Recently I wrote about having solid RTO foundations and having good Financial padding to see you through the lean times and to build a solid business foundation.
ASQA have recently come out and said there is no requirement for an organisation to demonstrate any specified minimum value of total assets. However as a business owner I still recommend that
you are able to show at least six months of funds at your disposal to cover capital improvements, rent or commercial mortgage payments, salaries, advertising and marketing costs and other general start-up costs. Even if it is for your own and family sanity.
What ASQA do say is their independent auditors will review: Specific measures used by ASQA to assess financial viability
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Net Tangible Assets (total assets, less intangible assets, less total liabilities): are required to be greater or equal to 2 per cent of the forecast revenue (or revenue for the current year if forecast revenue is not available). |
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Working Capital Ratio (current assets less current liabilities): are required to be greater or equal to 2.5 per cent of forecast revenue for the next year (or revenue for the current year, if forecast revenue is not available). |
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Current Ratio (current assets divided by current liabilities): are required to be greater than or equal to 1.0. |
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Debt Ratio (total liabilities divided by total assets): a debt ratio of less or equal to 1.0 is desirable. |
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Profitability (net profit after tax): positive outcomes are well regarded; however, losses will not necessarily disqualify applicants, unless net tangible assets are insufficient to support ongoing operations. |
To see the information sheet go to: http://www.asqa.gov.au/verve/_resources/FACT_SHEET_Financial_viability.pdf