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 limite


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
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.
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.
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.
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
£  £
-375 000  -425 000
200 000  200 000
110 000  150 000
220 000  300 000
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

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