MANAGING FINANCIAL RESOURCES AND DECISION

MANAGING FINANCIAL RESOURCES AND DECISION
MODULE SPECIFICATION 

Aim(s): The unit aim is to provide learners with an understanding of where and how to access sources of finance for a business, and the skills to use financial information for decision making.

MANAGING FINANCIAL RESOURCES AND DECISIONS

Learning Outcomes: On successful completion of this unit a learner will:

1. Understand the sources of finance available to a business
2. Understand the implications of finance as a resource within a business
3. Be able to make financial decisions based on financial information
4. Be able to evaluate the financial performance of a business 

Teaching/Learning strategies:

Lectures, group discussions and presentation, case studies, assignments, quizzes, etc…

Assessment Strategies:

The module will be assessed using one assessment component

Assessment details:

	Assessment component
Type of assessment	Individual
Assessment Vehicle	Assignment (Tasks 1, 2, 3, 4)
Issue date	TBA
Submission date	TBA
Result/Feedback date	TBA
Assessment tariff/weight	100%

Assessment component:

An assignment brief aiming at assessing of all learning outcomes will be made available (date to be advised). The assignment brief will include 4 specific tasks aiming at assessing learning outcomes 1, 2, 3 and 4 respectively. Learners will be required to submit their works on individual tasks at specified dates (stipulated in the assignment brief).

Pass/ Merit/ Distinction grades as per the assignment brief.

Reading and resources

Books

Essential:

Dyson, J. R. (2007). Accounting for Non-Accounting Students. 7th edition. Harlow: Pearson Education Ltd

Others (Recommended):

Wood, F. And Sangster, A. (2008). Business Accounting 1. 11th edition. Harlow: Pearson Education Ltd

Drury, C. (2005). Management Accounting for Business. 3rd edition. London: Thomson Learning

Website

www.aat.co.uk    The Association of Accounting Technicians

www.bized.co.uk (provides a selection of teaching and learning resources)

www.ft.com The Financial Times 

www.londonstockexchange.com  

Journals and newspapers

The financial and mainstream press can provide useful background reading, and can also be a useful source of case studies and financial information.

Copies of published financial reports are available from companies themselves, or via The Financial Times (a free online ordering service is available).

Unit Contents 

Learning Outcome 1: Understand the sources of finance available to a business 

• Range of sources: sources for different businesses; long term such as share capital; retained earnings; loans; third-party investment; short/medium term such as hire purchase and leasing; working capital stock control; cash management; debtor factoring

• Implications of choices: legal, financial and dilution of control implications; bankruptcy

• Choosing a source: advantages and disadvantages of different sources; suitability for purpose, e.g. matching of term of finance to term of project

Assessment criteria 

1.1. Identify the sources of finance available to a business

1.2. Assess the implications of the different sources

1.3. Evaluate appropriate sources of finance for a business project

Evidence requirements/ Assessment vehicle (see assignment brief) 

Learning Outcome 2: Understand the implications of finance as a resource within a business 

• Finance costs: tangible costs e.g. interest, dividends; opportunity costs e.g. loss of alternative projects when using retained earnings; tax effects

• Financial planning: the need to identify shortages and surpluses e.g. cash budgeting; implications of failure to finance adequately; overtrading

• Decision making: information needs of different decision makers

• Accounting for finance: how different types of finance and their costs appear in the financial statements of a business; the interaction of assets and liabilities on the balance sheet and on international equivalents under the International Accounting Standards (IAS)

Assessment criteria 

2.1. Analyse 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

2.4. Explain the impact of finance on the financial statements 

Evidence requirement/ Assessment vehicle (See assignment brief)

 Learning Outcome 3: Be able to make financial decisions based on financial information 

• Budgeting decisions: analysis and monitoring of cash and other budgets

• Costing and pricing decisions: calculation of unit costs, use within pricing decisions; sensitivity analysis

• Investment appraisal: payback period; accounting rate of return; discounted cash flow techniques i.e. net present value; internal rate of return

• Nature of long-term decisions: nature of investment importance of true value of money; cash flow; assumptions in capital investment decisions; advantages and disadvantages of each method

Assessment criteria 

3.1. Analyse budgets and make appropriate decisions

3.2. Explain the calculation of unit costs and make pricing decisions using relevant information

3.3. Assess the viability of a project using investment appraisal techniques

Evidence requirement/ Assessment vehicle (see assignment brief)   

Learning Outcome 4: Be able to evaluate the financial performance of a business 

• Terminology: introduction to debit, credit, books of prime entry, accounts and ledgers, trial balance, final accounts and international equivalents under the International Accounting Standards (IAS)

• Financial statements: basic form, structure and purpose of main financial statements i.e. balance sheet, profit and loss account, cash flow statement, notes, preparation not required; changes to reporting requirements under the International Accounting Standards (IAS) e.g. statement of comprehensive income, statement of financial position; distinctions between different types of business i.e. limited company, partnership, sole trader

• Interpretation: use of key accounting ratios for profitability, liquidity, efficiency and investment; comparison both external i.e. other companies, industry standards and internal i.e. previous periods, budgets 

Assessment criteria 

4.1. Discuss the main financial statements

4.2. Compare appropriate formats of financial statements for different types of business

4.3. Interpret financial statements using appropriate ratios and comparisons, both internal and external. 

Evidence requirements/ Assessment vehicle (see assignment brief)