Assignment, Finance and Accounting Managing Financial Resources and Decisions
Project description
HNC/D Assignment
Assignment Front Sheet
Qualification Unit number and title
Higher National Diploma in Business Unit 2 Managing Financial Resources and Decisions
Student name Assessor names
Emmanuel B Ofori
Ahmed Mahmoon
Tahsin Ozalan
Date issued Completion date Submitted on
27th May 2014 Formative submission: 27th June2014 by 23.00hrs
Final submission: 25th July 2014 by 23.00hrs
(Both submissions must be done via turnitin from Moodle)
Assignment title Managing Financial Resources and Decisions
Learning Outcome
Learning Outcome Assessment Criteria In this assessment you will have the opportunity to present evidence that shows you are able to: Task no.
Evidence
(Page no)
LO1: Understand the sources of finance available to a business 1.1 1.1 identify the sources of finance available to a business
1.2 1.2 assess the implications of the different sources
1.3 1.3 evaluate appropriate sources of finance for a business project
LO2: Understand the implications of finance as a resource within a business 2.1 2.1 analyse the costs of different sources of finance
2.2 2.2 explain the importance of financial planning
2.3 2.3 assess the information needs of different decision makers
2.4 2.4 explain the impact of finance on the financial statements
LO3: Be able to make financial decisions based on financial information 3.1 3.1 analyse budgets and make appropriate decisions
3.2 3.2 explain the calculation of unit costs and make pricing decisions using relevant information
3.3 3.3 assess the viability of a project using investment appraisal techniques
LO4: Be able to evaluate the financial performance of a business 4.1 4.1 discuss the main financial statements
4.2 4.2 compare appropriate formats of financial statements for different types of business
4.3 4.3 interpret financial statements using appropriate ratios and comparisons, both internal and external.
P
Learner declaration
I certify that the work submitted for this assignment via Moodle (and Turnitin) is my own and research sources are fully acknowledged.
Student signature: Date:
Assignment brief
Unit number and title Unit 2 Managing Financial Resources and Decisions
Qualification Higher National Diploma in Business
Start date
Deadline/hand-in
Assessors Mr Emmanuel B Ofori, Ahmed Mahmoon, Tahsin Ozalan
Assignment title Managing Financial Resources and Decisions
Purpose of this assignment
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.
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.
This assignment covers the whole unit of the intended learning outcomes and the assessment criteria taking into consideration all pass, merit and distinction.
Scenario
Excellence Solutions Plc is incorporated in the UK as a public limited company since 2005. The company is in the telecom manufacturing industry and is manufacturing mobile phones. Currently, the company is only serving the UK but is planning to expand and exploit neighbouring EU countries.
The company is expecting a large increase in their customer base and large number of overseas orders. The company is anticipating a cash need of around £1.25m for the expansion, additional space for overseas operation and some fixed assets.
Due to fast turnaround of telecom equipment, Excellence Solutions Plc strongly believes that it can repay the money within 24 months of borrowing. The company is a member of London Stock Exchange (LSE) and has a good reputation in the share market at present.
LO1: Understand the sources of finance available to a business
Task 1 (1.1 – 1.3)
(A.C 1.1): Learner is required to identify different sources of finance available to the business scenario given above.
(A. C 1.2): For the sources identified, learner is required to assess the implication of each of the following:
(a) Accessibility
(b) ownership and dilution of control
(c) gearing and tax effect
(d) bankruptcy
(A.C 1.3): Learner is required to evaluate the appropriate sources of finance for the business scenario given above.
[This provides evidence for learning outcome 1 and assessment criteria 1.1, 1.2 and 1.3]
Task 2 (LO 2 AC: 2.1 – 2.4)
LO2: Understand the implications of finance as a resource within a business
Scenario
It is often said interest or cost of finance (International Accounting Standard 23) is the price for money. Businesses have to pay a price for the capital or funds received whether equity finance or debt finance.
Task 2 (2.1, 2.2, 2.3 and 2.4)
(A.C 2.1) Taking into account the effect of dividend, interest rates and tax effects, learner is required to analyse the costs of different sources of finance.
(Learner is required to consider both equity source of finance and debt source of finance)
Scenario
Financial planning plays a starring role in helping individuals get the most out of their money. Many businesses run out of cash everyday due to poor and inefficient financial planning.
(A.C 2.2) Learner is required to critically assess the importance of financial planning in a modern business organisation. The need to identify shortages and surpluses e.g. cash budgeting; implications of failure to finance adequately; overtrading etc should be discussed.
Scenario
Information enables the manager to devise strategies at different levels within the organisation. Decision makers like shareholders, management, employees, customers and competitors need information for making informed decisions.
(A.C 2.3) Learner is required to assess the information needs of different decision makers at all level of the organisation
2.4 Explain the impact of finance on the financial statements.
[This provides evidence for learning outcome 2 and assessment criteria 2.1, 2.2, 2.3, 2.4]
LO3 Be able to make financial decisions based on financial information
Business Scenario
Creative Company manufactures a single product, the Safety Car which is a toy car sold to the market through approved dealers in the European market. The standard cost of the car is as follows:
Direct Material £8
Direct Labour £7
Variable factory overhead £4
Variable Selling Overhead £2
Total variable costs £21
• Production capacity is 60,000 units per annum and the market research carried out shows that with a strong advertisement campaign, this quantity could be sold. Fixed costs have been budgeted for the coming year as follows:
• Production £70,300
• Selling & Administration £73,100
• For the coming year, there is expected to be a wage award that will increase direct labor by 4% and there is expected to be a 3% increase in material costs and variable factory overhead. These increased costs have not been included in the product costs given above. The company expects a profit of 18% before tax.
(A. C 3.1) (a) Learner is required to analyse the budget given above by calculating the c
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