Blue Inc Business Analysis and Forecasting

This assignment delves into the operational aspects of Blue Inc, focusing on resource allocation, cost structure, and financial performance. It presents a detailed break-even analysis, highlighting the company's current situation and potential improvements through expense reduction and sales growth strategies. The assignment also emphasizes the importance of accurate cash flow forecasting to ensure business sustainability.

BUSINESS
RESOURCE

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................3
P1 Describe recruitment documentation in the recruitment process of new staff..................3
P2/ Employability, personnel and communication skills for finance manager......................4
P3 Describe the main physical and technological resources in Blue Inc...............................6
M1 How the main physical and technological resources in Blue Inc can improve the
performance............................................................................................................................8
M2 importance of Employability, personnel and communication skills for finance manager
................................................................................................................................................8
D1 How managing and controlling budget costs can improve performance.........................9
TASK 2......................................................................................................................................9
P5 Trading and profit and loss account..................................................................................9
P6 calculate contribution and the breakeven point..............................................................11
P7..........................................................................................................................................13
CONCLUSION........................................................................................................................14
REFERENCES.........................................................................................................................15

INTRODUCTION
Business resources are the tangible as well as intangible resources which help in
carrying out the function of the organization effectively. This report talks about the Blue Inc
which is the UK based retailer and it is expanding its functions in oversees. Further, the
report will talk about the job description and the job specification of the finance executive.
On the other hand, it also focuses on the physical and the human resources required carrying
out the function of the company. Besides this, the main emphasis is on the cash flow and the
ratios which will help to identify the company’s actual information.
P1 Describe recruitment documentation in the recruitment process of new staff
Accounting executives supervise a company's financial procedures. Entry-level work
in this field typically requires a bachelor's degree in economics, accounting, business
administration, or finance. Someone who enjoys math, business, statistics, and management
may enjoy this type of career (Chaffey and White, 2010). Accounting regulations and tax
codes change often, so accounting executives need to stay updated or obtain continued
education in the field. Each industry provides a different set of duties, but common shared
tasks among accounting executives include:
Using accounting software to create spreadsheets and reports
Drafting summary reports concerning key issues upper executives need to review
Assigning projects to departments and overseeing productivity
Verifying that all accounting related departments follow company protocol
Presenting accounting issues and results to executive committees and upper
management
Role Purpose is To support the Finance Team in financial planning, maintenance of
systems and records, and contribute to improvements in financial processes and associated
controls. Undertake and deliver a range of financial activities such as data input and financial
reconciliations (Thompson and Van der Walt, 2010).
Financial Systems Assist with the review and update of financial accounting and
banking systems, including their interaction with other databases.

Financial Planning Assist with the preparation of annual, three-year, and additional ad
hoc budgets as required.
Financial Reporting Assist with the production of quarterly management accounts, the annual
report and accounts and other ad hoc reporting as required.
Accountabilities is Responsible for the reconciliation of main operational bank account on a
monthly basis (Bae, Rowley and Sohn 2012). Process staff expenses and credit card
transactions, Process Nominal, Sales & Purchase ledger transactions as required. Liaison with
staff team members ensuring Finance and Sales force database records correlate. Reinforce
and support financial processes out with the finance team.
P2/M1 Employability, personnel and communication skills for finance manager
Communication Skills
Employees must have strong communication skills, as they have to communicate with
one another and with supervisors. Some employees working in customer service must also
communicate directly with customers. Effective communication skills are important to ensure
written emails are clear, documents are readable and speech during presentation is clear and
professional (Montgomery ed., 2011). Listening skills are also crucial, as employees must
listen to different approaches and ideas for projects and assignments, especially when
working as part of a team.
Research and Analytical Skills
Other important skills that employers seek in new employees are research and
analytical skills. Some employers often require employees to conduct market research for
new products or production research to keep production costs low and profits high and
determine what is in demand on the market (Breton‐Miller and Miller, 2013). Rather than
taking everything at face value, employees must be analytical and test all information found
in the research.
Leadership and Creativity Skills
Employees often work together on projects, so some employees must take on the
leadership role to ensure deadlines are met, problems are addressed and all ideas are being
considered. Employers often seek employees who have natural leadership skills. In addition,
these employees must also have creativity skills so they can find and use solutions for
potential problems on tasks, projects or assignments (Zikmund and et.al., 2013).

Planning and Multitasking Skills
Each employee is responsible for meeting deadlines, planning a schedule and
multitasking various assignments, tasks and events currently on the employee’s plate of
responsibilities. Employers seek workers who can handle the workload without needing too
much guidance or hand-holding during the workday (Zott and Amit, 2010). This skill
includes solving problems, being flexible with project changes and taking feedback from
other workers.
P3 Describe the main physical and technological resources in Blue Inc.
Financial Resources
The most important element in starting a business is funding. Even the most basic
home business incurs a multitude of startup costs, including registering a business name,
obtaining a business telephone line and printing business cards. Financial resources can be
obtained from a variety of sources, the easiest being from the personal accounts of the
company’s founder. Alternatively, loans and lines of credit may be granted from financial
institutions, friends and relatives, private investors and even the United States government. In
addition, many grants are offered from private and public sources to entrepreneurs of all
demographics and personal situations (Laumer, Eckhardt and Weitzel, 2010).
Human Resources
The success of an organization is heavily reliant on the talent and strength of its
employees. The hiring of experienced professionals with track records of excellence within
their area of expertise ensures that the mission and goals of the company will be carried out
efficiently and with competence. Strong team members can be recruited using a variety of
methods (Zachary, 2011). Staffing agencies and executive search firms specialize in placing
talent of all levels within every industry. An alternative is to find employees through referrals
from individuals whose judgment is trusted.
Physical Resources
Whether a small home business or a retail operation with multiple locations, every
organization must have the appropriate physical resources to survive. This includes a proper
workspace, working telephone line, adequate information systems and effective marketing
materials. This aspect of business planning can be one of the costliest (Zott and Amit, 2010).

As such, it is important for an entrepreneur to realistically assess his needs before making any
purchases.
Technological resources
Advancements in telecommunication technology have improved access to medical
resources and information, especially for doctors in rural or disadvantaged areas.
Physicians can communicate with experts from all over the world, improving patients'
diagnoses and treatment without the need to travel (Korunka and et.al., 2010).
Augmented reality refers to the process of using digital information to improve
navigation of the real world. With technologies such as Google Glass and smartphone
applications, augmented reality allows users to access a wealth of information on the fly.
Map tools help facilitate transportation, whether it is on a bike or the subway, while other
apps help users locate nearby stores or services.
Technology is also increasingly helping consumers transform products into
services. Developments in communications and social media let users save money by
sharing things they could previously only buy, such as cars, bikes, tools and even clothes
(Hart and Dowell, 2011).
Technology is also improving numerous aspects of urban infrastructure, from
public transportation to water and power management. Modern cities are increasingly
utilizing technology to maximize their use of public resources through more efficient
monitoring of power consumption and the streamlining of train and bus routes (Zott, Amit
and Massa, 2011).
P4 Range of internal and external source of finance for Blue Inc.
Sources of finance
Some sources of finance are short term and must be paid back within a year. Other sources of
finance are long term and can be paid back over many years.
Internal sources of finance are funds found inside the business. For example, profits can be
kept back to finance expansion. Alternatively the business can sell assets (items it owns) that
are no longer really needed to free up cash.

External sources of finance are found outside the business, eg from creditors or banks.
Short-term sources of external finance
Sources of external finance to cover the short term include:
An overdraft facility, where a bank allows a firm to take out more money than it has in its
bank account (Carroll and Shabana, 2010).
Trade credits, where suppliers deliver goods now and are willing to wait for a number of days
before payment.
Factoring is where firms sell their invoices to a factor such as a bank. They do this for some
cash right away, rather than waiting 28 days to be paid the full amount.
Debt collection
Sometimes businesses and smaller businesses particularly, allow customers to let their
agreed-upon payments slide. This is certainly a bad business practice on a number of grounds
and the appropriate remedy is to put more effort into collections. Doing so also increases
available capital (McGrath, 2010).
Long-term sources of external finance.
Sources of external finance to cover the long term include:
 Owners who invest money in the business. For sole traders and partners this can be
their savings. For companies, the funding invested by shareholders is called share capital.
 Loans from a bank or from family and friends.
 Debentures are loans made to a company.
 A mortgage, which is a special type of loan for buying property where monthly payments are
spread over a number of years.
 Hire purchase or leasing, where monthly payments are made for use of equipment such as a
car. Leased equipment is rented and not owned by the firm. Hired equipment is owned by the
firm after the final payment (Hill, Cronk and Wickramasekera, 2013).
 Grants from charities or the government to help businesses get started, especially in areas of
high unemployment.

M1 How the main physical and technological resources in Blue Inc can improve the
performance
These are the factors which are helpful in increasing the profitability of the
organization. With the help of human resource, the Blue Inc organization will manage their
work as the task which is carried out in the organization is because of the employees. On the
other hand, technological will help the employees to make the work easier of the workforce.
This is because the time taken will be less and they have to do less work in completing the
task.
M2 importance of Employability, personnel and communication skills for finance manager
Communication, personnel and employability skills are required in the organization to
make the work effective. Finance manger is required to effectively communicate their
requirement of finance to the management. Further, they conduct meeting for communicating
the budget as in this case, they need to have the effective communication skill. Personnel skill
assists the manager in developing relationship in the organization. This will help in
improving the bonding among the workers.
D1 How managing and controlling budget costs can improve performance
Managing resources and controlling budget costs can improve the business
performance in many ways. All businesses need to control their budgets but especially large
businesses. Budgets must be controlled in order for a business to make a profit rather than a
loss within their business. They must use their past history in order to predict how well they
will be able to perform in the next month as they can be inspirational for example aim to
increase sales by 2% each month. You must make sure you look ahead for example if you
know some of your part time staff will be leaving you need to make sure you leave a slice of
money in your budget to cover costs for recruitment for example there may need to be more
advertising in order to find the right person. Money would be being wasted and could be
spent on more productive things such as advertising in order to promote the business.
TASK 2
P5 Trading and profit and loss account
Ratio analysis is used to evaluate various aspects of a company's operating and
financial performance such as its efficiency, liquidity, profitability and solvency. The trend of
these ratios over time is studied to check whether they are improving or deteriorating. Ratio

Analysis as a tool possesses several important features. The data, which are provided by
financial statements, are readily available. The computation of ratios facilitates the
comparison of firms which differ in size. Ratios can be used to compare a firm's financial
performance with industry averages
Ratio analysis of Blue Inc is as follows:
Particulars
Figures
(in £)
Profitability ratios
Gross profit (GP) 49431
Net profit (NP) 7897
Net sales 87912
GP ratio Gross profit / net sales * 100 56%
NP ratio Net profit / net sales * 100 9%
Liquidity ratio
Current assets 72000
Current liabilities 50000
Current ratio Current assets / current liabilities 1.44
Shareholders’ equity 170000
Return on capital employed Net profit / Capital employed 5%
 Profitability ratio analysis: The above mentioned ratio analysis presents that GP and
NP ratio of Blue Inc accounts for 56% & 9% respectively. Hence, by considering
such aspect it can be stated that business unit failed to generate high profit margin due
to having high indirect expense level. Hence, by framing budgeting framework Blue
Inc can control on expenses and thereby would become able to generate high profit
margin.
 Liquidity ratio analysis: From financial statement analysis, it has been identified that
current ratio is 1.44 significantly. On the basis of ideal aspect business unit should
maintain the ratio of 2:1. Outcome of ratio analysis entails that liquidity position of
Blue Inc is good but it is lower than the ideal ratio. Hence, business unit is required to
make control over expenses and thereby maintain high current assets. In this way, by
maintaining enough assets business unit would become able to meet current
obligation on time.

Return on capital employed: Return on capital employed (ROCE) is the ratio of net
operating profit of a company to its capital employed. It measures the profitability of a
company by expressing its operating profit as a percentage of its capital employed. Capital
employed is the sum of stockholders' equity and long-term finance. Alternatively, capital
employed can be calculated as the difference between total assets and current liabilities.
The return on capital employed measures the proportion of adjusted earnings to the
amount of capital and debt required for a business to function. For a company to remain in
business over the long term, its return on capital employed should be higher than its cost of
capital; otherwise, continuing operations gradually reduce the earnings available to
shareholders. It is commonly used to compare the efficiency of capital usage of businesses
within the same industry.
The return on capital employed is a better measurement than return on equity, because
ROCE shows how well a company is using both its equity and debt to generate a return.A
higher value of return on capital employed is favourable indicating that the company
generates more earnings per dollar of capital employed. It has been examined that Blue Inc
has return on capital employed that is 5%. This implies that lower value of ROCE indicates
lower profitability. A company having less assets but same profit as its competitors will have
higher value of return on capital employed and thus higher profitability.
P6 calculate contribution and the breakeven point
Particulars Amount
selling price per unit 15
Variable cost per unit
Material 2.5
labor 5.5
overhead 1
Total variable cost 9
Contribution 6
Fixed cost 10000
BEP in units 1667
BEP in value 25000

Increase in direct material cost by £2.50
Particulars Amount
selling price per unit 15
Variable cost per unit
Material 3
labor 5.5
overhead 1
Total variable cost 9.5
Contribution 5.5
Fixed cost 10000
BEP in units 1818
BEP in value 27273
Reduction in selling price by £14
Particulars Amount
selling price per unit 14
Variable cost per unit
Material 2.5
labor 5.5
overhead 1
Total variable cost 9
Contribution 5
Fixed cost 10000
BEP in units 2000
BEP in value 28000
Increase in fixed cost

Particulars Amount
selling price per unit 15
Variable cost per unit
Material 2.5
labor 5.5
overhead 1
Total variable cost 9
Contribution 6
Fixed cost 11000
BEP in units 1833
BEP in value 27500
Decrease invariable overhead such as £0.75
Particulars Amount
selling price per unit 15
Variable cost per unit
Material 2.5
labor 5.5
overhead 0.75
Total variable cost 8.75
Contribution 6.25
Fixed cost 10000
BEP in units 1600
BEP in value 24000

BEP Increase in
direct
material
cost by
£2.50
Reduction
in selling
price by
£14
Increase in
fixed cost Decrease
invariable
overhead
such as
£0.75
1500
1600
1700
1800
1900
2000
2100
Units of BEP
Units of BEP
P7
Major problem that is experienced by the company
The major issues that have been determined by forecasting the cash flow is greater outflow in
comparison with the inflow. This implies that expenses of the firm are more as compared
with the income which can result in affecting the overall performance of the business to a
greater extent. It has been examined that such has to be improved for the sake of enhancing
the outcomes of the cash flow forecast.
Main causes of the problem
The major cause of issue stated above is related with increase in business expenses
which is not affecting the overall sales of the business. Thus the company is not able to earn
the required amount of income in comparison with expenses that are being made by it. There
is also increase in the purchase made by the business but this does not affect the sales. The
sales of the business are constant for various months that is influencing the overall
performance of the organization.
Improvement in the cash inflow and outflow in order to minimise the cash deficit
In order to enhance the performance of the firm it is being recommended to it to
reduce its expenditure to some extent so that it is able to meet the targeted returns. Also this
results in increasing the income that is being earned by the firm (Chaffey and White, 2010).
The firm must not make more purchase which is not as per the demand. Rather it is required
to assess the requirement of target market to increasing its sales.

CONCLUSION
From this report it can be concluded that it is important for the Blue Inc organization
to identify the physical and human resource so that they can carry out their operations
effectively in the organization. On the other hand, there are various internal and external
sources so it is vital to adopt the most efficient source which can improve the performance of
business.