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FUNCTIONAL ANALYSIS AND ALLOCATION
Question: Critically reviews the Functional Analysis and Allocation (FA&A) Process
Answer:
INTRODUCTION
Current the assignment is about the functional analysis and the functional allocation by stating its significance in an entity to use the same in accomplishing the desired aim and the targets. The entire report is categorized into different sections which help a researcher in performing its study in a systematically way to collect the appropriate facts and the results. A different section of this study consists of an overview of the research topic that is about functional analysis and functional allocation. The first section of the report explains the purpose, input, output, stages and processes used in this analysis to collect the data useful for this research. The next step will involve several methods for functional analysis and the last section states the approaches uses by a user for the functional allocation.
OVERVIEW OF FUNCTIONAL ANALYSIS AND ALLOCATION
Purpose
This phase of the research will reflect the purpose or the intention of the Functional analysis and the functional allocation. The Functional analysis of the data and the information in the books of account is to assess the overall information in determining the increasing or decreasing performance of an entity. For instance, the income statement is prepared to determine the profit earns by an entity in a particular period and the positional statement helps in assessing the position of the business in comparison to its competitors operating their businesses in a similar market or industry (Falcone, Silvestri, Di Bona and Forcina, 2018,pp. 43-76). Just like the functional analysis emphasizes on building plan and the programs in maximizing the effectiveness of the solution in resolving the issues. The motive of this analysis is to determine the performance of an entity by using several criteria's of testing such as checking the efficiency, growth, liquidity, profitability and return in a period of time.
Another terminology in the research is the Functional allocation which involves the allocation of all the costs incurred in an entity. The scope of the Functional allocation is not restricted to the allocation of the costs as this also involves the allocation if asset incurred in a business enterprise with an intention to achieve its targets. For instance, this category will consist of stocks, shares, investments and bonds will get allocated by an entity into different sources just to generate enough revenue over a period of time by eliminating all the risks incurred by an entity. In availing the benefit of the marketability, it is also essential to eradicate all the market and the operational risks to safeguard the position of the business to get affected by all the external sources.
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Question: Review inputs and outputs for the FA&A process
Answer:
Input
This stage will include all kinds of Functional analysis tools and the techniques to determine the Functional performance and assess the Functional information in the books of accounts of an entity using different criteria's. The criteria's selects by an entity will differ according to tie the nature of the business. There are some of the Functional analysis tools are mention as below which helps an entity in achieving all its targets within a given span of time are:
Vertical analysis- This method uses by an entity in analysing the components of the income statements with each other and know the changes takes places from one period to another. The reasons are to be found on the basis of the change occurred in one segments such as a change in profit from on period to another is analysed properly to find out what affect the profit to get decline. The reason can be of the heavy tax burden as the imposition of tax on an entity can decrease the entire profit (Dzaferagic, Kaminski, McBride, Macaluso and Marchetti, 2018, pp.971-988).
This analysis shows the structuring of the functional analysis as how this program is designed by using different topologies to determine the end outcome of the process. The functional analysis is an engineering designing system used in every industry to reduce the time require in a process. The application of this analysis is shown by taking an example of an entity where the income statements and the balance sheets of an entity is analysed vertical by taking one common vector as a base. The performance of all other elements depends on one vector.
Particulars
|
Year1
|
% of net Sales
|
Year 2
|
% Year of net Sales
|
Sales
|
250000
|
101.01%
|
275000
|
101.01%
|
Less: Sales Return
|
2500
|
1.01%
|
2750
|
1.01%
|
Net Sales
|
247500
|
100%
|
272250
|
100.00%
|
Cost of Sales
|
|
|
|
Opening stock
|
50000
|
20.20%
|
55000
|
20.20%
|
Purchases
|
60000
|
|
66000
|
120.00%
|
Closing stock
|
60000
|
120.00%
|
66000
|
30.38%
|
COGS
|
50000
|
83.33%
|
55000
|
20.20%
|
Gross profit
|
197500
|
329.17%
|
217250
|
79.80%
|
Operating Expenses
|
|
|
|
Suppliers expenses
|
15000
|
6.06%
|
16500
|
6.06%
|
Delivery expenses
|
2000
|
0.81%
|
2200
|
0.81%
|
Depreciation expense
|
4500
|
1.82%
|
4950
|
1.82%
|
tax expenses
|
6500
|
2.63%
|
7150
|
2.63%
|
Salary
|
10000
|
4.04%
|
11000
|
4.04%
|
Wages
|
12000
|
4.85%
|
13200
|
4.85%
|
Telephone
|
2500
|
1.01%
|
2750
|
1.01%
|
Electricity
|
1200
|
0.48%
|
1320
|
0.48%
|
Utilities
|
4100
|
1.66%
|
4510
|
1.66%
|
Total operating expenses
|
57800
|
23.35%
|
63580
|
23.35%
|
Net income before tax
|
139700
|
56.44%
|
153670
|
56.44%
|
tax expenses
|
7500
|
3.03%
|
8250
|
3.03%
|
Net profit after tax
|
132200
|
53.41%
|
145420
|
53.41%
|
Balance sheet
|
|
|
|
Particulars
|
Year 1
|
% of assets
|
Year 2
|
% of assets
|
Assets
|
|
|
|
|
cash
|
35000
|
8.24%
|
40250
|
8.24%
|
Marketable securities
|
30000
|
7.06%
|
34500
|
7.06%
|
Accounts receivable
|
125000
|
29.41%
|
143750
|
29.41%
|
Inventory
|
50000
|
11.76%
|
57500
|
11.76%
|
Prepaid expenses
|
30000
|
7.06%
|
34500
|
7.06%
|
Total current assets
|
270000
|
63.53%
|
310500
|
63.53%
|
Property and plant
|
50000
|
11.76%
|
57500
|
11.76%
|
Furniture
|
105000
|
24.71%
|
120750
|
24.71%
|
Total non-current assets
|
155000
|
36.47%
|
178250
|
36.47%
|
Total assets
|
425000
|
100%
|
488750
|
100.00%
|
Liabilities
|
|
|
|
Accounts payable
|
45000
|
10.59%
|
51750
|
10.59%
|
Salaries payable
|
25000
|
5.88%
|
28750
|
5.88%
|
Tax payable
|
15000
|
3.53%
|
17250
|
3.53%
|
Total current liabilities
|
85000
|
20.00%
|
97750
|
20.00%
|
Loan
|
120000
|
28.24%
|
138000
|
28.24%
|
Total non-current liabilities
|
120000
|
28.24%
|
138000
|
28.24%
|
Total liabilities
|
205000
|
48.24%
|
235750
|
48.24%
|
Equity
|
|
|
|
|
Issued capital
|
125000
|
29.41%
|
143750
|
29.41%
|
Retained earnings
|
70000
|
16.47%
|
80500
|
16.47%
|
Preference share capital
|
25000
|
55.56%
|
28750
|
5.88%
|
Total equity
|
220000
|
880.00%
|
253000
|
51.76%
|
Total liabilities and equity
|
425000
|
100%
|
488750
|
100.00%
|
Horizontal analysis- The name of this terminology depicts its functioning as this analysis will assess the performance of the Functional statement in a horizontal way. Under this analysis, the changes take places of all the singular components of the Functional statements is analysed instead of comparing it with the common elements such as sales or assets in the Functional statements. This is considering as a detailed analysis as compared to the vertical Functional analysis.
Particulars
|
Year1
|
Year 2
|
% Change
|
Sales
|
250000
|
280000
|
12%
|
Less: Sales Return
|
2500
|
3500
|
40%
|
Net Sales
|
247500
|
276500
|
12%
|
Cost of Sales
|
|
|
Opening stock
|
50000
|
56800
|
14%
|
Purchases
|
60000
|
62500
|
4%
|
Closing stock
|
60000
|
65000
|
8%
|
COGS
|
50000
|
54300
|
9%
|
Gross profit
|
197500
|
222200
|
13%
|
Operating Expenses
|
|
|
Suppliers expenses
|
15000
|
17500
|
17%
|
Delivery expenses
|
2000
|
2400
|
20%
|
Depreciation expense
|
4500
|
5000
|
11%
|
tax expenses
|
6500
|
7200
|
11%
|
Salary
|
10000
|
15000
|
50%
|
Wages
|
12000
|
14500
|
21%
|
Telephone
|
2500
|
2400
|
-4%
|
Electricity
|
1200
|
1250
|
4%
|
Utilities
|
4100
|
4600
|
12%
|
Total operating expenses
|
57800
|
69850
|
21%
|
Net income before tax
|
139700
|
152350
|
9%
|
tax expenses
|
7500
|
8250
|
10%
|
Net profit after tax
|
132200
|
145420
|
10%
|
Balance sheet
|
|
|
Particulars
|
Year 1
|
Year 2
|
% Change
|
Assets
|
|
|
|
cash
|
35000
|
45000
|
29%
|
Marketable securities
|
30000
|
32500
|
8%
|
Accounts receivable
|
125000
|
145000
|
16%
|
Inventory
|
50000
|
65200
|
30%
|
Prepaid expenses
|
30000
|
32400
|
8%
|
Total current assets
|
270000
|
320100
|
19%
|
Property and plant
|
50000
|
55200
|
10%
|
Furniture
|
105000
|
110000
|
5%
|
Total non-current assets
|
155000
|
165200
|
7%
|
Total assets
|
425000
|
485300
|
14%
|
Liabilities
|
|
|
Accounts payable
|
45000
|
47000
|
4%
|
Salaries payable
|
25000
|
28500
|
14%
|
Tax payable
|
15000
|
15400
|
3%
|
Total current liabilities
|
85000
|
90900
|
7%
|
Loan
|
120000
|
125600
|
5%
|
Total non-current liabilities
|
120000
|
125600
|
5%
|
Total liabilities
|
205000
|
216500
|
6%
|
Equity
|
|
|
|
Issued capital
|
125000
|
135000
|
8%
|
Retained earnings
|
70000
|
75600
|
8%
|
Preference share capital
|
25000
|
27800
|
11%
|
Total equity
|
220000
|
238400
|
8%
|
Total liabilities and equity
|
425000
|
454900
|
7%
|
The functional analysis is a study of the spaces of the vector which utilizes mathematically functioning to analyse the spaces in determining the end outcome of the program. Two of the spaces in this analysis consist of Hilbert and Banach spaces.
Output
The outcome and the end results of the functional diagrams prepared by an individual by considering several criteria's to boost the efficiency of a particular program. The functional block diagram develops by an entity to determine the solution to all the issues and the problems (Königs, Beurskens, Snoep, Scherder and Oosterlaan, 2018,pp.1149-1159). Taking an example, a designing program whose inputs are Audio signal, video signal, vehicle controls and power systems. All these inputs are considered as a significant factor in increasing the efficiency of the business and the entire designing system and the program to achieve the desired objectives within a given span of time.
The output of the functional analysis will depict the end outcomes of this plan are given below:
• Movement of the designing plan structure
• Video relay
• Audio relay
All these outcomes will reflect the idea behind the designing of the structure as the example is used to explain the importance of the output of the functional plan to resolve the problems in a stipulated time period(Gonzalez Calditoet al., 2018, pp.415-423). The movement of the plan will comprise of thrust, pitch, roll and yaw which shows different directions to move the data flow in this plan. Different directions show by this plan consists of up, down, forward and back, left to right and rotational directions.
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Question: Review the staging of the FA&A process within the system life-cycle
Answer:
Stages
There are different stages of the functional analysis to assess the designing structure and the plan is mention below:
Defining project requirements
Identifying needs and the purpose
Problem-solving
Defining requirements for delivering the services
Project planning and consultation with the stakeholders
Identifying gaps in the plans
Understanding the process of an activity
Developing performance-based targets
The above mention systematically plan follows by an entity in accomplishing all the stages in a designing plan after analysing the nature of the project. An individual develops plans for meeting its requirements (Byun, 2019, January, pp. 1-4).
Question: Review approaches/methods for performing both analysis and allocation
Answer: Supporting processes
Designing metrics and several methodologies prepare by an individual to identify and test the elements covered in the plan as the aim of a user is to meet all the aims and the targets in a given time period (Yadav, Gautam and Yadav, 2019, pp.1-14). There are several supporting processes which helps in meeting the targets of a plan are mention below:
Automatic systems- The automatic systems use by an entity in designing this system where the system is automatically fed into the system to generate the final outcome. This system will help in processing all the information in the system to track the daily progress of the targets accomplished in a particular year.
Safety of the system- Cryptography techniques used in encrypting the entire data in which the source of the sender and the receiver's data will not disclosed to the client on the front end as they only get the data.
Methods for functional analysis
Intuitive research- Another name of this technique is brainstorming which helps an individual in getting collective knowledge of experts of the different field to resolve all the problems or issues (Palmer, 2018, pp. 213-226).
Environmental analysis- The environmental analysis tool will help in assessing the internal as well as external environment analysis by taking care about the needs of all the stakeholders in an environment.
Methods for functional allocation
Task allocation- In this method tasks are prioritized on the basis of the deadlines three categories develops by an individual for allocating tasks consist of low, medium and high priority.
Decentralization of costs- The decentralization approach helps in distributing the total costs into smaller chunks to decrease the excessive workload of costs imposed on an entity as the aim of an entity is to increase the revenues (Regoet al., 2019, pp.1009-1033).
CONCLUSION
It is summarized from the assignment that the efficiency of the function analysis is better than the functional costs. The tools of the functional analysis emphasize on increasing the revenues generates by an entity in a particular year by focusing more on the risks associated with the process. The efficiency and the effectiveness of the system plan are maintained in this assignment as both these methodologies utilize in meeting all the targets better than each other.
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