Importance of Financial Resources for Businesses

The assignment focuses on the significance of selecting appropriate financial resources for businesses. It delves into the challenges organizations face in securing funding and examines various strategic approaches to manage finances effectively. Students are expected to analyze the importance of different types of financial resources and their impact on organizational success.

BUSINESS
RESOURCES

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
ASSESSMENT 1.............................................................................................................................4
P1 describe the recruitment documentation used in a selected organisation...............................4
P2. describe the main employability, personal and communication skills required when
applying for a specific job role....................................................................................................4
TASK 2............................................................................................................................................5
P3. describe the main physical and technological resources required in the operation of a
selected organisation....................................................................................................................5
P4. describe sources of internal and external finance for a selected business.............................6
TASK 3............................................................................................................................................7
P5. interpret the contents of a trading and profit and loss account and balance sheet for a
selected company.........................................................................................................................7
P6. illustrate the use of budgets as a means of exercising financial control of a selected
company.......................................................................................................................................8
TASK 4..........................................................................................................................................11
P7. illustrate the financial state of a given business...................................................................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
For a business to run successfully on a daily basis it needs finances. Success comes when
a business expands, reinvests and uses human recourses to run. Bentalls need money to run their
business effectively and successfully. It needs finance for its daily running of the business for
example, paying staff wages, paying bills for electricity and rent, paying taxes on time and
ordering stock regularly. Present report is based on Tesco which adopts several kind of
recruitment procedure for the purpose of meeting organization objectives.
ASSESSMENT 1
P1 describe the recruitment documentation used in a selected organisation
If Tesco are looking to recruit workers to be behind the till and on the shop floor, first of
all they will advertise the job role, they can do this in many ways today. They can advertise the
vacancy in a newspaper, posters, website, web adverts. As the job role does not require very
skilled and qualified people, the recruitment process will be a lot faster. When Tesco advertise
the vacancy they will need to include the job description and all duties that will be expected,
qualifications and skills required by potential applicants and location of where the work will be
done so the applicants know if they will be able to commute.
P2. describe the main employability, personal and communication skills required when applying
for a specific job role
Employability skills can include having suitable qualifications, most jobs will require
some formal qualification and an applicant will be required to have those formal qualifications or
they will not meet the job description. If there is a vacancy and one of the applicants has had
experience in a similar job then that is something that makes them look better to the employer
than if they just have the qualifications needed, as the employer would think if they worked in
that role before than it would be easier for them to do the same work again (Aladwan, 2014).
Having knowledge of products and services that are being used or sold by the organisation is a
benefit to applicants especially if they intend to work in customer service. If they can
demonstrate knowledge of products and services relevant to the organisation then this can
improve chances of obtaining the job. If an applicant has experience in a specific industrial
sector, this can be highly valued by employers. Meeting targets is vital for a business’s success,

if applicants show they have experience and are effective at meeting targets and deadlines than
they are seen as more employable, if they show they have met targets in a previous job or
education (Bhattacharyya, 2009).
TASK 2
P3. describe the main physical and technological resources required in the operation of a
selected organisation.
Physical resources
Some of the main physical resources for Tesco are; their premises, machinery, equipment,
materials and their stock. I have listed these as the main resources required as they are huge
factoring reasons as to why and how Tesco makes such huge amounts of profit.
A business can’t carry out its day to day activities without having a system in place which
manages physical resources. Physical resources can include; buildings and premises, machinery,
materials (and even waste) and equipment (Fombrun, 2008).
Lack of equipment or bad management in Tesco could mean production of products and
customer service in some aspects of the business running couldn’t be carried out as efficiently or
at all. Things classified as equipment could be IT hardware and software that must both be
managed extremely carefully. No one unauthorised to do so should be able to access the IT
hardware, this can be enforced with physical barriers and surveillance.
Technological resources
Tesco’s’ main technological resources include their intellectual property, their
copyrights/patents, and their experience and skill. Their intellectual property is, put simply, their
ideas; things that make them unique (Hernandez, 2009). This would include things such as their
logo, their ‘Tesco value’ range, and schemes such as the clubcard and the point reward scheme.
The management of these resources can greatly improve Tesco’s performance. If the IP is kept
up to date and fully modernised this will give them a competitive advantage, as long as the ideas
are original and not different versions of competitor’s ideas.
Human resources
The management of human resources is crucial for an organisation. The management should
ensure their employees are managed correctly and professionally.

P4. describe sources of internal and external finance for a selected business
Internal Source: The internal Sources for the owner of Tesco can be from the business
savings or the owners own savings. For Tesco the owner had to use his own personal savings to
start the business, as we see Tesco at the moment, very big and so much product.
The External sources are also in other words Sources from the outside. Tesco made use of
different kind of external sources to expand their business. By for example, Building societies,
Leasing, Venture Capitalists, and Friends or Family (Kumar, 2010).
 Tesco using Venture Capitalists: These are professionals that invest a upcoming new
business such as Tesco in which they also did, however they do that usually in a return
for a share in the ownership.
 Friends and Family: The owner of Tesco had its own savings also but he wanted to
expand Tesco as a business that is the reason he also used the money of his friends and
family in return for a share in the company. He can also lend money from a bank but that
is often a risk, because if the business doesn’t turn into a succes the owner will be in a
very high debt (Park, Douglas and James 2004).
 Banks: As Tesco didn’t have a lot money they needed the help of the bank in terms of
finance, because starting up a business costs a lot of money in many, the building, the
technological equipments and offices are needed to create a good business in a country.
In this way they had a base to start on with the money to expand the business thoroughly.
 Hire Purchase: The hire purchase method is a really important one for Tesco.

TASK 3
P5. interpret the contents of a trading and profit and loss account and balance sheet for a
selected company
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 (Sahoo, 2012). 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%
1. 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.
2. Liquidity ratio analysis: From financial statement analysis, it has been identified that
current ratio is 1.44 significantly (Sheehan, 2005). 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.
3. 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 (Fujioka and et. al., 2006).
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 (Matsumura and Shin, 2005).
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 (Levy and Williams, 2004).
P6. illustrate the use of budgets as a means of exercising financial control of a selected company

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
TASK 4
P7. illustrate the financial state of a given business
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 (Collier and Esteban, 2007).
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 (Bloom, 2004). The sales
of the business are constant for various months that is influencing the overall performance of the
organization (Litzky, Eddleston and Kidder, 2006).
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. 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 (Baucus and Beck-Dudley, 2005).
CONCLUSION
The aforementioned report concludes that application of suitable sources of recruitment
and selection contribute towards the success of the business. It facilitates to ensure certainty of

the business and derive valid outcome in the direction of growth and success of the business. It
can also be concluded that selection of right kind of financial resources.

REFERENCES
Journals and books
Aladwan, K., 2014. Managing human resources in Jordanian organizations: challenges and
prospects. International Journal of Islamic and Middle Eastern Finance and Management.
7(1). PP.126 – 138.
Bhattacharyya, C.K.,2009. Human Resource Planning. Excel Books.
Fombrun, C.F., 2008. Strategic human resource management. Wiley.
Hernandez, R.S., 2009. Strategic Human Resources Management in Health Services
Organizations.
Kumar, R.,2010. Human Resource Management: Strategic Analysis Text and Cases. I. K.
International Pvt. Ltd.
Park, R., Douglas K., and James S., 2004. Does Employee Ownership Enhance Firm Survival?. 8.
PP.3-33.
Sahoo, C., K., 2012. Performance management benefits organizations and their employees.
Human Resource Management International Digest. 20(6). PP. 3 – 5.
Sheehan, C., 2005. A model for HRM strategic integration. Personnel Review. 34 (2).PP.192 –
209.
Fujioka, T. and et. al., 2006. One year of musical training affects development of auditory
cortical-evoked fields in young children. Brain. 129(10). pp.2593-2608.
Levy, P. E. and Williams, J. R., 2004. The social context of performance appraisal: A review and
framework for the future. Journal of management. 30(6). pp.881-905.
Collier, J. and Esteban, R., 2007. Corporate social responsibility and employee commitment.
Business ethics: A European review. 16(1). pp.19-33.
Bloom, M., 2004. The ethics of compensation systems. Journal of Business Ethics. 52(2).
pp.149-152.
Baucus, M. S. and Beck-Dudley, C. L., 2005. Designing ethical organizations: Avoiding the long-
term negative effects of rewards and punishments. Journal of Business Ethics. 56(4).
pp.355-370.
Litzky, B. E., Eddleston, K. A. and Kidder, D. L., 2006. The good, the bad, and the misguided:
How managers inadvertently encourage deviant behaviors. The Academy of Management
Perspectives. 20(1). pp.91-103.

Matsumura, E. M. and Shin, J. Y., 2005. Corporate governance reform and CEO compensation:
Intended and unintended consequences. Journal of Business Ethics. 62(2). pp.101-113.