Assignment

TASK 1 to TASK 4: You are required to follow the instructions as specified towards each task and support with a research by using supportive materials like books, websites, etc., and give a feedback on the findings by relating your arguments to relevant case studies and examples from a business organisation as specified inMRFD Assignment task:

Task 1 and 2

The recession has left many people without jobs. Assuming that you have been laid off by your company and you have personal savings of  50,000. You have been contemplating what to do next and your friend has advised you to start your own business and be your own boss. You decide to carry out research on which business to engage in and how to raise the required finance. You are required to start a new business as a sole trader, or partnership or company with start-up capital of at least 100,000 - 1 million.Using supportive materials like books, websites, etc., and give a feedback of the findings on P1.1, P1.2, P1.3, P2.1, P2.2, P2.3 and P2.4. Answers without application to a specific business or appropriate examples will be referred.

Task 1

LO1 Understand the sources of finance available to a business

P1.1 Identify the sources of finance available to the new business you have chosen
P1.2 Assess the implications of the different sources of finance to your chosen business
P1.3 Select appropriate sources of finance for a business project you have chosen e.g. opening new store, developing IT system, buy new machines etc.

Task 2

LO2 Understand the implications of finance as a resource within a business

Using the same business you have chosen above

P2.1 Analyse the costs of different sources of finance
P2.2 Explain the importance of financial planning to the business organisation you have chosen
P2.3 Assess the information needs of different decision makers in your chosen business
P2.4 Explain the impact of finance on the financial statements of your chosen business

Task 3

Use thecase study given below andcarry out a research by using supportive materials like books, websites, etc., and give a feedback of the findings on P3.1, P3.2, and P3.3.

Answers without application to the case study or appropriate examples will be referred.

LO3 Be able to make financial decisions based on financial information

P3.1 Analyse budgets and make appropriate decisions from the case study given below:
Easy electronics ltd has been trading for many producing IBM compatible motherboards or main boards which are sold to own equipment manufacturers, Easy personal and computer hardware sellers. Budgeted Profit and Loss Account and Cash Budget for the six months period ending 31/December 2013 is given below: Easy Electronics ltdBudgeted Profit and Loss Account for the six month period ending 31December 2013.

Easy Electronics ltd

Cash flow forecast for July to December 2013

Additional information:

1. 30% of the sales are to be paid for by cash each month
2. Settlement for credit purchase is 30 days
3. The company offers a 30 days credit period
4. State any other assumptions made.

P3.2 Explain the calculation of unit costs and make pricing decisions using relevant information given below:

You are required to use the budgeted profit and loss account to explain how unit costs are calculated. It is estimated that Easy Electronics ltd will manufacture and sell 650,036 mother boards for the six months period ending 31stDecember 2013. The finance director of Easy Electronics ltd has asked you to evaluate a proposal to reduce the selling price by 10% from the current price of 55.12 per unit and as results sales are expected to increase by 20%. Cost of sales will also increase by 20%. All other costs will remain constant. You are required to make pricing decision based on the above information.

P3.3 Assess the viability of a project using at least two investment appraisal techniques using the case study provided below:

Easy Electronics ltd is considering diversifying into manufacturing Aluminium computer cases or housing from October 2014. The companys cost of capital is 10%. The net cash flows from the project are given below.

The project has a residual or scrap value of �400,000.

LO4 Be able to evaluate the financial performance of a business

For task P4.1 and P4.2 you are required to carry out a research by using supportive materials like books, websites, etc., to discuss the main financial statements (profit and loss, balance sheet and cash flow statement and compare appropriate formats of financial statements for different types of business (such as formats of financial statements for sole trader, partnership and limited company), and give a feedback of the findings on P4.1 and P4.2 Answers without application to main financial statements or formats of financial statements for different types of business and appropriate examples will be referred.

P4.1 Discuss the main financial statements (the discussion should focus on basic form and purpose of main financial statements)
P4.2 Compare appropriate formats of financial statements for different types of business
P4.3 Interpret financial statements using appropriate ratios and comparisons, both internal and external using the data given below.
For task P4.3 you are required to carry out a research by using supportive materials like books, websites, annual reports, etc., to interpret financial statements of WM Morrison Supermarkets PLC using appropriate ratios given below and to compare its financial performance with that of J Sainsbury PLC for year 2011 and 2010. Answers without application to the case study given will be referred.