khin phyu thant_13 ub 000204_ub 04 2013(managing financial report and decision)

8/19/2019 Khin Phyu Thant_13 UB 000204_UB 04 2013(Managing Financial Report and Decision)

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Managing Financial Resources and Decisions 1

1 ByKhin Phyu Thant

Assignment Title : Managing Financial Resources and Decisions

Qualification : Edexcel BTECH Level4/5 HND Diploma in Business

Unit number and title : Unit5 (Edexcel Unit 2) Managing Financial Resources and

Decisions

Start Date : 06.03.2014

Dead line : 09.04.2014

Assessor Name : Daw Aye Su Mon

Student Name : Khin Phyu Thant (UB-04-2013)

Student ID : 13/UB-000204


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Assignment front sheet

Learner name Assessor name

Khin Phyu Thant Daw Aye Su Mon

Date issued Completion date Submitted on

06.03.2014 09.04.2014 09.04.2014

Qualification Unit number and title

Edexcel BTEC Level 4 HNC Diploma in BusinessUnit 5- (Edexcel Unit 2) Managing Financial Resource and

Decisions H/601/0548

Assignmenttitle Managing Financial Resource and Decisions

In this assessment you will have opportunities to provide evidence against the following criteria.

Indicate the page numbers where the evidence can be found.

Criteria

reference

To achieve the criteria the evidence must show that

the student is able to:

Task

no.Evidence

1.1 Identify the various sources of finance available to a business 1

1.2 Assess the implication of the different sources 1

1.3

Evaluate the appropriate sources of finance for a business

project 1

2.1Analyze the costs of different sources of finance

1

2.2Explain the important of financial planning

1

2.3 Assess the information needs of different decisions makers 2


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2.4 Explain the impact of finance on the financial statements 2

3.1 Analyze budgets and make appropriate decisions 3

3.2Explain the calculation of unit costs and make pricing decision

using relevant information4

3.3Assess the variability of a projects using investment appraisal

techniques5

4.1

Discuss the main financial statement

6

4.2

Compare appropriate formats of financial statements for

different types of business 6

4.3Interpret financial statements using appropriate ratios and

comparisons, both internal and external6

Learner declaration

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

acknowledged.

Learner signature: Date: 09.04.2014


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Unit Contents

Task 1

Financial planning is critically important in setting up a company or expanding the company.

Without financial planning, the business cannot see in how cash flows in and out, debts and

rising cost, spent and remaining assets, various liabilities and owner’s equity, sales or

revenue and operational expenses, income and profit loss. By doing financial planning, the

business can be known improvements in productivity, efficiency, or market penetration and

clarify the hard data. Therefore financial planning is the backbone for a successful business.

And it also can realize the current financial situation. Working capital management is the

main important in financial planning. By managing working capital management sufficiently,

the business can manage the current assets, current liabilities, short term debt and

upcoming operational expenses. If the working capital is more than the needs, the business

can purchase the needed things in the business, invest pyan loat, can pay the credit faster.

If the working capital is less than the needs, the stocks should be sold as fast as they can.

The business has to get the debts faster. If the business is not working well in less workingcapital, they must find the finance in many ways such as overdrafts, loans and so on.

(Agualti Plan "O" business palnning, 2009-2014) (Garriso, 1999-2014)

In planning finance, there are two types of loans depending on their maturity which are

short term loan and long term loan. Short term loan can be obtained for the period of up to

one year and long term loan last more than one year.

To get the healthy business and positive cash flow, development and expansion of business

and ultimately a profitable enterprise, getting the right finance is the main point. To expend

our business, there are many sources of finances. The two major sources are

internal sources and external sources. The sources of finance can be obtained from inside of

the business by holding the profits instead of dividing to the shareholders, delaying

payments to creditors and reducing inventory level.

Three types of external sources are short term financing last up to one year to repay.

Medium term and long term’s financing maturities are more than one year. There are many

different sources finance can be obtained. Some of them are borrowing from the banks,


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savings and friends, government aid, venture capital and other finances: factoring, hire

purchase, leasing and franchising.

Borrowing from the banks

There are different types of banks and operating different banking systems. Some of banks

are

1. Clearing banks which work ))))))))))))

2. Retail banks are specializing in lending in large quantities to major customers.

3. Merchant banks offer services, often of a specialized nature to corporate customers.

In bank there are two types of lending in the form of loans or overdrafts. Loans can be obtained for

short term and long term. Rather than a formal loan, overdrafts are a very flexible to get a healthy

income, arise opportunities in set up situation.

Savings and friends

Most of business set up their business with individuals’ personal savings. An investment of friend

and relatives is also a common particle.

Government aid

Venture capital

Venture capital invests to expend the business for small and medium-sized business.

Factoring

Invoice discounting1b


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Leasing

Leasing is an agreement between two parties the lessor and lessee and it is a form of rental. A lessor

owns an asset but not use and lessee doesn’t not own and use asset by returning payment. Most

assets are things such as plant and machinery, and cars and other equipment. At the end of the

agreement, lessor can lease that assets to someone or sell these things as a second-hand.

Hire purchase (HP)

Hire purchase is a form of purchasing goods on credit and pay by instalment. The hire

purchase arrangement exists between the finance company and the customer. The business

can get goods from now and need to pay in a period of time.

Franchising

Franchising has proved attractive to many people and is the means by which a large number

of chains have grown very rapidly in the last decade. The franchisor has a successful

business and instead of establishing branches under its own names it license franchisees to

use its name, corporate identity and so on. The franchisees actually run the business,

employing staffs as necessary. Franchisees do not making pricing, marketing and

advertising.

Cost of borrowing from the bank

Bank is secured than other loans. Interest rate is also stable than others. When the business have

financial problem, overdraft from the bank can be gotten easily.

Costs of saving

The quality of business depends on the saving amount of owners. If there is no loans and

overdrafts from others, the business has a full control in profits and not to share and pay the

others.

Cost of borrowing from friends

Interest rate can be flexible but it is not secured than bank’s interest. The duration time of the

payback period can be adjusted because of personal communication.


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Cost of franchising

In franchising, costs can be seen in two sides for franchisees and franchisers. For franchisees, he or

she doesn’t need to pay the time to set up the business. The franchisees don’t need to worry about

the costs of operating, distribution and advertising. He or she has to pay the franchise fees and

royalty to the franchisor.

For franchisor, in his or her business, the procedures are uniformed and it reflects productivity levels

and better quality. Franchisor can also get the finance from franchisees through payment of

franchise fees, loyalty and Levis in addition to the possibility of sourcing private label products to

franchisees. To build the franchising, the requirements from franchisors to franchises are recruit,

train and supports. (Advantages and disadvantages of franchising, 2014)

Cost of leasing

The huge benefit of leasing is no need to pay entire price at once. This can help to maintain cash

flow of the business. When the business is in failures situation, leasing can help to keep up the

business for better situation. In leasing, though equipment are not own, maintenance and repair

cost are responsible.

Cost of hire purchase

Different decision makers

One of the most important expectations in decision making process and improvement economy is

presence of quality information. Financial information is the most significant opinions of the quality

business. Financial information such as sales and purchases, purchases of assets and liabilities,

wages and salaries, costs and profit are the incredibility important facts to make decisions. Financial

statements are also essential in decision making. Financial statements such as the profit and loss

account, the balance sheet and cash flow statement are the backbone in making decision. The

business has to decide according to these financial statements because the financial positions of the

business can be realized easily through these statements. In the business, there are many

participates who can make decisions for the business. Some of them are managers, investors,

bankers, and employees, public and so on. Profit and loss account, balance sheet and cash flow

statements are the most important information for managers. Without this information, mangers

cannot make the right decision for any situations. Managers can face many problems such as frailer


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the business because manger has no information of working capital, profit and loss situation of the

business. Most of financial statements are important for investors who want to invest the business.

The right information of financial statements is important to make the investment decisions for the

business and to understand the company ability to repay debt and business ability to grow.

Moreover they interest the business’s historical and projected financial performance to make the

suitable decisions. Bankers include the important parts to get the supports for the business. They

can make important decision according to the financial information. Fr bankers,

Task 3

Direct material cost 11p

Direct labor cost 1p

Prime cost 12p

Variable production O/H 3p

Total variable cost 15p

Distribution cost 9p

Total cost 24p

Profit 1p

Selling price 25p


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Task 6

Financial Statements characterise a formal record of the financial activities of an entity.

Financial strength, performance and liquidity of a company can be quantified by financial

statement and it also reflects the financial effects of business transactions and events on the

entity. There are three main types’ financial statements. They are balance sheet, statement

of cash flow and income statement.


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Balance sheet presents the financial position of an entity and comprised assets, liabilities

and equity.

Statement of cash flow presents the movement in cash and bank balance over a period.

This statement provides the information of sources such as sources of cash, uses of cash and

change in cash balance. Operating activities, investing activities and financing activities are

the movement of cash flow statement.

Income statement is also known as Profit and Loss Statement. Company’s financial

performance can be known in terms of net profit of loss over a definite period through this

statement.

Impact of finance on financial statement

Large impacts can be had on the business by increasing and decreasing financial statements.

For the business, the correction of the financial statement is critically important. Financial

statements can have a drastic effect on the investors on the business. Many investors look

at the financial statements and financial when making investment decisions.

http://www.business.hsbc.co.uk/1/2/borrowing-guide/cost-borrowing

http://www.fla.org.uk/business/benefits-of-leasing

http://www.bizhelp24.com/money/business-finance/leasing-in-business-advantages-

disadvantages.html

http://franexcel.com/resources.php?id=24 franchise

http://www.commercial.hsbc.com.hk/1/2/commercial/advice-centre/raising-finance/types-

finance

http://www.business.hsbc.co.uk/1/2/borrowing-guide/cost-borrowinghttp://www.business.hsbc.co.uk/1/2/borrowing-guide/cost-borrowinghttp://www.fla.org.uk/business/benefits-of-leasinghttp://www.fla.org.uk/business/benefits-of-leasinghttp://www.bizhelp24.com/money/business-finance/leasing-in-business-advantages-disadvantages.htmlhttp://www.bizhelp24.com/money/business-finance/leasing-in-business-advantages-disadvantages.htmlhttp://www.bizhelp24.com/money/business-finance/leasing-in-business-advantages-disadvantages.htmlhttp://franexcel.com/resources.php?id=24http://franexcel.com/resources.php?id=24http://www.commercial.hsbc.com.hk/1/2/commercial/advice-centre/raising-finance/types-financehttp://www.commercial.hsbc.com.hk/1/2/commercial/advice-centre/raising-finance/types-financehttp://www.commercial.hsbc.com.hk/1/2/commercial/advice-centre/raising-finance/types-financehttp://www.commercial.hsbc.com.hk/1/2/commercial/advice-centre/raising-finance/types-financehttp://www.commercial.hsbc.com.hk/1/2/commercial/advice-centre/raising-finance/types-financehttp://franexcel.com/resources.php?id=24http://www.bizhelp24.com/money/business-finance/leasing-in-business-advantages-disadvantages.htmlhttp://www.bizhelp24.com/money/business-finance/leasing-in-business-advantages-disadvantages.htmlhttp://www.fla.org.uk/business/benefits-of-leasinghttp://www.business.hsbc.co.uk/1/2/borrowing-guide/cost-borrowing


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LEARNER FEEDBACK FORM

QUALIFICATION Edexcel BTEC Level5 HND Diploma in Business


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UNIT Unit5 (Edexcel Unit 2) Managing Financial Resources and

Decisions

BATCH CODE UB-O4-2013

ASSESSOR NAME Daw Aye Su Mon

LEARNER NAME Khin Phyu Thant

Signature :

Date : 09 /04 /2014


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khin phyu thant_13 ub 000204_ub 04 2013(managing financial report and decision)

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