Unit 2 managing financial resources and decisions

Managing Financial Resources and Decisions HNC Assignment Brief Unit 2

Qualification

Unit number and title

Pearson BTEC Level 4 HNC Diploma in Business Level 4

Unit Code

Unit2 : Managing Financial Resources H/601/0548 and Decisions Credit Value 15 Assessor name : Peter Keeley

Student name

Drafts Submission dates Final Submission date for formative feedback summative assessment 15/02/2016 11th April 2016 29/02/2016 18/03/2016 Via Turnitin on Moodle 28/03/2016 before 23:59PM 04/11/2016

Assignment

Date issued/

Task1 Task 2 Task 3 Task 4

27/01/2016 27/01/2016 27/01/2016 27/01/2016

All Tasks

27/01/2016

Assignment title

Business Report on Managing Financial Resources and Decisions

Learning Assessment Learning Outcome Outcome Criteria AC 1.1

LO1

Understand the sources of finance available to a business.

AC 1.2

Understand the implications of

Evidenc Task no.

(Page no

Identify the sources of finance available Task 1 to a business Assess the implications of the different sources of finance to a business. .

5

Task 1 5

AC 1.3 LO2

In this assessment you will have the opportunity to present evidence that shows you are able to:

AC 2.1 AC 2.2

Evaluate appropriate sources of finance Task 1 for a business project Analyse the costs of different sources of Task 2 finance.

Explain the importance of financial Task 2

5 5

AC 2.3 finance as a resource within a business.

LO3

Be able to make financial decisions based on financial information

AC 2.4 AC 3.1 AC 3.2 AC 3.3 AC 4.1

LO4

Be able to evaluate AC 4.2 the financial performance of a business.

AC 4.3

planning.

Assess the information needs of different Task 2 decision makers.

Explain the impact of finance on the financial statements..

5

Task 2

5

Discuss the main financial statements. Task 3 Compare appropriate formats of financial statements for different types of Task 4 business.

Assess the viability of a project using Task 3 investment appraisal techniques.

Discuss the main financial statements. Task 4 Compare appropriate formats of financial statements for different types of Task 4 business..

Interpret financial statements using appropriate ratios and comparisons, both Task 4 internal and external.

6 7 6 7 7 7

Learner declaration

I certify that the work submitted for this assignment is my own and research sources are fully acknowledged.

Student signature:

Date:

Unit Aim

The unit aim is to provide learners with an understanding of where and how to access sources of finance for a business, and the skills to use financial information for decision making.

Unit Abstract

This unit is designed to give learners a broad understanding of the sources and availability of finance for a business organisation. Learners will learn how to evaluate these different sources and compare how they are used.

They will learn how financial information is recorded and how to use this information to make decisions for example in planning and budgeting.

Decisions relating to pricing and investment appraisal are also considered within the unit.

Finally, learners will learn and apply techniques used to evaluate financial performance.

Pearson BTEC Level 4 HNC in Business (QCF) Unit 2: Managing Financial Resources and Decisions HNC Assignment Brief

Unit2: Managing Financial Resources and Decisions Unit number and title Qualification Start date Deadline/hand-in Assessor

Pearson BTEC Level 4 HNC Diploma in Business 28th September 2015 11th April 2016 Peter Keeley

Assignment title

Managing Financial Resources and Decisions of Businesses

Purpose of this assignment: Aim is to provide learners with an understanding of where and how to access sources of finance for a business, and the skills to use financial information for decision making.

This assignment consists of two parts i.e. Part A and Part B Present your work in the form a business report for part A and B. Suggested word limit for all tasks 3500 words (+/- 10%). Please note that there is no penalty if you exceeded the word limit and this is only for your guidance.

Scenario for Part: A For Task 1: You work as a graduate trainee for ABC finance Ltd, who provide a range of services for clients. One of your duties is the preparation of business plans. A client Freddy Patel intends to start a new

business as a Sole Trader on 1 June 2016.

For Task 2 Freddy is to rent a small workshop where he intends to manufacture and sell high quality sports jackets based upon a unique design that the company has patented. He anticipates the following as likely to happen: Freddy is financing his business using £50,000 of his own savings and £25,000 in the form of a business loan [interest rate = 10%] and an agreed overdraft facility of £45,000 and an agreed overdraft facility of £45,000 [interest rate 2 % per month], Other data: 1. Set up costs - Machinery must be bought at a cost of £30,000 in the first month. He must also buy a van, which will cost £24,000 payable in 12 equal monthly instalments starting from January.

1. Rent of premises will cost £2,000 per month payable quarterly in advance.

Task 2: (LO2: AC 2.1, 2.2, 2.3, 2.4) Understand the implications of finance as a resource within a business.

2.1 Analyse the costs of different sources of finance to a business like Freddy Patel. [AC2.1] 2.2 Explain the importance of financial planning to a business like Freddy Patel. [AC2.2] 2.3 Assess the information needs of different decision makers like Freddy Patel. [AC2.1] 2.4 Explain the impact of finance on the financial statements to a business like Freddy Patel.

[AC2.1] LO3

Be able to make financial decisions based on financial information [AC 3.2]

3.2 Explain the calculation of unit costs and make pricing decisions using relevant information [A3.2] Using the data in the scenario, complete the following tasks: 1. Prepare the following monthly budgets on behalf of Freddy, for the first 12 months; a sales budget, a production budget and a detailed cash budget, which shows each month’s net flow. These budgets must be prepared and presented using a spreadsheet. [A1.2, A2.2] 2. Prepare revised independent cash flow budgets in the light of the following eventualities: [a]

Worst case scenario - Overdraft interest rates rise to 4% per month

[b]

Best case scenario -

Overdraft interest rates fall to 1% per month.

3. Produce a computer generated line graph for each of your budgets above which shows the cash balance at the end of each month. Write a brief interpretation of each graph. [A1.2, A2.2] 4. Based on Freddy’s original budget, prepare a spreadsheet showing a budgeted Profit and loss account and a balance sheet. N.B. closing stock is to be valued on the basis of the cost of the materials. [AC2.1, A2.4] 5. Freddy is confused about pricing and requires a cost calculation showing the minimum price he could charge per jacket. Say why this information is important. [AC3.1].

6. On the basis of the original cash flow [as in task 1] and profit and loss account and balance sheet budgets [as in task 4] you have prepared, assess the strengths and weaknesses of Freddy’s business plans. Explain any problems that may lay ahead and make recommendations about how these problems might be tackled.

You must also explain the advantages of preparing such budgets on a spreadsheet. Explain further why a potential lender may require the preparation of such budgets. [AC2.3, AC3.1].

7. Explain the difference between profit and cash flow. [AC2.4].

Task 3: (LO3: AC 3.1, 3.2. 3.3): Be able to make financial decisions based on financial information Freddy is considering investing in a labour saving machine. The associated costs and savings associated with this machine is given below. You are required to use 2 investment appraisal techniques and to assess the viability of the machine. You are to explain the significance of your findings.

Data : Machine 1 – This machine will have an immediate cost of £10,000, it will last 4 years and result in a labour saving cost of £3,000 per annum. The cost of capital is assumed to be 10%.

3.1 Analyse budgets and make appropriate decisions [AC3.1] 3.3 Assess the viability of a project using investment appraisal techniques [AC3.3]

Task 4: (LO4: AC 4.1, 4.2, 4.3): Be able to evaluate the financial performance of a business Assignment – Part B Scenario for part B: You are required to carry out research by using supportive materials like books, websites, annual reports, etc., to interpret the financial statements of WM Morrison Supermarkets PLC using appropriate ratios and other data such as is given below and to compare its financial performance with that of J Sainsbury PLC for year 2014 and 2015. Furthermore, provide a summary of how their performance compares with the budgeted performance of Freddy Patel.

Turnover (£mil) Profit (Loss) before Taxation Return on Shareholders’ Funds % Gross margin Profit Margin Berry ratio Return on Capital Employed Asset Turnover Current ratio Acid test Ratio Stock Turnover Debtor Collection Days Creditors Payment Days Gearing Ratio Interest Cover Earnings per share

Dividends per share Market capitalisation (£mil) PE Ratio Total Assets Working Capital Shareholders Funds Task 1 Based on the annual reports and the ratios above assess the comparative performance of WM Morrison Supermarkets PLC and J Sainsbury PLC for year 2014 and 2015. Briefly, state how the budgeted performance of Freddy Patel compares with these two companies. [AC4.1, AC4.3] Task 2 – Compare the final accounts format for the PLC’s above with that of Freddy Patel Sole Trader. Explain the differences and explain why the formats differ.

[AC4.2].

4.1 Discuss the main financial statements [AC4.1] 4.2 Compare appropriate formats of financial statements for different types of business. [AC 4.2] 4.3 Interpret financial statements using appropriate ratios and comparisons, both internal and external. [AC 4.3]

Merit Descriptors:

M1

M1: Identify and apply appropriate strategies to generate solution. Your answers for the tasks should reflect an effective approach to examine and research by using variety of sources. For example, you explain, analyse and apply various investment appraisal techniques to assess the viability of a project.

M2: You will have used appropriate techniques and methods to analyse the information collected and presented in all assignment tasks. For example, you presented a number of budgets and analysed them to justify your observations M3: You will have used appropriate communication, structure and approach, concepts and findings are presented in a logical and professional way for all tasks.

M2 M3

Distinction Descriptors D1: You will have arrived at justified conclusion through synthesis of information gathered from diverse but relevant

sources. Critical reflection has been demonstrated while presenting your arguments in the context of given organisation for all answers.

D1 D2: While responding your answers you have planned and organised substantial activities well, good research/investigation undertaken for the all tasks.

D2 E.g. The differences in accounting formats are evaluated well.

D3: You have demonstrated critical evaluation skills as well as innovative and creative thoughts are D3 applied while responding different tasks.

E.g. different financial statements are analysed and explained via the use of accounting ratios.

Pearson BTEC Level 5 HND in Business (QCF) Unit 4: Marketing Principles Session Oct 2015 Evidence checklist

Evidence presented

Summary of evidence required by student

Task 1 Written Report Task 2 Task 3 Task 4

Budgets presented on spreadsheets. Written Report.

Written Report Written report

Pearson BTEC Level 4 HNC in Business (QCF) Unit 4: Marketing Principles Achievement Summary Pearson BTEC Level 4 HNC Diploma in Business

Peter Keeley

Assessor name

Qualification

Unit Number and title

Unit 2: Managing Financial Resources and Decisions

Student name

Achieved?

Criteria To achieve the criteria the evidence must show that the Reference student is able to: LO1 AC 1.1

AC 1.2

AC 1.3 LO2 AC 2.1 AC 2.2

Understand the sources of finance available to a business.

Identify the sources of finance available to a business Assess the implications of the different sources of finance to a business. .

Evaluate appropriate sources of finance for a business project Understand the implications of finance as a resource within a business Analyse the costs of different sources of finance.

Explain the importance of financial planning.

(tick)

[P1.1]

[P1.2]

[P2.1] [P2.2] [P2.3]

AC 2.3

Assess the information needs of different decision makers

AC 2.4

Explain the impact of finance on the financial statements Be able to make financial decisions based on financial information Discuss the main financial statements.

Compare appropriate formats of financial statements for different types of business.

Assess the viability of a project using investment appraisal techniques.

Be able to evaluate the financial performance of a business.

Discuss the main financial statements.

LO3 AC 3.1 AC 3.2 AC 3.3 LO4 AC 4.1

[P2.4]

[P3.1] [P3.2] [P3.3]

[P4.1]

Compare appropriate formats of financial statements for [P4.2] different types of business..

Interpret financial statements using appropriate ratios and [P4.3] comparisons, both internal and external.

AC 4.2 AC 4.3 Merit

Identify and apply appropriate strategies to generate solution. Your answers for the tasks should reflect an [M1] effective approach to examine and research by using variety of sources.

You will have used appropriate techniques and methods to analyse the information collected and presented in all [M2] assignment tasks.

You will have used appropriate communication, structure and approach, concepts and findings are presented in a [M3] logical and professional way for all tasks.

M1

M2 M3 Distinction

D1

D2 D3

You will have arrived at justified conclusion through synthesis of information gathered from diverse but relevant sources. Critical reflection has been demonstrated while presenting your arguments in the context of given organisation for all answers.

[D1]

While responding your answers you have planned and organised substantial activities well, good [D2] research/investigation undertaken for the all tasks You have demonstrated critical evaluation skills as well as innovative and creative thoughts are applied while responding different tasks.

Grading Criteria for Merit and Distinction of the coursework Higher Grade achievements (where applicable) Grade descriptor

Achieved?

Achieved?

Grade descriptor

(tick)

M1: Identify and apply

(tick) D1: Use critical reflection to evaluate own work and justify valid conclusions

strategies to find appropriate solutions

M2: Select / design and apply appropriate methods / techniques

M3: Present and communicate appropriate findings

D2: Take responsibility for managing and organising activities

D3: Demonstrate convergent/lateral/creative thinking

In addition to the above PASS criteria, this assignment gives you the opportunity to submit evidence in DISTINCTION grades

Grade Descriptor

Indicative characteristic/s

M1 Identify and apply strategies to find appropriate solutions

M1: Identify and apply approp tasks should reflect an effective An effective approach to study and sources. research has been applied.

Example: you explain, analyse market of Morrison’s and Sains

M2 Select / design and apply appropriate methods / techniques

Contextualisation

A range of methods and techniques have been applied.

M2: You will have used approp

collected and presented in all a

Example: you use more than o

M3 Present and communicate appropriate findings

D1 Use critical reflection to evaluate own work and justify valid conclusions

The communication is appropriate for familiar and unfamiliar audiences and appropriate media have been used.

Conclusions have been arrived at through synthesis of ideas and have been justified.

M3: You will have used approp and findings are presented in a

Example: your reports are pres

D1: You will have a through synthesis o diverse but relevant been demonstrated in the context of giv

Example: The budgets have be support valid conclusions.

D2 Take responsibility for managing Activities have been managed. and organising activities

D2: While responding your an activities well, good research/in submitted all tasks within dead

Example: The differences in a research that was well planned

Convergent and lateral thinking D3 Demonstrate convergent /lateral / have been applied creative thinking

D3: You have demonstrated c thoughts are applied while resp Example:

3.

Preparation guidelines of the Coursework Document 4. All coursework must be word processed.

5. Document margins must not be more than 2.54 cm (1 inch) or less than 1.9cm (3/4 inch).

6. Font size must be within the range of 10 point to 14 point including the headings and body text (preferred font size is 11).

7. Standard and commonly used type face such as Arial should be used.

8. All figures, graphs and tables must be numbered.

9. Material taken from external sources must be properly refereed and cited within the text using Harvard standard 10. Do not use Wikipedia as a reference.

11. Word limit is only suggestive and there is no penalty if not followed.

4. Plagiarism and Collusion Any act of plagiarism or collusion will be seriously dealt with according to the College regulations. In this context the definition and scope of plagiarism and collusion are presented below: Plagiarism is presenting somebody else’s work as your own. It includes copying information directly from the Web or books without referencing the material; submitting joint coursework as an individual effort.

Collusion is copying another student’s coursework; stealing coursework from another student and submitting it as your own work.

Suspected plagiarism or collusion will be investigated and if found to have occurred will be dealt with according to the college procedure. (For details on Plagiarism & Collusion please see the student hand book) 5. Submission 6. Initial submission of coursework to the tutors is compulsory in each unit of the course.

7. Student must check their assignments on College VLE with plagiarism software Turnitin to make sure the similarity index for their assignment stays within the College approved level. A student can check the similarity index of their assignment 8. All Final coursework must be submitted to the Final submission point into the unit not to the Tutor). A student would be allowed to submit only once and that is the final submission.

9. Any computer files generated such as program code (software), graphic files that form part of the coursework must be submitted as an attachment to the assignment with all documentation.

10. Any portfolio for a unit must be submitted as a hardcopy to examination office.

11. The student must attach a tutor’s comment in between the cover page and the answer in the case of Resubmission.

6. Good practice 7. Make backup of your work in different media (hard disk, memory stick, or cloud computing services such as Dropbox, Google Drive etc.) to avoid distress for loss or damage of your original copy.

7. Extension and Late Submission 8. If you need an extension for a valid reason, you must request one using an Exceptional Extenuating Circumstances (EEC) form available from the College examination office and VLE. Please note that the lecturers do not have the authority to extend the coursework deadlines and therefore do not ask them to award a coursework extension. The completed form must be accompanied by evidence such as a medical certificate in the event of you being sick.

9. Late submission will not be accepted and marked according to the college procedure.

It is noted that late submission may not be graded for Distinction.

10. All Late coursework must be submitted to the late submission point into the unit (not to the Tutor). A student would be allowed to submit only once and that is the final submission.

11. Submission deadlines Online to the College VLE Final Submission date: as on front page.

Glossary: Analyse: Break an issue or topic into smaller parts by looking in depth at each part. Support each part with arguments and evidence for and against. (Pros and cons) Critically Evaluate/Analyse: When you critically evaluate you look at the arguments for and against an issue. You look at the strengths and weaknesses of the arguments. This could be from an article you read in a journal or from a text book.

Discuss: When you discuss you look at both sides of a discussion. You look at both sides of the arguments. Then you look at the reason why it’s important (for) then you look at the reason why it’s important (against).

Explain: When you explain you must say why it is important or not important.

Evaluate: When you evaluate you look at the arguments for and against an issue.

Identify: When you identify you look at the most important points.