit, allocating funds for liabilities, and banking. Yet each has its own specific considerations. For example, individuals need to provision for retirement expenses, which means investing enough money during their working years and ensuring that their asset allocation fits their long-term plans. A large company, on the other hand, may have to decide whether to raise additional funds through a bond issue or stock offering. Investment banks may advise the firm on such considerations and help them market the securities. As for public finance, in addition to managing money for its day-to-day operations, a government body also has larger social responsibilities. Its goals include attaining an equitable distribution of income for its citizens and enacting policies that lead to a stable economy.

Task 1: Make a thorough research on the above company. Identify and briefly explain the sources of finance available for the expansion in the distribution of its line of products and highlight the implications of such sources of finance.

Introduction to Sources of Finance

One of the most important issues facing all businesses, whether a business in the start-up phase or well-established, is the obtaining of appropriate levels of financing. Whether it is needed for investing in land, buildings or equipment, hiring new employees, investing in inventory or moving into new markets, obtaining sufficient financing to accomplish these goals is a dilemma nearly all business owners face. This law letter will provide a general overview of various sources of financing available to businesses both large and small. A listing of all the different possible avenues for raising funds to finance your business is beyond the scope of this law letter. The objective is to provide you with a basic working knowledge of various types of financing and things to watch out for with each. The most common sources of business financing which will be discussed in this letter are as follows: personal savings/”love money”, conventional debt financing (banks/credit unions), government assistance, business partners/strategic alliances, venture capital and “going public”.

Melaleuca Refugee Company Profile

Melaleuca Refugee Centre provides an environment for resettlement and healing of refugee survivors of torture and trauma, their families and communities through confidential, high quality, holistic services. In 2002, it expanded to include IHSS services and became known as the Melaleuca Refugee Centre Torture Trauma Survivors Service of the NT Incorporated (Melaleuca Refugee Centre).

Sources of Finance of Melaleuca Refugee Company, Malaysia

The company receives significant grant funds from both the Federal and Northern Territory Governments to provide various assistance and support services to refugees and the survivors of torture and trauma and their families. Government Grant is a financial award given by the federal, state or local government to an eligible grantee. Government grants are not expected to be repaid by the recipient. Grants do not include technical assistance or other forms of financial assistance such as a loan or loan guarantee, an interest rate subsidy, direct appropriation or revenue sharing. There is typically a lengthy application process to qualify and be approved for a government grant. Most recipients are required to provide periodic reports on their grant project’s progress.

Australian government

(i).Department of Immigration and Citizenship (ii).Department of Health and Ageing (iii).Department of Families, Housing, Community (iv).Services and Indigenous Affairs

Northern Territory Government

(i).Department of Children and Families (ii).Department of the Chief Minister, Office of Multicultural Affairs

Toyota Foundation

The Toyota Foundation makes international grants for research and applied projects, mainly in Asia. The Foundation supports work in the humanities, social sciences, and natural sciences. Themes include connections between culture and environment; traditional agriculture in Asia; community-based conservation; and indigenous communities and natural resources. Among the Foundation’s grant-making programs, the two of principal relevance in the Terra Viva Grants Directory are Research Grants Program and Asian Neighbors Program.

(555 WORDS)

Task 2: From the above, explain the importance of financial planning for Melaleuca Products and describe the impact of finance on the financial statements.

Melaleuca is the most problematic invasive plant species in Florida because of its wide distribution range, prolific seed production and potential impact on human health (Fuller 2005). Melaleuca threatens the preservation of critical wildlife habitat in southern Florida including in the Florida Everglades National Park. Despite control efforts melaleuca still occurred in around 170 000 hectares of southern Florida in 1997, representing 6% of the total region (Bodle & Van 1999, in Rayamajhi et al. 2007; Laroche 1999). Ecosystem Change: Melaleuca threatens the integrity of subtropical freshwater ecosystem processes in Florida (Dray & Center 1994, in Lopez-Zamora Comerford & Muchovej 2004) by altering soil chemistry, reducing de-composition rates and modifying hydrology and fire regime. Melaleuca also reduces species biodiversity and alters species composition. Reduction in Native Biodiversity: Melaleuca forests provide limited food and habitat value for native wildlife and can reduce indices of native species in Florida wetlands by as much as 80% (Dray et al 2006; Bodle et al., 1994, O’Hare & Dalrymple, 1997, in Dray et al. 2009; Porazinska Pratt & Giblin-Davis 2007). Decreases in diversity of native plant biodiversity have also been linked with melaleuca in the Bahamas. Habitat Alteration: Melaleuca is contributing to significant habitat loss in the Everglades National Park by converting fire-maintained sawgrass communities into Melaleuca forest (Turner et al. 1998, in Munger 2005). Displacement: Melaleuca displaces pond cypress (Taxodium ascendens) (Myers 1975 1983, Ewel 1986, in Rayamajhi et al. 2008b), slash pine (Pinus elliottii) and sawgrass (Cladium jamaicensis) (Bodle et al., 1994, in Tipping et al. 2008). Competition: Melaleuca is competitively superior to most native vegetation occurring in the Florida Everglades (Turner et al. 1998, in Pratt et al. 2005b). It is fire-adapted, herbivore-adapted and produces seeds and roots prolifically. Inhibits the Growth of Other Species: Allelochemicals present in roots can have a detrimental effect on the soil biota (Porazinska Pratt & Giblin-Davis 2007). Economic:Balciunas and Center (1991, in Serbesoff-King 2003) reported that by the year 2010, close to $2 billion would be lost due to the melaleuca invasion in southern Florida. Financial losses included $1 billion in tourism to the Everglades NP, $250 million in tourism to the rest of south Florida, $250 million in recreation, $250 million due to fires, $1 million in control efforts, $10 million due to loss of endangered species and $1 million to nursery growers. Agricultural: In one study 18 economic arthropod pests were collected from M. quinquenervia (Costello et al. 2008). Human Health: As melaleuca populations expand in southern Florida and the human population increases the risk of fire and loss of human life and property increases (Laroche 1999). Modification of Hydrology: A stand of melaleuca may transpire more water than the sawgrass communities it replaces (Hofstetter 1991a, in Laroche 1999). Modification of Fire Regime: Ground fires, high temperatures, rapid spread rates and abundant smoke, all present in burning melaleuca stands, present new risks for wildlife in the Everglades wetlands (Flowers 1991, in Laroche 1999). Modification of Nutrient Regime: The rate of decomposition of melaleuca litter is slower than that of native plants (Van & Rayamajhi, Unpub. Data, in Rayamajhi et al. 2006b).

(517 WORDS)

Task 3: Obtain Financial Statements of the company showing its two (2) consecutive latest annual statements. Compute for its profitability and liquidity ratio. Compare and comment on the result of your two (2) years calculations.

Profitability Ratio of Melaleuca Refugee Company

Profitability Ratio




Net Surplus Margin (Net Surplus / Sales)

755,436 $ / 4,375,160 $

= 0.17 : 1

937,325 $/ 5,090,820 $

= 0.18 : 1

Return on Total Assets ( Surplus Available to Common Shareholders / Total Assets)

755,436 $ / 1,542,283 $

= 0.49 : 1

937,325 $ / 2,572,861 $

= 0.36 : 1

Return on Equity ( Surplus Available to Common Shareholders / Equity)

755,436 $ / 949,745 $

= 0.8 : 1

937,325 $ / 1,887,070 $

= 0.5 : 1

Gross Surplus Margin

0 / 4.375,160 $

= 0

0 / 5,090,820 $

= 0

( Gross Surplus / Sales)

0 / 4.375,160 $ = 0 0 / 5,090,820 $ = 0

Table 1: Comparison of Profitability Ratio (Values extract from Appendix 1 & 2)

Liquidity Ratio of Melaleuca Refugee Company


2011 2012

Liquidity Ratio

1,516,902 $ /$592,638

= 2.56 : 1

2,568,059 $ / $685,791

= 3.74 : 1

Quick Ratio [(Current Assets – Inventories – Prepayment) / Current Liabilities )]

(1,516,902 $ – 0 -0) / 592,638 $

= 2.56 : 1

(2,568,059 $ – 0 – 0) / 685, 791 $

= 3.74 : 1

Table 2: Comparison of Liquidity Ratio (Values extract from Appendix 1 & 2)

Explanation of the Comparison of the Profitability Ratios

Net Surplus Margin

Both the ratio for the years 2011 and 2012 also to 1, which means that if there is 1$ of sales, then there will be 0.17$ surplus and 0.18$ surplus for the two years respectively. There can be seen that the net surplus margin for year 2012 is higher than the year 2012 by 0.01 on the above Table 1. This is because of the difference between the total income for the both years 2011 and 2012. This may due to the funding and donation for the company.

Return on Total Assets

Both the ratio for the years 2011 and 2012 also to 1, which means that if there is 1$ of total assets, then there will be 0.49$ and 0.36$ of surplus to common shareholders for the years 2011 and 2012 respectively. The return on assets in year 2011 is higher than the year 2012 due to the total asset in year 2011 is lower than the total assets in year 2012.

Return on Equity

Both the ratio for the years 2011 and 2012 also to 1, which means that if there is 1$ of equity, then there will be 0.8$ and 0.5$ of surplus to common shareholders. The surplus difference between both years is 0.3$ due to the great difference of equity for the both years.

Gross Surplus Margin

There is also 0 for the gross surplus margin due to without of gross surplus for this company. This may say that the gross surplus margin is not applicable for this company.

Explanation of Comparison of the Liquidity Ratio

Current Ratio

From Table 2 on above, can be seen that there is both the ratio for the years 2011 and 2012 also to 1, which means that if there is 1$ of current liabilities, then there will be 2.56$ and 3.74$ of current assets for two respective years. It can be show that the current ration of the year 2012 is higher than year 2011. This may cause by the current liabilities of the year 2012 is much higher than the year 2011.

Quick Ratio

From Table 2 as shown on above, we can be seen that there is the same quick ratio with the current ratio for the both years which are 2.56: 1 and 3.74: 1 for the years 2011 and 2012 respectively. This occurred is due to the company is no existing of inventories and prepayment.

(638 WORDS)

Task 4: Analyze Melaleuca’s business environment through its consolidated results as shown in the Financial Statements.

Introduction of Business Environment of Melaleuca

Melaleuca have successfully reached and implemented a new Enterprise Agreement with staff and their union, which the overwhelming majority of staff supported. This was approved by Fair Work Australia in February 2012.The Manager also engaged an external and independent consultant to review the structure and operations of the organization. The manager has also approved the consultant’s recommendations, and a new operational structure that better suits the current needs of the organization was implemented in July 2012. As part of this restructure, they created a new position of Deputy Director to better support executive management in Melaleuca. Mary Taylor (current Deputy Director) joined Melaleuca at a challenging time during the restructure. Manager members participated in a governance training workshop in February 2012 to expand our knowledge on the legal obligations of committee member and good governance practices. The Manager is currently working in collaboration with key stakeholders and staff on the next strategic plan for the organization to help organization set its direction for the short to medium term. In the background to all this activity, government policies on refugees and asylum seekers continue to evolve.

Management and Staff of Melaleuca

The Committee of Management and staff of Melaleuca have a legal and moral responsibility to manage Melaleuca in the best interests of the community it serves. Committee of Management and staff demonstrate professional ethical behaviour at all times in their responsibilities to the organization in their professional relationships with each other, and in their professional service to the community. Staff numbers at Melaleuca vary in relation to the centre’s program cycles. However, for the day-to-day program implementation 40 staff members are employed. Ali Nur has been the Director of the Melaleuca Refugee Centre since early December 2009. He studied Medicine in Somalia and has a Masters degree in Public Health from the University of Sydney. He worked with refugees from eastern Ethiopia from 1979 to 1982 and came to Australia on a scholarship sponsored by Community Aid Abroad. In 1983 he returned to Australia on a humanitarian visa. He trained health workers in remote Aboriginal communities and worked with the NT Health Department. He also worked in Timor with Oxfam, in Indonesia doing earthquake relief, in Sri Lanka after the tsunami and in Vietnam with various international aid agencies. To read the NT News interview about our director (with authorization from NT News) Melaleuca Refugee Centre has a community-based Committee of Management (COM), which appoints the Director to manage the day-to-day operations of the organisation. The role of the Committee of Management is to meet regularly to monitor the performance and management of the organisation. The COM is elected from and by Associate Members of the organisation and is responsible for setting strategic directions. The COM meets at least 8 times a year.

Counseling and Advocacy of Malaleuca

The counseling team at Melaleuca Refugee Centre provides support, counseling and advocacy services to individuals and their families from refugee background. People who have experienced torture and trauma before coming to Australia might continue to suffer from effects of the prolonged exposure to human rights abuses, violence, war and physical hardship. Settling into a foreign country can be a very traumatizing experience. Melaleuca recognizes that people’s pre-migration experiences and the process of resettlement are important to psychosocial well-being. Melaleuca offers initial counseling upon arrival and long term counseling for those individuals or families in need.

Youth Supports and Services of Malaleuca

Melaleuca’s youth program provides a multi-function program, offering a holistic, timely and culturally appropriate service to young people of refugee and migration background aged 12 to 21 years. The youth program under RECONNECT supports young people who are at risk of homelessness and enhances refugee youth engagement with family, education, training and community. The youth team collaborates with other agencies to facilitate new networks for young people and provide them with important social connections and extra support.

Community Development of Malaleuca

Melaleuca delivers a range of community development programs underpinned by the key principles and values of Community Development: education, participation, democracy, advocacy and strategies of community empowerment and strengthening that build social capital and community capacity. In the case of survivors of torture and trauma, community development rebuilds resilience which may have been eroded by past experiences. Community Development accepts that the impact of torture and state-sanctioned violence may result in distrust and conflict, and aims to build social cohesion and strength. It identifies and builds on individual and community assets. It links the community with others in collaborative partnerships, and empowers individuals and communities who are particularly disadvantaged within the resettlement country.

Past Events of Malaleuca

OzFusion 2013 multicultural Australia Day was a resounding success with around 600 attending. This was the first time Melaleuca was involved in this high profile event. Our clients were engaged in all aspects of the day and it was a great opportunity to meet other multicultural groups. OzFusion celebrated Darwin’s cultural diversity through an exciting and engaging program of cultural performances and bands and featured delicious multicultural food. A special guest this year was Australia Day Ambassador Mr John Kundereri Moriarty AM, a Territorian and Chairman and co-founder of the Sydney-based Jumbana Group, a leading Australian Indigenous design consultancy. The Hon Terry Mills MLA, Chief Minister of the Northern Territory who performed “Waltzing Matilda” and “In the Jungle” with Capricornica and African All Star Drummers. The Lord Mayor of Darwin Katrina Fong Lim gave a welcome speech.Â

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As a conclusion, the objective of financial statements analysis is to show how to rearrange information from financial statements into financial ratios that provide information about five areas of financial performance which are short-term solvency, activity, financial leverage, profitability and value. Accounting statements provide important information about the value of the firm. Financial analysis learns how to rearrange financial statements to squeeze out the maximum amount of information. While removal of Melaleuca is a mandate for public agencies, one of the remaining obstacles is that private landowners have generally not implemented control practices. While it is technically illegal for private individuals to possess Melaleuca, very little is actually being done to force them to remove it from their property, with the exception of a few proactive municipalities. Thus, while infestations of Melaleuca have declined on public lands, they are flourishing on private lands. These stands on private property may lead to new infestations or infestation in areas already treated, thus undermining public control efforts. A comprehensive strategy that includes private landowner incentives and enforcement is needed for inducing these landowners to adopt recommended control practices for Melaleuca.

(188 WORDS)

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