Managing Financial Resources & Decisions

Managing Financial Resources & Decisions

Introduction

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

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

Students of this unit will gain an understanding of where and how to access sources of finance for a business, and the skills to use financial information for decision making. Upon completing the unit, learners will understand the sources of finance available to a business; understand the implications of finance as a resource within a business; be able to make financial decisions based on financial information, and; be able to evaluate the financial performance of a business.

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.

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.

 Key Objectives:

  • Identify the sources of finance available to a business
  1. Examine the  implications of the different sources
  2. Select appropriate sources of finance for a business project
  3. Evaluate the costs of different sources of finance
  4. Explain the role of financial planning
  5. Analyse  the information needs of different decision makers
  6.  Explain how different types of finance and their costs appear in the financial statements of a business;
  7. Analyse and monitor cash and other budgets make appropriate decisions
  8. Calculate unit costs and make pricing decisions
  9. Assess the viability of a project using investment appraisal techniques
  10. Explain the purpose of main financial statements
  11. Compare and contrast the formats of financial statements for different types of business such as sole trader, partnership and company.
  12. Analyse key accounting ratios for profitability, liquidity, efficiency and investment and compare both internal and external.

Learning Outcomes and assessment criteria:

On successful completion of this unit a learner will:

  1. Understand the sources of finance available to a business

1.1 identify the sources of finance available to a business

1.2 assess the implications of the different sources

1.3 evaluate appropriate sources of finance for a business project

  1. Understand the implications of finance as a resource within a business

2.1 analyse the costs of different sources of finance

2.2 explain the importance of financial planning

2.3 assess the information needs of different decision makers

2.4 explain the impact of finance on the financial statements

  1. Be able to make financial decisions based on financial information

3.1 analyse budgets and make appropriate decisions

3.2 explain the calculation of unit costs and make pricing decisions using relevant information

3.3 assess the viability of a project using investment appraisal techniques

  1. Be able to evaluate the financial performance of a business

4.1 discuss the main financial statements

4.2 compare appropriate formats of financial statements for different types of business

4.3 interpret financial statements using appropriate ratios and comparisons, both internal and external.

Knowledge and Understanding:

  1. Identify and explain the sources of finance available to a business
  2. Assess the implications of finance as a resource within a business
  3. Know how to make financial decisions based on financial information
  4. Evaluate the financial performance of a business

Indicative content:

  1. Understand the sources of finance available to a business

Range of sources: sources for different businesses; long term such as share capital; retained earnings; loans; third-party investment; short/medium term such as hire purchase and leasing; working capital stock control; cash management; debtor factoring

Implications of choices: legal, financial and dilution of control implications; bankruptcy.

Choosing a source: advantages and disadvantages of different sources; suitability for purpose e.g. matching of term of finance to term of project

  1. Understand the implications of finance as a resource within a business

Finance costs: tangible costs e.g. interest, dividends; opportunity costs e.g. loss of alternative projects when using retained earnings; tax effects

Financial planning: the need to identify shortages and surpluses e.g. cash budgeting; implications of failure to finance adequately; overtrading

Decision making: information needs of different decision makers

Accounting for finance: how different types of finance and their costs appear in the financial statements of a business; the interaction of assets and liabilities on the balance sheet and on international equivalents under the International Accounting Standards (IAS).

  1. Be able to make financial decisions based on financial information

Budgeting decisions: analysis and monitoring of cash and other budgets;

Costing and pricing decisions: calculation of unit costs, use within pricing decisions; sensitivity analysis;

Investment appraisal: payback period; accounting rate of return; discounted cash flow techniques i.e. net present value; internal rate of return;

Nature of long-term decisions: nature of investment importance of true value of money; cash flow; assumptions in capital investment decisions; advantages and disadvantages of each method.

  1. Be able to evaluate the financial performance of a business

Terminology: introduction to debit, credit, books of prime entry, accounts and ledgers, trial balance, final accounts and international equivalents under the International Accounting Standards (IAS);

Financial statements: basic form, structure and purpose of main financial statements i.e. balance sheet, profit and loss account, cash flow statement, notes, preparation not required; changes to reporting requirements under the International Accounting Standards (IAS) e.g. statement of comprehensive income, statement of financial position; distinctions between different types of business i.e. limited company, partnership, sole trader;

Interpretation: use of key accounting ratios for profitability, liquidity, efficiency and investment; comparison both external i.e. other companies, industry standards and internal i.e. previous periods, budget

Programme Specification

Accrediting Body:  EDEXCEL

Course: BTEC HND IN BUSINESS                               

Unit: 2 MANAGING FINANCIAL RESOURCES & DECISIONS

WkLecture ScheduleOutcome of sessionActivity/seminar and formative assessmentResources
Introduction to Managing Financial Resources & Decisions: identifying the sources of finance available to a business and assessing the implications of the different sources of finance. Introduction to the module, mode of assessment, awareness of the awarding body,  assessment criteria and the mode of assessmentShort-answer questions to assess learner’s knowledge, role play and individual induction, helping to know each other.Module handbook
2Case studyAssessing the implications of the various sources of financeIdentify sources of finance available to an existing businessBe able to assess the implications of the different sources of finance.Power point slides and lecture notes.
 3 Evaluating appropriate sources of finance for a business project.By the end of the session, the learner will be able to evaluate appropriate sources of finance for a business project.Moderated group discussions and short-answer questions.Power point slides and lecture notes.
Case study: analysing the costs of different sources of finance.Working with the assignmentCase study and addressing the learning outcome 1.1, 1.2 and 1.3Module hand book and assignment for the purpose
The importance of financial planning.Planning is a managerial function and this lecture aims at enabling the learner to grasp the importance of financial planning within an organisation.Reflective questions at the end of the class and a case study for discussionPower point slides, video-based sessions on the importance of financial planning.
Assessing the information needs of different decision makers.Identify the types of decisions made by various decision makers at all levels in an organisation.Assess the information needed to support decision making at all levels of the organisation.Practical discussion and feedbackComputer Lab
The impact of finance on financial statements.Having understood the importance of financial planning to an organization, explain the impact of finance on financial statements. Working with the Assignment meeting the LO2.1,2.2,2.3,2.4Case study and address the LOPowerPoint slides and lecture notes
Analysing budgets and making appropriate decisions.Explain and illustrate two components of the budget that could help you make appropriate financial decisions.Case study and address the LOPowerPoint slides and lecture notes.
Calculation of unit costs and making pricing decisions, using relevant information.DoCase study and role play.PowerPoint slides and lecture notes.
10 Assessing the viability of a project, using investment appraisal techniques.DoGroup discussionPower point slides and lecture notes.
11 Case study and class discussion of the main financial statements.Explain the key components of financial statements.Case study and LOPower point slides and lecture notes.
12Appropriate formats of financial statements for different types of business.Identify the different formats of financial statements for different types of business and explain their relevance.Case study and LOPower point slides and lecture notes.
13Interpreting financial statements, using appropriate ratios and comparisons (internal & external).Demonstrate an understanding of the various ratios used to interpret financial statements.Discussion and reflective feedbackPower point slides
14Case studyInterpret financial ratios using a real business
15Revision. Summarising all the tasksAddressing the LOFeedback addressing the learning outcome
16Assignment Support and guidanceAddressing the LO
17Assignment Support and guidanceAddressing the LO
18Assignment Support and guidanceAddressing the LO
19Assessment and feedbackFeedback given to learners
20Assessment and feedbackFeedback given to learners
21Assessment and feedbackFeedback given to learners

Recommended text and links:

Core text

  • Dyson J R, (2007),Accounting for Non-Accounting Students. Financial Times/Prentice Hall. ISBN: 9780273709220

Other text

Atrill P. (2012), Financial Management for Decision Makers.  6th Edition, Harlow: Pearson Financial Times/Prentice Hall. ISBN: 9780273756934

Atrill, P. and McLaney, E. (2013), Accounting and finance for non-specialists.8th ed. Harlow: Financial Times/Prentice Hall. ISBN:9780273778035

Watson,D. and Head, A. (2012), Corporate Finance Principles and Practice. 6th edition, Harlow: Pearson ISBN: 9780273762874

Journals and newspapers

The financial and mainstream press can provide useful background reading, and can also be a useful source of case studies and financial information. Copies of published financial reports are available from companies themselves, or via The Financial Times (a free online ordering service is available).

Videos

A number of videos are available, covering the financial aspects of business.

Websites

The professional accounting bodies all have websites with lots of useful information and links.

The Financial Times website includes a free service providing copies of financial reports. Biz/ed provides a wealth of useful resources aimed at learners and teachers.

Assessment:

The module will be assessed meeting all the LO as specified by the awarding body, Ed Excel.

Please read the instructions carefully while addressing the tasks specified. 

Contribution: 100% of the module

Outline Details: Individual report approx 4000 words.   Details enclosed in the assignment brief.

Teaching and Learning Activities

The module tutor(s) will aim to combine lectures with tutorial activities. This environment will provide opportunities for the student to understand the course material through case study and text and to apply it in a practical way. The intent is to facilitate interactive class activities, and discussion about the significant role of research in a global and local business environment.

2.3 Teaching Ethos

The college’s approach towards teaching and learning is simple and effective. The main aim of UKCBC is to assist learners in maximising their potential by ensuring that they are taught clearly and effectively. This will enable students to engage in the learning environment and promote success in both their academic studies and subsequent career.

2.3.1 Methods of Delivery:

LECTURES:

These will be developed around the key concepts as mentioned in the indicative course content and will use a range of live examples and cases from business practice to demonstrate the application of theoretical concepts. This method is primarily used to identify and explain key aspects of the subject so that learners can utilise their private study time more effectively.

SEMINARS:

These are in addition to the lectures. The seminars are designed to give learners the opportunity to test their understanding of the material covered in the lectures and private study with the help of reference books. This methodology usually carries a set of questions identified in advance. Seminars are interactive sessions led by the learners. This method of study gives the learner an excellent opportunity to clarify any points of difficulty with the tutor and simultaneously develop their oral communication skills.

CASE STUDIES: An important learning methodology is the extensive use of case studies. They enable learners to apply the concepts that they learn in their subjects. The learners have to study the case, analyse the facts presented and arrive at conclusions and recommendations. This assists in the assessment of the learner’s ability to apply to the real world the tools and techniques of analysis which they have learnt. The case study serves as a supplement to the theoretical knowledge imparted through the course work.

Plagiarism:

Any act of plagiarism will be seriously dealt with according to the colleges and awarding bodies’ regulations. In this context the definition and scope of plagiarism are presented below:

Plagiarism is presenting someone’s work as your won. It includes copying information directly from the web or books without referencing the material; submitting joint coursework as an individual effort; copying another student’s coursework; stealing coursework form another student and submitting it as your own work. Suspected plagiarism will be investigated and if found to have occurred will be dealt with according to the college procedure. (For further details please refer to the plagiarism policy and the student code of conduct.)

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Assignment Front Sheet

Unit: 9 – MANAGING FINANCIAL RESOURCES AND DECISION
Learning Hours:  60 Hours.                                              Self-learning hours:  90 hours.Course: HND Business – Level 4CREDIT VALUE: 15 CREDITSTerm:
Module Leader: Mr Daniel OluwatayoLecturer: Mr George MuwongeInternal Verifier: Mr Dalton Vincent
ASSIGNMENT TITLE:
Learners NameTerm:Batch:Intake:
Registration NumberCampus:
Hand out Date:                                                  Submission Date:
LearningOutcomeAssessment CriteriaIn this assessment you will have the opportunity to present evidence that shows you are able to: Task NumberEvidence Page number
LO1. Understand the sources of finance available to a Business.1.1Identify the sources of finance available to a business1
1.2Assess the implications of the different sources for your chosen business1
1.3Evaluate appropriate sources of finance for your chosen  business project1
LO2. Understand the implications of finance as a resource within a business.2.1Analyse the costs of different sources of finance with reference to your chosen business2
2.2Explain the importance of financial planning with reference to your chosen business2
2.3Assess the information needs of different decision makers for your chosen business2
2.4Explain the impact of finance on the financial statements for your chosen business2
LO3. Be able to make financialdecisions based on financialinformation3.1Analyse budgets and make appropriate decisions3
3.2Explain the calculation of unit costs and make pricing decisions using relevant information.3
3.3Assess the viability of a project using investment appraisal techniques.3
LO4. Be able to evaluate theFinancial performance of aBusiness.4.1Discuss the main financial statements4
4.2Compare appropriate formats of financial statements for different types of business4
4.3Interpret financial statements using appropriate ratios and comparisons, both internal and external4
Please see that you include the Turnitin report. This work will not be accepted without theTurn it in report.Report attached: Yes                                NoIf no Reason:% of the turn it in report.
Learners Declaration: I certify that the work submitted for this unit is my own and the research sources are fully acknowledged.Learners Signature:                                                                                                                Date:Plagiarism:Any act of plagiarism will be seriously dealt with according to the colleges and awarding bodies’ regulations. In this context the definition and scope of plagiarism are presented below:Plagiarism is presenting someone’s work as your won. It includes copying information directly from the web or books without referencing the material; submitting joint coursework as an individual effort; copying another student’s coursework; stealing coursework form another student and submitting it as your own work. Suspected plagiarism will be investigated and if found to have occurred will be dealt with according to the college procedure. (For further details please refer to the plagiarism policy and the student code of conduct.)
Due Dates
Issue DateFinal Due Date18th  week
Due Task- 1End of NovFinal due date where e-learning will be blocked for FEBRUAY 2016 intake19th week
Due Task- 2End of Nov
Due Task- 32nd week of Dec
Due Task – 42nd week of Jan

Guidance in addition to the Pass criteria’s, this assignment gives you the opportunity to submit evidence in order to achieve the following Merit and Distinction grades.  Assessment Grid indicating their pass, merit and distinction:

Unit: Managing Financial Resources and Decision 

Outcomes/criteria:Indicative characteristicsPossible evidence ContextualisationIn this assessment you will have the opportunity to present evidence that shows you are able to :Feedback
LO1. Understand the sources of finance available to a business.LO2. Understand the implications of finance as a resource within a businessLO3. Be able to make financial decisions based on financial informationLO4. Be able to evaluate the financial performance of a business.As per the assessment criteria specified for passDoDoDoTask 1Addressing 1.1, 1.2 and 1.3 as instructed and exhibit an understanding to different the sources of finance available to Sweet Menu RestaurantTask 2Addressing 2.1, 2.2, 2.3 and 2.4 as instructed with evidence towardsthe implications of finance as a resource regarding Sweet Menu Restaurant.Task 3  Addressing 3.1, 3.2 and 3.3 as instructed with evidence towards being able to make financial decisions based on financial information given in the assignment for Sweet Menu Restaurant.Task 4 Addressing 4.1, 4.2, and 4.3 as instructed with evidence towards being able to evaluate the financial performance of a business with specific reference to your chosen organisations.
Merit Description:
M. Identify and apply strategies to find appropriate solutions.
Effective judgments have been made.To achieve M1, you will need to make effective judgements in analysing budgets and making appropriate decisions (3.1, and 3.3) and an effective approach of study with good research skills being used across the assignment to address the criteria’s with reference to a business chosen by the learner and information given in the assignment.
An effective approach to study and research has been used.
M2. Select/ design and apply appropriate methods/ techniques.A range of methods/techniques has been applied.To achieve M2, you will have used suitable methods/techniques to assess the viability of a project and interpret financial performance (3.3 and 4.3), the selection of methods and techniques justified (3.3 and 4.3), and a range of sources of information used across the assignment.
A range of sources of information used.
The selection of methods and techniques justified.
 M3. Present and communicate appropriate findings.Appropriate structure and approach has been used.To achieve M3 the work you present should be appropriate and the presentation and communication across the tasks 1 to 4 should be appropriately structured, logical and coherent arguments made, and a range of methods of presentation used addressing the learning outcomes as specified with appropriate findings with special reference to Sweet Menu Restaurant and your chosen organisation where requested.
Logical and coherent arguments have been presented
A range of methods of presentation has been used.
Distinction Description:
D1. Use critical reflection to evaluate own work and justify valid conclusion.Synthesis has been used to generate and justify valid conclusionsTo achieve D1 you will have addressed the criteria’s and justifying valid conclusions, evaluated the financial performance of Sweet Menu Restaurant and your chosen organisation where requested using defined criteria and propose realistic improvements against defined characteristics for success.
Evaluation has taken place using defined criteria
Realistic improvements have been proposed against defined characteristics for success.
D2. Take responsibility for managing and organizing activities.Autonomy/independence demonstratedTo achieve D2 you will have demonstrated autonomy across your assignment, with effective independent research and met the deadlines to submit all the tasks and achieve the unit merit criteria and interdependence with each learning outcome has been demonstrated.
The importance of interdependence has been recognized.
D3. Demonstrate convergent, lateral and creative thinkingIdeas generate and decisions takenYour work demonstrates new ideas or suggestions relevant to Sweet Menu Restaurant and your chosen organisation where requested, evidence of creative thinking and receptiveness to new ideas across the assignment making it look different and creative. 
Capacity for innovation and creative thought has been used.
Receptiveness to new ideas has been demonstrated.

Assignment Brief

Unit Number and titleManaging Financial Resources and Decisions
QualificationBTEC HND Business (Level 4)
Start Date
Deadline/ Hand-in

TASK 1 to TASK 4: You are required to follow the instructions as specified towards each task and support with a research by using supportive materials like books, websites, etc. Relate your answers to relevant scenarios and case studies as specified and comment on answers where relevant.

Scenario for task 1 and task 2.

Sweet Menu Restaurant Ltd is a reputable restaurant that is based in Gants Hill in East London. The restaurant was founded 10 years ago by three students who met at the college when studying for their Edexcel HND business course. The restaurant is well known for providing various inter-continental menus at affordable prices. The restaurant is well known for providing various inter-continental menus at affordable prices. At the last shareholders meeting, all the three owners agreed to take advantage of the business prospect and open two new branches in Central London and Croydon. A business plan has been presented by the Finance Manager, and it was estimated that Sweet Menu Restaurant will need between £300,000 and £500,000 to open the proposed new branches.

LO1 Understand the sources of finance available to a business

Task 1: Using the scenario above

Required:

1.1 Identify the sources of finance available to a business.

** Consider various sources of finance from internal and external sources.

1.2 Assess the implications of the sources of finance identified in task 1.1

1.3 Evaluate the most appropriate sources of finance for Sweet Menu Restaurant expansion plans.

**You must give attention to the most appropriate sources, answers without application to scenario will be referred.

LO2 Understand the implications of finance as a resource within a business

Task 2: Using the scenario above

Required:

2.1 Analyse the costs of the different sources of finance that you have identified for Sweet Menu Restaurant in task 1.3 above.

2.2 Explain the importance of financial planning for Sweet Menu Restaurant with reference to the new business project.

2.3 Assess the information needs of different decision makers in Sweet Menu Restaurant.

2.4 Using the most recent financial statement of Sweet Menu Restaurant given below, explain the impact of the sources of finance identified in task 1.3 on the financial statements of Sweet Menu Restaurant.

Profit and loss account for the year ended 31st December, 2014

££
Revenue350,000
Less: Cost of Sales-127,500
Gross profit222,500
Less:
Administration expenses-92,000
Selling and distribution expenses-14,500
-106,500
Operating profit116,000
Interest-10,000
Profit before tax106,000
Tax-21,000
Profit after tax85,000
Proposed dividend-80,000
Retained profit for the year5,000

Balance sheet as at 31st December, 2014

££
NON-CURRENT ASSETS
Equipment75,000
Delivery vans52,000
Furniture and fittings38,000
165,000
CURRENT ASSETS
Inventories44,000
Receivables13,000
Cash and banks11,000
68,000
CURRENT LIABILITIES
Payables38,000
Net Current Assets30,000
Net Assets195,000
EQUITIES
60,000 ordinary share capital @ £1 per share60,000
Revenue reserves104,000
NON-CURRENT LIABILITY
Long -term loan31,000
Net Assets195,000
       

LO3 Be able to make financial decisions based on financial information

Case study – Blue Island Restaurant

The directors of Blue Island Restaurant are planning towards the busy end of the year and as the Cost Accountant you have prepared the following budgets for the 4 months to 31st December 2015 together with a meal cost data.

Cash Budget
ReceiptsSeptember£October £November£December£Total£
Cash sales1500013000150001800058000
Total1500015500180002000058000
Payments
Van1200012000
Furniture & Fittings180001000028000
Salaries & wages750075008500900032500
Petrol280280280840
Lighting & Energy5006006501750
Insurance3503503503501400
Purchases – inventory300030003500400013500
Total4085011630132302428089990
Net balance(25850)38704770(4280)(21490)
Balance b/fwd18500(7350)(3480)12908690
Balance c/fwd(7350)(3480)1290(2990)(12530)
Trade payables budget (Inventory)
September£October £November£December£
August purchases 40%1200
September purchases 60%1800
September purchases 40%1200
October purchases 60%1800
October purchases 40%1200
November purchases 60%2300
November purchases 40%1380
December purchases 40%2620
Total payments3000300035004000
Additional Information:
The recipe cost sheet for a popular meal at Blue Island Restaurant is shown below;
ItemCost        £
Steak3.00
Vegetables and other ingredients1.50
Labour3.50
Overheads (using full absorption costing technique)2.00
Meal cost10.00
The restaurant add 40% mark up on all menu cost exclusive of VAT which is at 20% and charges £16 per meal. An alternative to working out the cost of menu has been suggested below;

Food cost percentage = Total costs of ingredients / Sale price

Task 3:

The directors have little financial knowledge and have requested further explanation of the figures and advice.

Required:

3.1 Analyse the budgets and make appropriate decisions

3.2 Explain the calculation of the unit costs (meal cost) and make pricing decisions using relevant information given above.

3.3 Blue Island restaurant has an empty space in one of its branches that could be used to expand the production of ready meals supplied to a local supermarket.Two proposals relating to the use of this space have been submitted. Only one of them can be accepted, since each project would fully utilise the empty space.The following information was obtained for the proposals:

Year                                        Proposal 1     Proposal 2

                                                Cash flows    Cash flows

0                                              -£1200                       -£1200

1                                                 £800                         £300

2                                                 £600                         £400

3                                                 £400                         £500

4                                                 £200                         £600

5                                                  £50                          £500

Residual value                          £0                           £50

The cash flows for year five include, where applicable, the sale of the fixed assets purchased (in year zero) at residual value. The company’s cost of capital is 10 per cent.

Required

3.3 Assess the viability of the two projects using investment appraisal techniques as follows;

  1. Payback method and net present value (NPV) method for the two projects and identify which project should be approved by Blue Island Restaurant and explain why.

LO4. Be able to evaluate the financial performance of a business

Task 4:

A company’s financial statements provide various financial information that investors and creditors use to evaluate a company’s financial performance.

Required:

4.1 Discuss the main financial statements

**Focus discussion on the main elements of financial statements.

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

**Please discuss formats prescribed by Generally Acceptable Accounting Practice (GAAP) and International Financial Reporting Standards (IFRS).

Task 4.3

Sweet Menu Restaurant and Blue Island Restaurant are two close competitors

Profit and loss accounts for the year ended 31st December, 2014.

Sweet Menu RestaurantBlue Island Restaurant
££££
Revenue350,000299,000
Less: Cost of Sales-127,500-101,000
Gross profit222,500198,000
Less:
Administration expenses-92,000-41,000
Selling and distribution expenses-14,500-30,200
-106,500-71,200
Operating profit116,000126,800
Interest-10,000-3,000
Profit before tax106,000123,800
Tax-21,000-29,000
Profit after tax85,00094,800
Proposed dividend-80,000-55,000
Retained profit for the year5,00039,800

Balance Sheet as at 31st December, 2014

Sweet Menu RestaurantBlue Island Restaurant
££
NON-CURRENT ASSETS
Equipments75,00048,500
Delivery vans52,00088,500
Furniture and fittings38,00010,000
165,000147,000
CURRENT ASSETS
Inventories44,00031,000
Receivables13,0005,000
Cash and banks11,0005,000
68,00041,000
CURRENT LIABILITIES
Payables38,00065,000
Net Current Assets30,000-24,000
Net Assets195,000123,000
EQUITIES
Ordinary share capital  @ £1 per share60,00035,000
Revenue reserves104,00083,000
Shareholders’ funds164,000118,000
NON-CURRENT LIABILITY
Long -term loan31,0005,000
Net Assets195,000123,000

Required

4.3 Interpret the financial statements of the two restaurants using ratios and comparisons, both internal and external.

**Please ensure you use at least two ratios each across profitability, liquidity, solvency and any other category of ratios

**Take notice

Assignment Guidelines:

  • Use a standard report structure, Word-process the report and use Normal script of a proper font size 12.
  • Produce an academic report, detailing the above issues with an approx. word limit of 4000 to 4500 words.
  • Complete the title page and sign the statement of authenticity.
  • The Assignment sheet should be attached in the front.
  • Submit the document in a folder in the form of a file as well as a soft copy on the submission date.
  • It should be uploaded on E-Learning platform before the deadline and dropped into the drop box at your relevant campuses and get the ——– and collect the receipt of the submission form at the college.
  • Assignments submitted after the deadline will not be accepted unless mitigating and may be entitled for a late fee.
  • Collusion and Plagiarism must be avoided.
  • Start each answer on a new page and pages should be numbered. Highlight each question clearly.
  • Include a Bibliography at the end of the assignment and use the Harvard referencing system.
  • All work should be comprehensively referenced and all sources must be fully acknowledged, such as books and journals, websites (include the date of visit), etc.
  • Try to give the page numbers, publishers’ details and the year of publication
  • In order to pass you need to address all the LO
  • In order to get a merit you need to address the characteristics of pass and address M1, M2,M3
  • In order to get a Distinction you need to address the characteristics of pass, merit and address D1, D2 and D3.

Use a common format for the questions, for example:

  • Introduction (analyse the question.)
  • Under

Introduction

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

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

Students of this unit will gain an understanding of where and how to access sources of finance for a business, and the skills to use financial information for decision making. Upon completing the unit, learners will understand the sources of finance available to a business; understand the implications of finance as a resource within a business; be able to make financial decisions based on financial information, and; be able to evaluate the financial performance of a business.

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.

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.

 Key Objectives:

  • Identify the sources of finance available to a business
  • Examine the  implications of the different sources
  • Select appropriate sources of finance for a business project
  • Evaluate the costs of different sources of finance
  • Explain the role of financial planning
  • Analyse  the information needs of different decision makers
  •  Explain how different types of finance and their costs appear in the financial statements of a business;
  • Analyse and monitor cash and other budgets make appropriate decisions
  • Calculate unit costs and make pricing decisions
  • Assess the viability of a project using investment appraisal techniques
  • Explain the purpose of main financial statements
  • Compare and contrast the formats of financial statements for different types of business such as sole trader, partnership and company.
  • Analyse key accounting ratios for profitability, liquidity, efficiency and investment and compare both internal and external.

Learning Outcomes and assessment criteria:

On successful completion of this unit a learner will:

  1. Understand the sources of finance available to a business

1.1 identify the sources of finance available to a business

1.2 assess the implications of the different sources

1.3 evaluate appropriate sources of finance for a business project

  1. Understand the implications of finance as a resource within a business

2.1 analyse the costs of different sources of finance

2.2 explain the importance of financial planning

2.3 assess the information needs of different decision makers

2.4 explain the impact of finance on the financial statements

  1. Be able to make financial decisions based on financial information

3.1 analyse budgets and make appropriate decisions

3.2 explain the calculation of unit costs and make pricing decisions using relevant information

3.3 assess the viability of a project using investment appraisal techniques

  1. Be able to evaluate the financial performance of a business

4.1 discuss the main financial statements

4.2 compare appropriate formats of financial statements for different types of business

4.3 interpret financial statements using appropriate ratios and comparisons, both internal and external.

Knowledge and Understanding:

  1. Identify and explain the sources of finance available to a business
  2. Assess the implications of finance as a resource within a business
  3. Know how to make financial decisions based on financial information
  4. Evaluate the financial performance of a business

Indicative content:

  1. Understand the sources of finance available to a business

Range of sources: sources for different businesses; long term such as share capital; retained earnings; loans; third-party investment; short/medium term such as hire purchase and leasing; working capital stock control; cash management; debtor factoring

Implications of choices: legal, financial and dilution of control implications; bankruptcy.

Choosing a source: advantages and disadvantages of different sources; suitability for purpose e.g. matching of term of finance to term of project

  1. Understand the implications of finance as a resource within a business

Finance costs: tangible costs e.g. interest, dividends; opportunity costs e.g. loss of alternative projects when using retained earnings; tax effects

Financial planning: the need to identify shortages and surpluses e.g. cash budgeting; implications of failure to finance adequately; overtrading

Decision making: information needs of different decision makers

Accounting for finance: how different types of finance and their costs appear in the financial statements of a business; the interaction of assets and liabilities on the balance sheet and on international equivalents under the International Accounting Standards (IAS).

  1. Be able to make financial decisions based on financial information

Budgeting decisions: analysis and monitoring of cash and other budgets;

Costing and pricing decisions: calculation of unit costs, use within pricing decisions; sensitivity analysis;

Investment appraisal: payback period; accounting rate of return; discounted cash flow techniques i.e. net present value; internal rate of return;

Nature of long-term decisions: nature of investment importance of true value of money; cash flow; assumptions in capital investment decisions; advantages and disadvantages of each method.

  1. Be able to evaluate the financial performance of a business

Terminology: introduction to debit, credit, books of prime entry, accounts and ledgers, trial balance, final accounts and international equivalents under the International Accounting Standards (IAS);

Financial statements: basic form, structure and purpose of main financial statements i.e. balance sheet, profit and loss account, cash flow statement, notes, preparation not required; changes to reporting requirements under the International Accounting Standards (IAS) e.g. statement of comprehensive income, statement of financial position; distinctions between different types of business i.e. limited company, partnership, sole trader;

Interpretation: use of key accounting ratios for profitability, liquidity, efficiency and investment; comparison both external i.e. other companies, industry standards and internal i.e. previous periods, budget

Programme Specification

Accrediting Body:  EDEXCEL

Course: BTEC HND IN BUSINESS                               

Unit: 2 MANAGING FINANCIAL RESOURCES & DECISIONS

WkLecture ScheduleOutcome of sessionActivity/seminar and formative assessmentResources
Introduction to Managing Financial Resources & Decisions: identifying the sources of finance available to a business and assessing the implications of the different sources of finance. Introduction to the module, mode of assessment, awareness of the awarding body,  assessment criteria and the mode of assessmentShort-answer questions to assess learner’s knowledge, role play and individual induction, helping to know each other.Module handbook
2Case studyAssessing the implications of the various sources of financeIdentify sources of finance available to an existing businessBe able to assess the implications of the different sources of finance.Power point slides and lecture notes.
 3 Evaluating appropriate sources of finance for a business project.By the end of the session, the learner will be able to evaluate appropriate sources of finance for a business project.Moderated group discussions and short-answer questions.Power point slides and lecture notes.
Case study: analysing the costs of different sources of finance.Working with the assignmentCase study and addressing the learning outcome 1.1, 1.2 and 1.3Module hand book and assignment for the purpose
The importance of financial planning.Planning is a managerial function and this lecture aims at enabling the learner to grasp the importance of financial planning within an organisation.Reflective questions at the end of the class and a case study for discussionPower point slides, video-based sessions on the importance of financial planning.
Assessing the information needs of different decision makers.Identify the types of decisions made by various decision makers at all levels in an organisation.Assess the information needed to support decision making at all levels of the organisation.Practical discussion and feedbackComputer Lab
The impact of finance on financial statements.Having understood the importance of financial planning to an organization, explain the impact of finance on financial statements. Working with the Assignment meeting the LO2.1,2.2,2.3,2.4Case study and address the LOPowerPoint slides and lecture notes
Analysing budgets and making appropriate decisions.Explain and illustrate two components of the budget that could help you make appropriate financial decisions.Case study and address the LOPowerPoint slides and lecture notes.
Calculation of unit costs and making pricing decisions, using relevant information.DoCase study and role play.PowerPoint slides and lecture notes.
10 Assessing the viability of a project, using investment appraisal techniques.DoGroup discussionPower point slides and lecture notes.
11 Case study and class discussion of the main financial statements.Explain the key components of financial statements.Case study and LOPower point slides and lecture notes.
12Appropriate formats of financial statements for different types of business.Identify the different formats of financial statements for different types of business and explain their relevance.Case study and LOPower point slides and lecture notes.
13Interpreting financial statements, using appropriate ratios and comparisons (internal & external).Demonstrate an understanding of the various ratios used to interpret financial statements.Discussion and reflective feedbackPower point slides
14Case studyInterpret financial ratios using a real business
15Revision. Summarising all the tasksAddressing the LOFeedback addressing the learning outcome
16Assignment Support and guidanceAddressing the LO
17Assignment Support and guidanceAddressing the LO
18Assignment Support and guidanceAddressing the LO
19Assessment and feedbackFeedback given to learners
20Assessment and feedbackFeedback given to learners
21Assessment and feedbackFeedback given to learners

Recommended text and links:

Core text

  • Dyson J R, (2007),Accounting for Non-Accounting Students. Financial Times/Prentice Hall. ISBN: 9780273709220

Other text

Atrill P. (2012), Financial Management for Decision Makers.  6th Edition, Harlow: Pearson Financial Times/Prentice Hall. ISBN: 9780273756934

Atrill, P. and McLaney, E. (2013), Accounting and finance for non-specialists.8th ed. Harlow: Financial Times/Prentice Hall. ISBN:9780273778035

Watson,D. and Head, A. (2012), Corporate Finance Principles and Practice. 6th edition, Harlow: Pearson ISBN: 9780273762874

Journals and newspapers

The financial and mainstream press can provide useful background reading, and can also be a useful source of case studies and financial information. Copies of published financial reports are available from companies themselves, or via The Financial Times (a free online ordering service is available).

Videos

A number of videos are available, covering the financial aspects of business.

Assessment:

The module will be assessed meeting all the LO as specified by the awarding body, Ed Excel.

Please read the instructions carefully while addressing the tasks specified. 

Contribution: 100% of the module

Outline Details: Individual report approx 4000 words.   Details enclosed in the assignment brief.

Teaching and Learning Activities

The module tutor(s) will aim to combine lectures with tutorial activities. This environment will provide opportunities for the student to understand the course material through case study and text and to apply it in a practical way. The intent is to facilitate interactive class activities, and discussion about the significant role of research in a global and local business environment.

2.3 Teaching Ethos

The college’s approach towards teaching and learning is simple and effective. The main aim of UKCBC is to assist learners in maximising their potential by ensuring that they are taught clearly and effectively. This will enable students to engage in the learning environment and promote success in both their academic studies and subsequent career.

2.3.1 Methods of Delivery:

LECTURES:

These will be developed around the key concepts as mentioned in the indicative course content and will use a range of live examples and cases from business practice to demonstrate the application of theoretical concepts. This method is primarily used to identify and explain key aspects of the subject so that learners can utilise their private study time more effectively.

SEMINARS:

These are in addition to the lectures. The seminars are designed to give learners the opportunity to test their understanding of the material covered in the lectures and private study with the help of reference books. This methodology usually carries a set of questions identified in advance. Seminars are interactive sessions led by the learners. This method of study gives the learner an excellent opportunity to clarify any points of difficulty with the tutor and simultaneously develop their oral communication skills.

CASE STUDIES: An important learning methodology is the extensive use of case studies. They enable learners to apply the concepts that they learn in their subjects. The learners have to study the case, analyse the facts presented and arrive at conclusions and recommendations. This assists in the assessment of the learner’s ability to apply to the real world the tools and techniques of analysis which they have learnt. The case study serves as a supplement to the theoretical knowledge imparted through the course work.

Plagiarism:

Any act of plagiarism will be seriously dealt with according to the colleges and awarding bodies’ regulations. In this context the definition and scope of plagiarism are presented below:

Plagiarism is presenting someone’s work as your won. It includes copying information directly from the web or books without referencing the material; submitting joint coursework as an individual effort; copying another student’s coursework; stealing coursework form another student and submitting it as your own work. Suspected plagiarism will be investigated and if found to have occurred will be dealt with according to the college procedure. (For further details please refer to the plagiarism policy and the student code of conduct.)

Assignment Front Sheet

Unit: 9 – MANAGING FINANCIAL RESOURCES AND DECISION
Learning Hours:  60 Hours.                                              Self-learning hours:  90 hours.Course: HND Business – Level 4CREDIT VALUE: 15 CREDITSTerm:
Module Leader: Mr Daniel OluwatayoLecturer: Mr George MuwongeInternal Verifier: Mr Dalton Vincent
ASSIGNMENT TITLE:
Learners NameTerm:Batch:Intake:
Registration NumberCampus:
Hand out Date:                                                  Submission Date:
LearningOutcomeAssessment CriteriaIn this assessment you will have the opportunity to present evidence that shows you are able to: Task NumberEvidence Page number
LO1. Understand the sources of finance available to a Business.1.1Identify the sources of finance available to a business1
1.2Assess the implications of the different sources for your chosen business1
1.3Evaluate appropriate sources of finance for your chosen  business project1
LO2. Understand the implications of finance as a resource within a business.2.1Analyse the costs of different sources of finance with reference to your chosen business2
2.2Explain the importance of financial planning with reference to your chosen business2
2.3Assess the information needs of different decision makers for your chosen business2
2.4Explain the impact of finance on the financial statements for your chosen business2
LO3. Be able to make financialdecisions based on financialinformation3.1Analyse budgets and make appropriate decisions3
3.2Explain the calculation of unit costs and make pricing decisions using relevant information.3
3.3Assess the viability of a project using investment appraisal techniques.3
LO4. Be able to evaluate theFinancial performance of aBusiness.4.1Discuss the main financial statements4
4.2Compare appropriate formats of financial statements for different types of business4
4.3Interpret financial statements using appropriate ratios and comparisons, both internal and external4
Please see that you include the Turnitin report. This work will not be accepted without theTurn it in report.Report attached: Yes                                NoIf no Reason:% of the turn it in report.
Learners Declaration: I certify that the work submitted for this unit is my own and the research sources are fully acknowledged.Learners Signature:                                                                                                                Date:Plagiarism:Any act of plagiarism will be seriously dealt with according to the colleges and awarding bodies’ regulations. In this context the definition and scope of plagiarism are presented below:Plagiarism is presenting someone’s work as your won. It includes copying information directly from the web or books without referencing the material; submitting joint coursework as an individual effort; copying another student’s coursework; stealing coursework form another student and submitting it as your own work. Suspected plagiarism will be investigated and if found to have occurred will be dealt with according to the college procedure. (For further details please refer to the plagiarism policy and the student code of conduct.)
Due Dates
Issue DateFinal Due Date18th  week
Due Task- 1End of NovFinal due date where e-learning will be blocked for FEBRUAY 2016 intake19th week
Due Task- 2End of Nov
Due Task- 32nd week of Dec
Due Task – 42nd week of Jan

Guidance in addition to the Pass criteria’s, this assignment gives you the opportunity to submit evidence in order to achieve the following Merit and Distinction grades.  Assessment Grid indicating their pass, merit and distinction:

Unit: Managing Financial Resources and Decision 

Outcomes/criteria:Indicative characteristicsPossible evidence ContextualisationIn this assessment you will have the opportunity to present evidence that shows you are able to :Feedback
LO1. Understand the sources of finance available to a business.LO2. Understand the implications of finance as a resource within a businessLO3. Be able to make financial decisions based on financial informationLO4. Be able to evaluate the financial performance of a business.As per the assessment criteria specified for passDoDoDoTask 1Addressing 1.1, 1.2 and 1.3 as instructed and exhibit an understanding to different the sources of finance available to Sweet Menu RestaurantTask 2Addressing 2.1, 2.2, 2.3 and 2.4 as instructed with evidence towardsthe implications of finance as a resource regarding Sweet Menu Restaurant.Task 3  Addressing 3.1, 3.2 and 3.3 as instructed with evidence towards being able to make financial decisions based on financial information given in the assignment for Sweet Menu Restaurant.Task 4 Addressing 4.1, 4.2, and 4.3 as instructed with evidence towards being able to evaluate the financial performance of a business with specific reference to your chosen organisations.
Merit Description:
M. Identify and apply strategies to find appropriate solutions.
Effective judgments have been made.To achieve M1, you will need to make effective judgements in analysing budgets and making appropriate decisions (3.1, and 3.3) and an effective approach of study with good research skills being used across the assignment to address the criteria’s with reference to a business chosen by the learner and information given in the assignment.
An effective approach to study and research has been used.
M2. Select/ design and apply appropriate methods/ techniques.A range of methods/techniques has been applied.To achieve M2, you will have used suitable methods/techniques to assess the viability of a project and interpret financial performance (3.3 and 4.3), the selection of methods and techniques justified (3.3 and 4.3), and a range of sources of information used across the assignment.
A range of sources of information used.
The selection of methods and techniques justified.
 M3. Present and communicate appropriate findings.Appropriate structure and approach has been used.To achieve M3 the work you present should be appropriate and the presentation and communication across the tasks 1 to 4 should be appropriately structured, logical and coherent arguments made, and a range of methods of presentation used addressing the learning outcomes as specified with appropriate findings with special reference to Sweet Menu Restaurant and your chosen organisation where requested.
Logical and coherent arguments have been presented
A range of methods of presentation has been used.
Distinction Description:
D1. Use critical reflection to evaluate own work and justify valid conclusion.Synthesis has been used to generate and justify valid conclusionsTo achieve D1 you will have addressed the criteria’s and justifying valid conclusions, evaluated the financial performance of Sweet Menu Restaurant and your chosen organisation where requested using defined criteria and propose realistic improvements against defined characteristics for success.
Evaluation has taken place using defined criteria
Realistic improvements have been proposed against defined characteristics for success.
D2. Take responsibility for managing and organizing activities.Autonomy/independence demonstratedTo achieve D2 you will have demonstrated autonomy across your assignment, with effective independent research and met the deadlines to submit all the tasks and achieve the unit merit criteria and interdependence with each learning outcome has been demonstrated.
The importance of interdependence has been recognized.
D3. Demonstrate convergent, lateral and creative thinkingIdeas generate and decisions takenYour work demonstrates new ideas or suggestions relevant to Sweet Menu Restaurant and your chosen organisation where requested, evidence of creative thinking and receptiveness to new ideas across the assignment making it look different and creative. 
Capacity for innovation and creative thought has been used.
Receptiveness to new ideas has been demonstrated.

Assignment Brief

Unit Number and titleManaging Financial Resources and Decisions
QualificationBTEC HND Business (Level 4)
Start Date
Deadline/ Hand-in

TASK 1 to TASK 4: You are required to follow the instructions as specified towards each task and support with a research by using supportive materials like books, websites, etc. Relate your answers to relevant scenarios and case studies as specified and comment on answers where relevant.

Scenario for task 1 and task 2.

Sweet Menu Restaurant Ltd is a reputable restaurant that is based in Gants Hill in East London. The restaurant was founded 10 years ago by three students who met at the college when studying for their Edexcel HND business course. The restaurant is well known for providing various inter-continental menus at affordable prices. The restaurant is well known for providing various inter-continental menus at affordable prices. At the last shareholders meeting, all the three owners agreed to take advantage of the business prospect and open two new branches in Central London and Croydon. A business plan has been presented by the Finance Manager, and it was estimated that Sweet Menu Restaurant will need between £300,000 and £500,000 to open the proposed new branches.

LO1 Understand the sources of finance available to a business

Task 1: Using the scenario above

Required:

1.1 Identify the sources of finance available to a business.

** Consider various sources of finance from internal and external sources.

1.2 Assess the implications of the sources of finance identified in task 1.1

1.3 Evaluate the most appropriate sources of finance for Sweet Menu Restaurant expansion plans.

**You must give attention to the most appropriate sources, answers without application to scenario will be referred.

LO2 Understand the implications of finance as a resource within a business

Task 2: Using the scenario above

Required:

2.1 Analyse the costs of the different sources of finance that you have identified for Sweet Menu Restaurant in task 1.3 above.

2.2 Explain the importance of financial planning for Sweet Menu Restaurant with reference to the new business project.

2.3 Assess the information needs of different decision makers in Sweet Menu Restaurant.

2.4 Using the most recent financial statement of Sweet Menu Restaurant given below, explain the impact of the sources of finance identified in task 1.3 on the financial statements of Sweet Menu Restaurant.

Profit and loss account for the year ended 31st December, 2014

££
Revenue350,000
Less: Cost of Sales-127,500
Gross profit222,500
Less:
Administration expenses-92,000
Selling and distribution expenses-14,500
-106,500
Operating profit116,000
Interest-10,000
Profit before tax106,000
Tax-21,000
Profit after tax85,000
Proposed dividend-80,000
Retained profit for the year5,000

Balance sheet as at 31st December, 2014

££
NON-CURRENT ASSETS
Equipment75,000
Delivery vans52,000
Furniture and fittings38,000
165,000
CURRENT ASSETS
Inventories44,000
Receivables13,000
Cash and banks11,000
68,000
CURRENT LIABILITIES
Payables38,000
Net Current Assets30,000
Net Assets195,000
EQUITIES
60,000 ordinary share capital @ £1 per share60,000
Revenue reserves104,000
NON-CURRENT LIABILITY
Long -term loan31,000
Net Assets195,000
       

LO3 Be able to make financial decisions based on financial information

Case study – Blue Island Restaurant

The directors of Blue Island Restaurant are planning towards the busy end of the year and as the Cost Accountant you have prepared the following budgets for the 4 months to 31st December 2015 together with a meal cost data.

Cash Budget
ReceiptsSeptember£October £November£December£Total£
Cash sales1500013000150001800058000
Total1500015500180002000058000
Payments
Van1200012000
Furniture & Fittings180001000028000
Salaries & wages750075008500900032500
Petrol280280280840
Lighting & Energy5006006501750
Insurance3503503503501400
Purchases – inventory300030003500400013500
Total4085011630132302428089990
Net balance(25850)38704770(4280)(21490)
Balance b/fwd18500(7350)(3480)12908690
Balance c/fwd(7350)(3480)1290(2990)(12530)
Trade payables budget (Inventory)
September£October £November£December£
August purchases 40%1200
September purchases 60%1800
September purchases 40%1200
October purchases 60%1800
October purchases 40%1200
November purchases 60%2300
November purchases 40%1380
December purchases 40%2620
Total payments3000300035004000
Additional Information:
The recipe cost sheet for a popular meal at Blue Island Restaurant is shown below;
ItemCost        £
Steak3.00
Vegetables and other ingredients1.50
Labour3.50
Overheads (using full absorption costing technique)2.00
Meal cost10.00
The restaurant add 40% mark up on all menu cost exclusive of VAT which is at 20% and charges £16 per meal. An alternative to working out the cost of menu has been suggested below;

Food cost percentage = Total costs of ingredients / Sale price

Task 3:

The directors have little financial knowledge and have requested further explanation of the figures and advice.

Required:

3.1 Analyse the budgets and make appropriate decisions

3.2 Explain the calculation of the unit costs (meal cost) and make pricing decisions using relevant information given above.

3.3 Blue Island restaurant has an empty space in one of its branches that could be used to expand the production of ready meals supplied to a local supermarket.Two proposals relating to the use of this space have been submitted. Only one of them can be accepted, since each project would fully utilise the empty space.The following information was obtained for the proposals:

Year                                        Proposal 1     Proposal 2

                                                Cash flows    Cash flows

0                                              -£1200                       -£1200

1                                                 £800                         £300

2                                                 £600                         £400

3                                                 £400                         £500

4                                                 £200                         £600

5                                                  £50                          £500

Residual value                          £0                           £50

The cash flows for year five include, where applicable, the sale of the fixed assets purchased (in year zero) at residual value. The company’s cost of capital is 10 per cent.

Required

3.3 Assess the viability of the two projects using investment appraisal techniques as follows;

  1. Payback method and net present value (NPV) method for the two projects and identify which project should be approved by Blue Island Restaurant and explain why.

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LO4. Be able to evaluate the financial performance of a business

Task 4:

A company’s financial statements provide various financial information that investors and creditors use to evaluate a company’s financial performance.

Required:

4.1 Discuss the main financial statements

**Focus discussion on the main elements of financial statements.

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

**Please discuss formats prescribed by Generally Acceptable Accounting Practice (GAAP) and International Financial Reporting Standards (IFRS).

Task 4.3

Sweet Menu Restaurant and Blue Island Restaurant are two close competitors

Profit and loss accounts for the year ended 31st December, 2014.

Sweet Menu RestaurantBlue Island Restaurant
££££
Revenue350,000299,000
Less: Cost of Sales-127,500-101,000
Gross profit222,500198,000
Less:
Administration expenses-92,000-41,000
Selling and distribution expenses-14,500-30,200
-106,500-71,200
Operating profit116,000126,800
Interest-10,000-3,000
Profit before tax106,000123,800
Tax-21,000-29,000
Profit after tax85,00094,800
Proposed dividend-80,000-55,000
Retained profit for the year5,00039,800

Balance Sheet as at 31st December, 2014

Sweet Menu RestaurantBlue Island Restaurant
££
NON-CURRENT ASSETS
Equipments75,00048,500
Delivery vans52,00088,500
Furniture and fittings38,00010,000
165,000147,000
CURRENT ASSETS
Inventories44,00031,000
Receivables13,0005,000
Cash and banks11,0005,000
68,00041,000
CURRENT LIABILITIES
Payables38,00065,000
Net Current Assets30,000-24,000
Net Assets195,000123,000
EQUITIES
Ordinary share capital  @ £1 per share60,00035,000
Revenue reserves104,00083,000
Shareholders’ funds164,000118,000
NON-CURRENT LIABILITY
Long -term loan31,0005,000
Net Assets195,000123,000

Required

4.3 Interpret the financial statements of the two restaurants using ratios and comparisons, both internal and external.

**Please ensure you use at least two ratios each across profitability, liquidity, solvency and any other category of ratios

**Take notice

Assignment Guidelines:

  • Use a standard report structure, Word-process the report and use Normal script of a proper font size 12.
  • Produce an academic report, detailing the above issues with an approx. word limit of 4000 to 4500 words.
  • Complete the title page and sign the statement of authenticity.
  • The Assignment sheet should be attached in the front.
  • Submit the document in a folder in the form of a file as well as a soft copy on the submission date.
  • It should be uploaded on E-Learning platform before the deadline and dropped into the drop box at your relevant campuses and get the ——– and collect the receipt of the submission form at the college.
  • Assignments submitted after the deadline will not be accepted unless mitigating and may be entitled for a late fee.
  • Collusion and Plagiarism must be avoided.
  • Start each answer on a new page and pages should be numbered. Highlight each question clearly.
  • Include a Bibliography at the end of the assignment and use the Harvard referencing system.
  • All work should be comprehensively referenced and all sources must be fully acknowledged, such as books and journals, websites (include the date of visit), etc.
  • Try to give the page numbers, publishers’ details and the year of publication
  • In order to pass you need to address all the LO
  • In order to get a merit you need to address the characteristics of pass and address M1, M2,M3
  • In order to get a Distinction you need to address the characteristics of pass, merit and address D1, D2 and D3.

Use a common format for the questions, for example:

  • Introduction (analyse the question.)
  • Underpinning Knowledge (write about the relevant theory/points)
  • Applied knowledge(Data Analysis)
  • Conclusions and Recommendations (summarizing the whole scenario keeping in view pass, merit, distinction criteria.)
  • pinning Knowledge (write about the relevant theory/points)
  • Applied knowledge(Data Analysis)
  • Conclusions and Recommendations (summarizing the whole scenario keeping in view pass, merit, distinction criteria.)
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