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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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