Managing Financial Resources and Decisions

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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Khin Phyu Thant

Managing Financial Resources and Decisions

Assignment front sheet

Assessor name

Learner 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 Business

Unit 5- (Edexcel Unit 2) Managing Financial Resource and

Decisions H/601/0548

A
Assignment
Managing Financial Resource and Decisions
title
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.

1.1

Identify the various sources of finance available to a business

1.2

Assess the implication of the different sources

1.3

2.1

2.2

2.3

Evaluate the appropriate sources of finance for a business

project
1
Analyze the costs of different sources of finance

Explain the important of financial planning

Assess the information needs of different decisions makers

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Evidence

Managing Financial Resources and Decisions

2.4

Explain the impact of finance on the financial statements

3.1

Analyze budgets and make appropriate decisions

3.2

Explain the calculation of unit costs and make pricing decision

using relevant information

3.3

Assess the variability of a projects using investment appraisal

techniques

4.1

4.2

4.3

Discuss the main financial statement

Compare appropriate formats of financial statements for

different types of business
6
Interpret financial statements using appropriate ratios and
comparisons, both internal and external

Learner declaration
I certify that the work submitted for this assignment is my own and research sources are fully
acknowledged.
Learner signature:

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Date: 09.04.2014

Managing Financial Resources and Decisions

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 owners 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 working
capital, 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 terms 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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Managing Financial Resources and Decisions

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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Managing Financial Resources and Decisions

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 doesnt 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 banks interest. The duration time of the
payback period can be adjusted because of personal communication.

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Managing Financial Resources and Decisions

Cost of franchising
In franchising, costs can be seen in two sides for franchisees and franchisers. For franchisees, he or
she doesnt need to pay the time to set up the business. The franchisees dont 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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Managing Financial Resources and Decisions

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 businesss 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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10

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. Companys 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-advantagesdisadvantages.html

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

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

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Managing Financial Resources and Decisions

LEARNER FEEDBACK FORM

QUALIFICATION

Edexcel BTEC Level5 HND Diploma in Business

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Khin Phyu Thant

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Managing Financial Resources and Decisions

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

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Managing Financial Resources and Decisions

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