Unit 2

Topics: Financial ratio, Balance sheet, Dog Pages: 6 (1441 words) Published: February 8, 2012
Assignment brief|
Unit number and title| Unit 2 – Business Resources|
Qualification| BTEC Level 3 Certificate, Subsidiary Diploma & Diploma in Business| Start date| September 2010|
Deadline | December 2010|
Assessor| L.McNeill|
P4, P5, P6, P7, M3, M4, D2 D3.| | |
Assignment title| The Role of Financial Resources|
Purpose: The aim of this unit is to develop learner knowledge of the range of human, physical, technological andfinancial resources required in an organisation, and how the management of these resources can impacton business performance.| Scenario:You are going to interpret a given setof financial information on aselected organisation. Domestic Dog Homes specialises in supplying pet bedding for dogs in a range of sizes from miniature to giant dog size. They also cater for all ages, ie puppies to mature dogs. They stock innovative items such as dog tents for owners who like camping, and incontinence beds for mature dogs which do not leak and can be washed every day for a year.The company has a lot of competition, in particular from large companies like Wilsons and Pets at Home. However, due to the specialist nature of their products, they are continuing to survive. They are now interested in expanding their range to include brand new products from a leading designer which they feel will complement their current range. Before they take the plunge, they would like details of the state of their finances.| Evidence you must produce:Report back to stakeholders onhow financial resources impacton the performance of thebusiness.| Task 1For P4 you need to describe the sources of internal and external finance relevant to the selected business (Domestic Dog Homes). These should include areas from below: Internal sources: owner’s savings; capital from profitsExternal sources: banks e.g. overdraft, business loan, commercial mortgage, venture capital, hire purchase,leasing, factoring, share issuesThis provides evidence for P4| Task 2For P5 you will be given financial statements for a company andyou will have to provide a brief written interpretation including annotation of the keyelements of the trading and profit and loss account and the balance sheet, explaining the purpose of each element.These purposes are highlighted below:Financial statements: profit and loss (purpose and use, measure of trading performance, establishing profit figures) and balance sheet (purpose and use, establishing net worth, business valuation)This provides evidence for P5| Task 3For P7 you should be able to use accounting ratios to show the financial state of a given business. The 8 ratios you need to include are listed below:Basic ratios: to determine solvency e.g. current ratio, acid test ratio; to determine profitability e.g. grossprofit percentage; net profit percentage; return of capital employed; to determine performance e.g. stockturnover, debtors’ collection period, asset turnoverThis provides evidence for P7| Task 4For M3 you will extend your answer to P7, demonstrating that you can apply the use of various financial ratios. You should show the formulae of the ratios and their workings to demonstrate how you have arrived at your given answers. (E.g. where you got the information from e.g. Sales figure as illustrated in the Profit and loss account)This provides evidence for M3| Task 5For D2 you will be expected to provide additional knowledge and understanding about accounting ratios. You will be expected to provide judgements about the sufficiency of ratios as a measure of how well a company is performing.This provides evidence for D2| Task 6For P6 you should be able to use break-even charts. You will be presented with a budget that has not been managed properly and identify the problems and suggest remedies.Costs and budgets: costs managed to budget (fixed costs/variable costs, monitoring budgets and variances);breakeven; bidding to increase future...
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