UNIT 7003V1

Assignment Brief: Financial Management.

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INTRODUCTION

This unit is about understanding financial data and how it is used to support achievement of strategic objectives, managing budgets strategically, developing and making judgements on financial proposals against strategic objectives.

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SCENARIO

Learners may use their own employment context, or that of another organisation with which they are very familiar, to base their assignment. However, in the case that they are not able to do so, please use the below scenario:-

You are a senior manager in a business unit of a medium sized enterprise, with functional management and organisational leadership responsibilities. You have responsibility for the financial resources deployed in your area, including forecasting income and expenditure, reporting variances and planning to achieve target. You also sit alongside other senior managers in evaluating business cases for capital investment.

Please select and research an organisation of your choice to identify its strategic objectives and financial data. Provide brief details of your research in a summary of between 150 and 200 words which are in addition to the suggested word count and also include the financial data for your chosen organisation. Use the results of your research to answer the tasks below.

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TASK 1 - UNIT 7003V1

Write a summary to describe the main sources of financial data available within and outside the organisation, and provide examples of how the information would be used to review financial performance.

Examine the data and identify areas that you consider deserve further investigation/analysis, explaining how and why you consider this to be necessary.

Describe the types of data on other organisations that you may require from time to time - for instance if you were considering entering into a trading relationship or a financial investment - stating any limitations in availability. You will be expected to show an appreciation of different organisation structures.

For at least three of the examples described, explain how you would test the validity of the data. Guideline word count: 350 - 400 words

A.C. 1.1 - Determine how to obtain financial data and assess its validity

A.C. 1.4 - Review and question financial data

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TASK 2 - UNIT 7003V1

Using either your own organisation’s financial data, or that of an organisation of your choice, calculate at least six of the following accounting ratios on the last two available year-end accounts, selecting those that you consider to be the most appropriate measures of financial performance for your chosen organisation:

• Gross profit as a percentage of sales
• Net profit as a percentage of sales
• Return on capital employed
• Gearing
• Asset turnover
• Current ratio
• Acid Test
• Average age of debtors in days
• Average age of creditors in days
• Average age of stock (using closing stock) in days

What conclusions can you draw from the data? What are the strengths and weaknesses of the organisation based on this analysis? Make recommendations of ways in which any shortcomings could be addressed. State the limitations of the use of ratios in the measurement of financial performance.

Guideline word count for UNIT 7003V1: 650 - 750 words

A.C. 1.2 - Apply different types of analytical tools and techniques to a range of financial documents, formulating conclusions about performance levels and needs of stakeholders

A.C. 1.3 - Conduct comparative analysis of financial data

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TASK 3 - UNIT 7003V1

Identify possible approaches to the production of a budget with reference to any financial constraints, the achievement of organisational targets, legal requirements and accounting conventions. Where possible relate this information to an organisational context whether in your own organisation or one with which you are familiar.

Guideline word count: 550 - 600 words

A.C. 2.1 - Identify how a budget can be produced taking into account financial constraints and achievement of targets, legal requirements and accounting conventions

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TASK 4

Task 4 exercise:

Jan

Feb

March

April

May

June

Receipts:

£000

£000

£000

£000

£000

£000

Sales Receipts

2110

2156

2164

2219

2284

2444

Proceeds from Loan

4000

Total Receipts

6110

2156

2164

2219

2284

2444

Payments:

£000

£000

£000

£000

£000

£000

Material Purchases

718

733

757

777

822

880

Wages

600

600

550

550

550

450

Fixed Costs

700

700

710

710

715

715

Lease of New Building

200

200

200

200

200

Advertising Fees

120

120

120

130

Corporation Tax

650

Capital Expenditure

2750

Loan Repayment

450

450

450

Total Payments

2018

2353

5087

2807

2867

3345

Net Cash Flow

4092

(197)

(2923)

(588)

(583)

(901)

Opening Bank Balance

185

4277

4080

1157

569

(14)

Closing Bank Balance

4277

4080

1157

569

(14)

(915)