INTRODUCTION TO FINANCE
| Unit Title | Introduction to Finance |
| Unit Reference Number | M/616/2722 |
| Unit Level | Level 4 |
| Assessor | |
| Date issued | |
| Hand in Date | |
| Unit Grading Structure | Pass |
| Assessment Guidance | To achieve this unit, learners must achieve the learning outcomes and meet the standards specified by all assessment criteria for the unit. |
| LO | LO Description | AC | AC Description |
| 1 | Understand sources of
finance available to a business. |
1.1 | Assess the benefits and limitations of the different sources of finance. |
| 1.2 | Evaluate appropriate sources of finance for a business project. | ||
| 2 | Understand finance as a resource within a business. | 2.1 | Determine the costs of different sources of finance. |
| 2.2 | Explain the importance of financial planning. | ||
| 2.3 | Assess the information needs of different decision makers in a business. | ||
| 2.4 | Explain the impact of sources of finance on the financial statement. | ||
| 3 | Be able to make financial decisions based on financial information. | 3.1 | Analyse budgets and recommend appropriate decisions. |
| 3.2 | Explain the calculation of unit costs. | ||
| 3.3 | Make pricing decisions using relevant information. | ||
| 3.4 | Assess the viability of a project using investment appraisal techniques. | ||
| 4 | Be able to assess the
financial performance of a business. |
4.1 | Compare formats of financial statements appropriate for different types of business. |
| 4.2 | Interpret financial statements using appropriate ratios and comparisons, both internal and external. |
Scenario
Each task has its own scenario for this assignment
Task 1 of 3 – Financial Advice Report (ACs 1.1, 1.2, 2.1, 2.2, 2.3 & 2.4)
Scenario
You are a Financial Advisor; a client has approached you for advice about opening a flower shop business. The client has saved £10,000 but knows that a minimum of £30,000 is needed to start the business.
Instructions
You are to give advice regarding possible financial sources to raise the remaining £20,000.00 and need to:
- Assess the benefits and limitations of different sources of finance.
- Evaluate appropriate sources of finance for this business project.
- Determine the costs of different sources of finance.
- Explain the importance of financial planning.
- Assess the information needs of different decision makers in a business. • Explain the impact of sources of finance on the financial statement.
Write your findings in a report to be given to be given to the client
Delivery and Submission
- 1x Financial Advice Report – 750 words
Task 2 of 3 – Financial Decisions Report (ACs 3.1, 3.2, 3.3, 3.4, 4.1) Instructions
Scenario
Mr May is a sole trader and owns WoodyTrain, a toy store specialising in handcrafted wooden train toys. Mr May wants to raise £20,000 by getting a new partner.
Instructions
You are required answer the following points and produce a report of your findings: • Analyse the types of business budgets that Mr May have prepared for this business organisation. Recommend how these budgets would allow a new partner to make an informed decision about investment.
- Explain the different methods Mr May could use to calculate the unit cost of the handcrafted wooden train toys.
- Compare the format of the financial statements that Mr May will currently prepare for his sole trader business with those prepared for a partnership and limited company. • WoodyTrain has been asked to supply a large number of toys to a large retailer at a
discounted price of 50%. Advise Mr May on what he needs to consider before replying to the retailer.
- WoodyTrain is considering expanding and purchasing a new toy store. Two new stores are being considered – Toy Store A and Toy Store B.
The following are the estimated cash flows for each building.
| Year | Toy Store A | Toy Store B |
| £ | £ | |
| 0 | -375 000 | -425 000 |
| 1 | 200 000 | 200 000 |
| 2 | 110 000 | 150 000 |
| 3 | 220 000 | 300 000 |
| 4 | 130 000 | 250 000 |
The toy store’s cost of capital is 12%. The extract from present value tables of £1 @ 12%:
| Year 1 | 0.893 |
| Year 2 | 0.797 |
| Year 3 | 0.712 |
| Year 4 | 0.636 |
- Calculate for each building:
o Payback
o Net Present Value
- Recommend and justify, based on your financial analysis, which Toy Store, Mr May should purchase.
Delivery and Submission
- 1x Financial Decisions Report – 1000 words
Task 3 of 3 – Financial Analysis Report (AC 4.2)
For this task, you are employed as an adviser to a team of Toy Store Owners. For research, you should review the published accounts of Hamleys Group Limited (Toy Store), which can be downloaded from
https://beta.companieshouse.gov.uk/company/02352435/filing-history
You are required to prepare a financial analysis report that includes the following: • An evaluation of the financial statements of Hamleys Group Limited. You should evaluate the structure, format and requirements of their published accounts. • A description of how the following ratios could be used by organisations, such as Hamleys Group Limited and their stakeholders.
You should consider the following ratio groups:
o Profitability
o Liquidity
o Efficiency
o Capital
o Investor
Delivery and Submission
- 1x Financial Analysis Report – 750 words
Referencing:
- Each section must reflect any supporting Harvard style citations.
- A comprehensive Harvard style reference list must be included at the end of the work.
Evidence to be submitted:
- Financial Advice Report – 750 words
- Financial Decisions Report – 1000 words
- Financial Analysis Report – 750 words
