The purpose of this assignment is to give the learners a broad understanding of the sources and availability of managing financial for a business organisation. Learners will learn how to evaluate these different sources and compare how they are used. They will learn how financial information is recorded and how to use this information to make decisions for example in planning and budgeting.
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
Since embarking upon your Business you have been looking for a new job in finance or accountancy. You have had a number of years of experience working in industry and you would be particularly interested in a role which involved working with and advising local businesses. Eventually you secure a post with a large firm of accountants as a Finance and Business Advisor. This is a new departure for the company who have, traditionally, concentrated upon accountancy and auditing services.
As a starting point, the senior partner in the company suggests that you put together:
You are given the following information from the companys financial statement.
|
000 |
000 |
From the balance sheet as at |
31 March 2003 |
31 March 2002 |
Stocks |
12482 |
11862 |
Trade Debtors |
32287 |
28410 |
Trade Creditors |
17048 |
13585 |
Total Asset less current liabilities |
47505 |
34912 |
Creditors Due after more than one year |
13388 |
6870 |
Share Capital ( 25p share) |
6782 |
4282 |
From the profit and loss account for the year ended |
31 March 2003 |
31 March 2002 |
Turnover |
205157 |
182530 |
Cost f goods sold |
172065 |
153730 |
Expenses |
27342 |
22285 |
Interest Payable |
1925 |
1220 |
Calculate the following ratios and comment on the performance of the business over the two years;
Cash Flow Forecast for a new business - Northfield Components Ltd: Jan 2008 - Dec 2008 |
||||||||||||
|
JAN |
FEB |
MAR |
APR |
MAY |
JUN |
JUL |
AUG |
SEP |
OCT |
NOV |
DEC |
000 `s |
000 `s |
000 `s |
000 `s |
000 `s |
000 `s |
00 0`s |
000 `s |
000 `s |
000 `s |
00 0`s |
000 `s |
|
Brought Fwd. |
40 |
|
|
|
|
|
|
|
|
|
|
|
Sales |
200 |
300 |
300 |
300 |
250 |
260 |
300 |
260 |
300 |
325 |
265 |
265 |
Total Income |
240 |
300 |
300 |
300 |
250 |
260 |
300 |
260 |
300 |
325 |
265 |
265 |
Purchases |
150 |
140 |
135 |
135 |
140 |
130 |
135 |
145 |
140 |
140 |
145 |
145 |
Wages |
55 |
55 |
55 |
55 |
55 |
55 |
55 |
55 |
55 |
55 |
55 |
55 |
Rent & Rates |
56 |
|
|
56 |
|
|
56 |
|
|
56 |
|
|
Light & Heat |
|
|
55 |
|
|
55 |
|
|
55 |
|
|
55 |
Advertising |
2 |
2 |
2 |
2 |
2 |
2 |
2 |
2 |
2 |
2 |
2 |
2 |
Insurance |
55 |
|
|
|
52 |
|
|
|
|
|
|
|
Equipment |
50 |
10 |
|
10 |
|
10 |
|
|
|
|
|
|
Vehicles |
20 |
|
|
|
|
|
|
|
|
|
|
|
Directors Salaries |
22 |
22 |
22 |
22 |
22 |
22 |
22 |
22 |
22 |
22 |
22 |
22 |
Motor Expenses |
11 |
11 |
11 |
11 |
11 |
11 |
11 |
11 |
11 |
11 |
11 |
11 |
Sundry Expenses |
11 |
11 |
11 |
11 |
11 |
11 |
11 |
11 |
11 |
11 |
11 |
11 |
Total Expenditure |
432 |
251 |
291 |
302 |
293 |
296 |
292 |
246 |
296 |
297 |
246 |
301 |
Monthly |
-192 |
49 |
9 |
-2 |
-43 |
-36 |
8 |
14 |
4 |
28 |
19 |
-36 |
Deficit/Surplus |
|
|
|
|
|
|
|
|
|
|
|
|
Accumulative Deficit/Surplus |
-192 |
-143 |
-134 |
-136 |
-179 |
-215 |
-207 |
-193 |
-189 |
-161 |
-142 |
-178 |
Gross profit margin
Stock Turnover
Debtors Collection period ( Debtors Days)
Creditors payment period ( creditors days
(This provides evidence for outcome 2 assessment criteria 2.1, 2.2 , 2.3 and 2.4 for outcome 4 assessment criteria 4.1,4.2 and 4.3)
The Financial Accountant of Northfield Components has recently resigned and left his post with immediate effect. The Directors decide to advertise for a replacement but realize that the recruitment process may take up to three months. In the short term they decide to bring in a financial consultant to tide them over until a permanent appointment is made. You are asked by your line manager to take on this role initially for three months
On your first morning in early January 2008 the Directors present you with the cash budgets prepared by the departed financial accountant. You are given the budgetfor the twelve months from January 2008. The directors are concerned about the likely cash deficits shown in the cash budget.
Cash Flow Forecast for a new business - Northfield Components Ltd: Jan 2008 - Dec 2008 |
||||||||||||
|
JAN |
FEB |
MAR |
APR |
MAY |
JUN |
JUL |
AUG |
SEP |
OCT |
NOV |
DEC |
|
000 `s |
000 `s |
000 `s |
000 `s |
000 `s |
000 `s |
00 0`s |
000 `s |
000 `s |
000 `s |
00 0`s |
000 `s |
Brought Fwd. |
40 |
|
|
|
|
|
|
|
|
|
|
|
Sales |
200 |
300 |
300 |
300 |
250 |
260 |
300 |
260 |
300 |
325 |
265 |
265 |
Total Income |
240 |
300 |
300 |
300 |
250 |
260 |
300 |
260 |
300 |
325 |
265 |
265 |
Purchases |
150 |
140 |
135 |
135 |
140 |
130 |
135 |
145 |
140 |
140 |
145 |
145 |
Wages |
55 |
55 |
55 |
55 |
55 |
55 |
55 |
55 |
55 |
55 |
55 |
55 |
Rent & Rates |
56 |
|
|
56 |
|
|
56 |
|
|
56 |
|
|
Light & Heat |
|
55 |
|
|
55 |
|
|
55 |
|
|
55 |
|
Advertising |
2 |
2 |
2 |
2 |
2 |
2 |
2 |
2 |
2 |
2 |
2 |
2 |
Insurance |
55 |
|
|
|
52 |
|
|
|
|
|
|
|
Equipment |
50 |
10 |
|
10 |
|
10 |
|
|
|
|
|
|
Vehicles |
20 |
|
|
|
|
|
|
|
|
|
|
|
Directors Salaries |
22 |
22 |
22 |
22 |
22 |
22 |
22 |
22 |
22 |
22 |
22 |
22 |
Motor Expenses |
11 |
11 |
11 |
11 |
11 |
11 |
11 |
11 |
11 |
11 |
11 |
11 |
Sundry Expenses |
11 |
11 |
11 |
11 |
11 |
11 |
11 |
11 |
11 |
11 |
11 |
11 |
Total Expenditure |
432 |
251 |
291 |
302 |
293 |
296 |
292 |
246 |
296 |
297 |
246 |
301 |
Monthly |
-192 |
49 |
9 |
-2 |
-43 |
-36 |
8 |
14 |
4 |
28 |
19 |
-36 |
Deficit/Surplus |
|
|
|
|
|
|
|
|
|
|
|
|
Accumulative Deficit/Surplus |
-192 |
-143 |
-134 |
-136 |
-179 |
-215 |
-207 |
-193 |
-189 |
-161 |
-142 |
-178 |
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