Managing Financial Resources and Decisions

Unit 2
HNC Assignment Brief
Qualification Unit number and title Unit Code
Unit2 : Managing Financial Resources
Pearson BTEC Level 4 HNC Diploma in
H/601/0548
Business
and Decisions
Level Credit Value
4 15
Assessor name : Peter Keeley
Student name

Final Submission date

Drafts Submission dates
Assignment Date issued/ for summative
for formative feedback
assessment
Task1 27/01/2016 15/02/2016
Task 2 27/01/2016 29/02/2016 11th April 2016
Task 3 27/01/2016 18/03/2016
Via Turnitin on Moodle
Task 4 27/01/2016 28/03/2016 before 23:59PM
All Tasks 27/01/2016 04/11/2016

Assignment title Business Report on Managing Financial Resources and Decisions

In this assessment you will have the Evidence
Learning Assessment
Learning Outcome opportunity to present evidence that Task no.
Outcome Criteria
shows you are able to: (Page no)
Identify the sources of finance available
AC 1.1 Task 1 5
to a business
AC 1.2 Assess the implications of the different
Understand the
sources of finance sources of finance to a business. . Task 1
LO1
available to a
business. 5

Evaluate appropriate sources of finance Task 1

AC 1.3 for a business project
Analyse the costs of different sources of
Understand the AC 2.1 Task 2 5
finance.
implications of Explain the importance of financial
finance as a AC 2.2 Task 2 5
planning.
LO2 resource within a
business. Assess the information needs of
AC 2.3 Task 2 5
different decision makers.
Explain the impact of finance on the
AC 2.4 Task 2 5
financial statements..
LO3 Be able to make AC 3.1 Discuss the main financial statements. Task 3 6
 financial decisions Compare appropriate formats of
based on financial AC 3.2 financial statements for different types Task 4 7
information of business.
Assess the viability of a project using
AC 3.3 Task 3 6
investment appraisal techniques.
AC 4.1 Discuss the main financial statements. Task 4 7
Compare appropriate formats of
Be able to evaluate
AC 4.2 financial statements for different types Task 4 7
the financial
LO4 of business..
performance of a
business. Interpret financial statements using
AC 4.3 appropriate ratios and comparisons, both Task 4 7
internal and external.

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 Pearson BTEC Level 4 HNC Diploma in Business

Start date 28th September 2015
Deadline/hand-in 11th April 2016
Assessor 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.

1. Manufacturing - Freddy intends to work flat out and make 400 jackets per month. At present
he can import the materials he needs at a cost of 60 per jacket. The materials needed for
each month are to be bought monthly on one months credit.

1. Freddy expects to make no sales in the first month, which thereafter will rise by 100 each
month to a maximum of 400 per month. He is confident that he can sell all that he makes for
100 per jacket. However, he realises that he will have to offer 2 months credit to customers.

1. Freddy will have to employ certain staff and this amount to 3,600 per month, payable one
month in arrears.

1. Other running costs are estimated by Freddy to be roughly 1,700 per month.

1. Freddy expects to make drawings of 2,000 per month.

1. Freddy has been advised that the assets are likely to lose 20% of their value in the first year.

1. The business loan plus 12% interest must be repaid 13 months after the business starts.

For Task 3:

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 For Task 3 :

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%.

TASKS to complete

Task 1: (LO1: AC1.1, 1.2, 1.3 ): Understand the sources of finance available to a business

Complete this task using the following scenario:

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 on 1 June 2016 as a Sole Trader.

1.1: Identify the sources of finance available to a business like Freddy Patel. You need to do
research in order to identify sources of finance.[ AC 1.1]

1.2: Assess the implications of the different sources of finance to a business like Freddy Patel. [AC
1.2]

1.3: Evaluate appropriate sources of finance for a business project like Freddy Patel.
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 months 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 Freddys 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 Freddys 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 PLCs 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 M2
are presented in a logical and professional way for all tasks.
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 D1
presenting your arguments in the context of given organisation
for all answers.
D2

D2: While responding your answers you have planned and organised substantial activities well, good
research/investigation undertaken for the all tasks.
D3
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
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 Evidence
Summary of evidence required by student
checklist presented

Task 1
Written Report
Task 2 Budgets presented on spreadsheets. Written Report.
Task 3 Written Report
Task 4 Written report

Pearson BTEC Level 4 HNC in Business (QCF)

Unit 4: Marketing Principles

Achievement Summary

Pearson BTEC Level 4

HNC Diploma in Peter Keeley
Qualification Business Assessor
 name
Unit 2: Managing
Financial Resources and
Decisions
Unit Number Student
and title name

Achieved?
Criteria To achieve the criteria the evidence must show that the
Reference student is able to:
(tick)
Understand the sources of finance available to a
LO1
business.
AC 1.1 Identify the sources of finance available to a business [P1.1]
Assess the implications of the different sources of finance
to a business. .
AC 1.2 [P1.2]

Evaluate appropriate sources of finance for a business

AC 1.3
project
Understand the implications of finance as a resource
LO2
within a business
AC 2.1 Analyse the costs of different sources of finance. [P2.1]
AC 2.2 Explain the importance of financial planning. [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 [P2.4]

Be able to make financial decisions based on financial
LO3
information
AC 3.1 Discuss the main financial statements. [P3.1]
Compare appropriate formats of financial statements for
AC 3.2 [P3.2]
different types of business.
Assess the viability of a project using investment appraisal
AC 3.3 [P3.3]
techniques.
Be able to evaluate the financial performance of a
LO4
business.
AC 4.1 Discuss the main financial statements. [P4.1]
Compare appropriate formats of financial statements for
AC 4.2 [P4.2]
different types of business..
Interpret financial statements using appropriate ratios and
AC 4.3 [P4.3]
comparisons, both internal and external.
Merit
Identify and apply appropriate strategies to generate
M1 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
M2 analyse the information collected and presented in all [M2]
assignment tasks.
You will have used appropriate communication, structure
M3 and approach, concepts and findings are presented in a [M3]
logical and professional way for all tasks.
Distinction
You will have arrived at justified
conclusion through synthesis of
information gathered from diverse
D1
but relevant sources. Critical [D1]
reflection has been demonstrated
while presenting your arguments in
the context of given organisation for
all answers.
While responding your answers you have planned and
D2 organised substantial activities well, good [D2]
research/investigation undertaken for the all tasks
You have demonstrated critical evaluation skills as well as
D3 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
Achieved? Achieved?
descriptor
Grade descriptor
(tick) (tick)
M1: Identify
and apply
strategies to
D1: Use critical reflection
find
to evaluate own work and
appropriate
justify valid conclusions
solutions

M2: Select /
design and D2: Take responsibility
apply for managing and
appropriate organising activities
methods /
techniques

M3: Present
and D3: Demonstrate
communicate convergent/lateral/creative
appropriate thinking
findings

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

Grade Descriptor Indicative characteristic/s Contextualisation

M1: Identify and apply approp

M1 Identify and apply strategies to
find appropriate solutions
the tasks should reflect an effec
An effective approach to study and of sources.
research has been applied.
Example: you explain, analyse
market of Morrisons and Sains

A range of methods and techniques

M2 Select / design and apply have been applied. M2: You will have used approp
appropriate methods / techniques information collected and prese

Example: you use more than o

M3 Present and communicate
appropriate findings
D1 Use critical reflection to evaluate through synthesis of ideas and have
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
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: While responding your an
activities well, good research/in
D2 Take responsibility for managing submitted all tasks within dead
Activities have been managed.
and organising activities
Example: The differences in ac
research that was well planned
D3: You have demonstrated c
Convergent and lateral thinking creative thoughts are applied w
D3 Demonstrate convergent /lateral / have been applied
creative thinking 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 elses 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 students 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 tutors 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 its important (for) then you look at the
reason why its 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.