Financial Statement Analysis for Fort Sport Ltd.
Added on 2019-12-03
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Unit 2: Managing Financial Resources andDecisions - RESITLevel : 4TitleManaging Financial Resources and DecisionsLearningOutcomeLearningOutcomeAssessmentCriteriaIn this assessment you willhave the opportunity topresent evidence that showsTaskno.EvidenceLO1LO2Understand the sources of finance available to a businessUnderstand the importance of financial planning and information needs.1.1Identify the sources of financeavailable to a business 1.2Assess the implications of thedifferent sources1.3Evaluate appropriate sources offinance for a business project2.1Analyse the costs of differentsources of finance 2.2Explain the importance offinancial planning2.3Assess the information needs of different decision makers2.4Explain the impact of finance on the financial statements Unit 2: Managing Financial Resources and Decisions May 20141
LO3Be able to make financial decisions based on financial information 3.1Analyse budgets and make appropriate decisions.3.2Explain the calculation of unit costs and make pricing decisionsusing relevant information.3.3Assess the viability of a project using investment appraisal techniques.LO4Be able to evaluate the financial performance of a business.4.1Discuss the main financial statements.4.2Compare appropriate formats of financial statements for different types of business.4.3Interpret financial statements using appropriate ratios and comparisons, both internal and external.titleManaging Financial Resources and DecisionsPurpose of this assignment – This unit is designed to give learners a broad understanding of the sources andavailability of finance for a business organisation. Learners will learn how to evaluatethese different sources and compare how they are used. They will learn how financialinformation is recorded and how to use this information to make decisions for examplein planning and budgeting. Decisions relating to pricing and investment appraisal arealso considered within the unit. Finally, learners will learn and apply techniques usedto evaluate financial performance. ScenarioUnit 2: Managing Financial Resources and Decisions May 20142
You work as a finance manager within the Head Offices of Fort Sport Ltd. You have been asked to assist the management team in preparing and forecasting thecompany’s expansion. Fort Sport Ltd is a small private company who began trading inApril 2013. The company supplies fitness products online to the public; specialising inmid range sporting goods and equipment. In 2014, it wishes to increase its activity inthe market and as such need to identify a variety of options for finance.Your research has shown that the Bannatyne Group would be interested in investing inFort Sport Ltd. This could be an option for the company and will be something for youto consider, however, in the event that this investment is not viable, other options offinance must be explored. The Bannatyne Group has been keen to enter into a deal of this nature as marketresearch indicates that internet related businesses are expected to grow in the UK andglobally.Your line manager has asked you to explore the cost and profit implications of varioussources of finance that would be available to Fort Sport Ltd. In particular, theexecutives within the group want to know what the costs would be if the group wereto accept the investment offer from the Bannatyne Group.Please use the following case study as areference:-http://businesscasestudies.co.uk/beeson-gregory/raising-finance-for-smes/intr.html#axzz2yDASkv00Unit 2: Managing Financial Resources and Decisions May 20143
Task 1 (This tasks offers you an opportunity to achieve L.O. 1: 1.1, 1.2 and1.3)You have been asked to identify a range of sources of finance available to Fort SportLtd. These can include raising funds through a combination of finance areas. Pleaseidentify at least three sources(1.1).You should also assess the implications of your choices: What are the legal,financial and dilution of control implications (percentage ownerships); risks ofbankruptcy.(1.2)After assessing the possible sources of finance, you must choose a source(s)thatwould be appropriate for Fort Sport Ltd. You are required to: evaluate benefits of different sources for Fort Sport Ltd; match term of finance to term of project (1.3)Unit 2: Managing Financial Resources and Decisions May 20144
Task 2 (This tasks offers you an opportunity to achieve LO2: 2.1, 2.2, 2.3, and2.4)Analyse the financial costs of your chosen sources of finance for Fort Sport Ltd.(2.1)With reference to the financial planning of this task, you will need to explain in a reportformat why financial planning is important for the success of Fort Sport Ltd.(2.2)Assess different information needs for each decision maker within Fort SportLtd: Identify and assess the information that is needed for a range of decision makers.(2.3)Explain how the loan and investments (purchase of ordinary shares) impacts thebalance sheet and income statement(2.4)Unit 2: Managing Financial Resources and Decisions May 20145
Task 3 (This tasks offers you an opportunity to achieve LO3: 3.1, 3.2, and3.3)Task 3a. Analyse budgets and make appropriate decisions: The CEO of Fort Sport Ltd has asked you to prepare a Cash Budget for the four monthsending October 2014, and identify whether the business has a surplus or a deficit. IfFort Sport Ltd has a surplus, suggest two ways in which it could utilise this and if it hasa deficit, suggest two ways it could deal with this.(3.1)The CEO of Fort Sport Ltd has asked you to prepare the Cash Budget based on thefollowing information:1.The Bank Balance on 1st July 2014 will be £50,000.2.Total monthly sales for the four month period ending October 2014 areforecasted as: £July 150,000 August 100,000Sept 125,000October120,0003.Cash purchases during the relevant period are:£July52,000August 32,000Sept74,000October82,0004.A new supplier has offered Fort Sport Ltd two months credit starting July 2014;this means that materials bought on credit in July will be paid for in September and soon. Fort Sport Ltd plan to make the following credit purchases from this supplier:Unit 2: Managing Financial Resources and Decisions May 20146
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