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This page has the remaining tasks for Unit 2.  These are all based on finance for businesses as the remaining resource which needs to be managed.  
We are continuing to use Jaguar LandRover as our case study

Deadlines:

 

P4                                   2 March 2016  

P5 / P7 / M3                   16 March 2016 

P6 / M4                          23 March 2016

 

D1 (With additional           13 April 2016

       information)

D2                                  20 April 2016

D3                                  13 April 2016

 

 

P4 describe sources of internal and external finance for a selected business

 

Asssignment Task:

 

You are to produce a DETAILED PowerPoint on the Sources of Internal and External Finance.  If you would prefer, you may create a report in Word.

 

The presentation’s audience are new members of the Finance staff of JLR.  Include all the sources you have learnt and relate them to JLR.  Some are more relevant to JLR (whilst others are not).  Include them all.

 

 

You MUST include the following:    

 

  1. Explanation of what is Internal and External Finance  (ie Internal Finance refers to those sources which are .............................)

  2. Internal sources:

    1. owner’s savings;

    2. capital from profit ( I prefer the term 'Retained Profit')

    3. Sale of assets

  3. External sources: banks e.g.

    1. overdraft,

    2. business loan,

    3. commercial mortgage,

    4. venture capital,

    5. hire purchase,

    6. leasing,

    7. factoring,

    8. share issues 

    9. Crowd funding

P5 interpret the contents of a trading and profit and loss account and balance sheet for a selected company
And ...
M3 interpret the contents of a trading and profit and loss account and balance sheet for a selected company explaining how accounting ratios can be used to monitor the financial performance of the organisation
And ...
D2 evaluate the adequacy of accounting ratios as a means of monitoring the state of the business in a selected organisation, using examples

 

 

For this task you are going to write a report to the directors of Jaguar Land Rover and interpret their 2015 Annual accounts.

 

You will need the spreadsheet (which you created in the lesson) and PDF of JLR's accounts.  You also need the ratio calculations sheet.  All will have been emailed to you.

 

The report will be made up of distinct sections:

 

Section 1 

 

Qualitative information for each year.  PASS      

 

In a Word document you need to set out the qualitative information which supports the quantitative data you already have on the spreadsheet.  Make sure this is relevant, readable and detailed.

                                                                

This will include bullet points of newsworthy information which occurred during the three years of the accounting period.  The bullet points will be used to help understand why the figures may have improved or worsened.

 

Section 2 

 

Initial observations from Profit and Loss, and Balance Sheet -  PASS  

                  

You have the spreadsheet of the five year's financial figures.  You need to make your initial observations on how well you believe JLR is doing. 

For instance, is revenue rising?  By how much?  Is it increasing streadily or are the changes more volatile?  

You are to summarise the changes over the years shown, making any comments as to whether the directors should be pleased with the results or should investigate further.

 

Section 3 

 

Ratio Analysis -  PASS              

         

You will complete the word document where all the calculations are made.  It is easier for you to do this by hand.  Once you have completed the ratios you need to comment on each one, making judgements as to whether you believe the figures are satisfactory, or not - and why.

Also:

  • Should the directors be happy with the ratio?

  • Is it improving or worsening?

 

Section 4 

 

How businesses use Accounting Ratios -  MERIT        

This is a written report on the purpose of Accounting ratios. It will have three clear sections:

                                    

You are to explain what is the PURPOSE of ratio analysis.  

What are the advantages of financial ratios.

What are the limitations of financial ratios.

 

I would STRONGLY recommend you look at each of the hyperlinks below for this task.  The textbook does not give very much information to support this task.

 

Point  - Impact - Consequence

 

ie The point of working out profit margin is to see how profitable the business is year on year.  This impacts upon the management of JLR because they can see where sales are falling or costs are rising (and visa versa).  Consequently, JLR can make changes to their business to maintain or improve their profit margins.

  

Hyperlinks:

 

 

Section 5

 

Evaluation of the adequacy of accounting ratios - DISTINCTION    

        

You are evaluating here, so you must be using JJSDR

This is asking whether accounting ratios are adequate enough to make a judgement on a business, like JLR

Include:

  • Relative importance of the limitations to ratios

 

 

 

P6 illustrate the use of budgets as a means of exercising financial control of a selected company
 
M4 analyse the reasons why costs need to be controlled to budget. 
 
D3 evaluate the problems they have identified from unmonitored costs and budgets.
 
Expected Homework time to complete = 3 Hours
 

The school's kitchen is making cupcakes this term.  Canteen Manager (Louie Gale) wants to know whether they will make a profit, and is on target to reach his budget.

 

 

A)  Break Even Analysis  P6

 

Louie will analyse his cupcake sales with Break Even Analysis.

 

They sell their cupcakes at £1 and they cost 40p  to make.  Their monthly fixed costs are £600 (Their portion of the kitchen's costs, and the wages of Rajhan and Penny, Junior bakers).

 

  1. Calculate their current break even point and explain:

  • What Break Even

  • How a business such as Louie's could benefit from the use of Break Even.  

  • Use Excel to create a table and work out the formula.  

  • Copy the table and formula to Word and provide a written explanation to the outcome.

  1. Create the break even chart, annotating in a manner that explains it to Louie.  Again, this can be completed very simply in Excel and copied to Word, with another explanation.

  2. Louie has now realised how he could use break even to help them and has got a cheaper oven, reducing their Fixed Costs to £550 and a cheaper flour/sugar supplier meaning variable costs are now 35p per cake.

  3. Re-calculate the break even.  

    • Copy the results (Table, Graph and calculated Formula) to Word. 

  4. Explain the potential impact this might have on the business. 

 

B) Budgets

 

Louie has deceided he wants to go alone in the cupcake world.  He has seen a competitor (Callum's Bostin Cupcakes) and has approached him to become a partnership.  Callum has given Louie a copy of his latest budget figures for his business.

 

  1. Click on the image to the right to open the spreadsheet.

  2. Complete the variances for each of the months.

  3. Open a new word document and start a report to Mr Costello.  Introduce the report by explaining what budgets are.  Use the textbook to support this.

  4. Explain the uses of Budgets (how they may be useful to businesses wanting to secure new finance, investors or grants)

  5. Copy the completed budget into Word and explain what the budget shows (Explain the principles of Actual versus Budget, and variances).

  6. Explain and SUGGEST WHY each of the variances MAY have occured.

 

 

 

 

 

C) For the Merit - Budgets Continued ...

 

M4 – Analyse the reasons why costs need to be controlled to budget.

 

For this task you need to analyses why costs are important, why they need to be controlled and how a budget can help this process.  

 

Hyperlinks:

 

 

Use the following headings:

1 Introduction

 

Explain how businesses set budgets to help them control costs, and how this will help their profit margins and organic growth.

 

2 What if they are NOT monitored?

 

(Consider the following bullet points to guide your writing)

  • Managers may not notice problems because….

  • The IMPACT of not noticing problems are...

  • Managers can’t take steps to correct the problem if they don’t know it exists - so what is the impact of this for the business strategies?

 

3 Refering to Callums Bostin Cupcakes, what problems might the variances create?

(Consider the following bullet points to guide your writing)

  • Reduced profits - problem because….

  • The need to replace/better train staff  - problem because….

  • The need to source new material suppliers/renegotiate - problem because….

  • Pressure to increase prices - problem because….

 

4 Conclusion - Your opinion - Using PIC

  • Consider and explain how the budgeting process (the setting and analysing of budgets) enables problems come to light and the absence of a budget might have significant consequences.

  • Explain how long it would take to identify the problems if the budgeting process were being used as compared to just producing the standard year end accounts.    

     

     

 

 

 

D) For the Distnction- Budgets Continued ...
evaluate the problems they have identified from unmonitored costs and budgets.
 

To complete this task you need to evaluate the problems that unmonitoered costs may have on the business.  You will then evaluate the possible consequences arising from poorly controlled budgets.  Finally, include the limitations of variance analysis.  

 

Use JJSDR to ensure you cover the requirements of a Distinction.

 

Use the following headings:

 

  1. Why costs need to be controlled

  2. Possible consequences arising from poorly controlled budgets

  3. Limitations of variance analysis

 

 

Give YOUR OPINIONS, with JUSTIFICATION

 

Slide presentation - Budgets
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