Business Resources Report: Blue Inc. Operations and Finances

This report provides a comprehensive analysis of the business resources utilized by Blue Inc., a UK-based fashion retail chain. It begins by examining the recruitment documentation, including job descriptions and person specifications, necessary for hiring store managers. The report then delves into the essential employability, communication, and personal skills required for various job roles within the company. A detailed overview of physical and technological resources needed for business operations, such as store facilities, machinery, intellectual property, and point-of-sale systems, is also provided. Furthermore, the report explores both internal and external sources of finance available to the firm, including retained earnings, equity shares, and bank overdrafts. Finally, the report interprets Blue Inc.'s trading, profit and loss account, and balance sheet, offering calculations of key financial metrics like gross profit, net profit, and current ratios. The use of budgets for financial control is also discussed, along with an illustration of the company's financial state and suggestions to minimize cash deficit.

Business Resources

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Recruitment documentation utilised in a firm...................................................................3
P2 Main employability, communication & personal skills needed when applying for a
particular job role...................................................................................................................5
P3 Physical and technological resources needed in operation of an organisation.................6
P4 Sources of internal & external finance for business firm..................................................6
TASK 2............................................................................................................................................8
P5 Interpretation of trading, profit & loss account and balance sheet for firm.....................8
P6 Use of budgets as a means of exercising financial control of company.........................10
P7 Illustration of financial state of business.........................................................................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
.......................................................................................................................................................14

INTRODUCTION
Business Resources refers to the productive or economic factor needed to attain an
activity or as way to undertake a firm and accomplish desired outcomes. The most basic
resources includes Human, financial, physical and technological resources which are required by
every business firm in order to carry out its activities and functions in an effective & efficient
manner (Chaffey and White, 2010). The present assignment is based on Blue Inc which is one of
the rapidly growing UK based fashion retail store. This report covers recruitment documentation
used in hiring process of new staff as well as required skills when applying for particular job
role. It also includes the resources needed in business operations and sources of finance for
specific firm. At last, financial statement of firm is interpreted, problems are identified and ways
are suggested to minimize cash deficit.
TASK 1
P1 Recruitment documentation utilised in a firm
The given organisation in this assignment is Blue Inc which is the fashion retail chain
based on United Kingdom. Currently, firm operates its 250 stores all across the UK and is the

fastest growing retailer in young fashion market. For every business organisation, human
resource is an essential part. Managing them in proper way assists firm in performing its
operation and activities smoothly (Cascio, 2018). So, it is essential for firm to recruit skilled and
knowledgeable manpower which assists in attaining its objectives. Some document that are
required for recruiting employees includes job description and person specification which are
defined below:
Job Description
Job Title: Store manager Store Name: Blue Inc.
Type of Role: Permanent Hours: Full Time
Salary: Up to £27000 p.a. Last Date: 12/07/2018
Working with Blue Inc.
Blue Inc is rapidly growing fashion retail chain of UK and is performing its business activities
by internet platform as well. Therefore, there is a good management of work so, various
opportunities are provided by firm to its workforce in terms of their growth and development as
well as enhancing skills and abilities. Store manager will be needed to work with administration
of Blue Inc for attaining operational goals.
Competencies:
 Good communication
 Team work
 Decision-making & judgment
 Team work
 Customer focus
Job Duties:
 Assist in clear communication among retail floor & office staff.
 Store resources of firm in proper and effective way so that it can be utilized later on.
 Designing a session related to product knowledge with sales representatives
 Addresing the issues of customers in timely manner
Requirements :

 MBA(Marketing)
 3+ Years of experience in area of retail marketing
Note: Interested candidates can drop their resume to official website of firm.
PERSON SPECIFICATION
Organisation: Blue Inc.
Job profile – Store Manager
Qualification – MBA or PGDM (Marketing)
Essential Criteria:
 Sound knowledge of management tools and skills.
 Have the ability to determine productive customers and should have effective sales skills
 Strong leadership skills
 Strong motivational, interpersonal and communication skills
Desirable criteria:
 3+ years’ experience
 Excellent knowledge regarding retail policies & procedures
 Good personality
P2 Main employability, communication & personal skills needed when applying for a particular
job role
For performing each task in better manner, some skills are required by every individual.
On the basis of these skills, candidate are selected and hired. It helps in attaining goals and
targets of company in effective manner (Montgomery, 2011). Some skills that are required by
Blue Inc for particular job position are defined below:
Employability skills: These skills assists manpower in performing their job roles
effectively. Effective employability skills assists workforce in significance of good relationships
within company. Some skills involves:
 Suitable qualifications
 Preferred experiences

 Efficiency to meet targets of company
 Knowledge of products & services
Personal skills: These are the skills that allow an individual to communicate with others
in an effective manner, manage and self express themselves. Only having professional skills are
not enough for a person in performing its duties well, but some personal attributes are also
required. Some skills are defined below:
 Patience & Hard Working
 Team Working skills
 Interview Skills
 Negotiation skills
Communication skills: It is the very essential skill that assist employees in maintaining
good relationships within firm as well as with customers (Zott and Amit, 2010). It also assist in
conveying information in more appropriate manner.
All the above mentioned skills are very necessary for a store manager as these helps in
performing their duties well and maintaining good relationships with customers which in turn
results in high growth and profitability of company (Zikmund and et. al., 2013).
P3 Physical and technological resources needed in operation of an organisation
Physical resources:
The physical resources of a company include all the tangible resources that need to
maintain for carrying out its function. Proper management of resources is very important in Blue
Inc. because company having too much inventory available, which needs to be taken care of and
it includes equipments & machinery, land and materials.
Building and Facilities: It is very essential physical resource which need to available in
every company as it is the place where they will operate. So, stores of Blue Inc. is required to
have a large stores where they put all their resources at one place in effective and efficient
manner.
Materials and Machinery: For Blue Inc. it is very important to use best raw material to
make better output so that they can easily sold their product in stores. Also, resource manager
should take care that there is optimum utilisation of resources.
Technological resources:

The technological resources of company include intangible resources such as intellectual
property, Point -of-sale System.
Intellectual Property – Intellectual property simply means a 'idea' that make the product
unique it includes range of product, different schemes and their logo. There should be proper
management of these resources that helps in improving Blue Inc.'s performance.
Point-of-Sale System – For reducing the possibility of human errors there is software
program attached to cash register that helps in speed up the transaction process without any error.
Point-of-sale system is very helpful for Blue Inc. as it is equipped with infrared which quickly
provides price information for cashier (Wilson, 2015).
P4 Sources of internal & external finance for business firm
Internal sources of fund:
Internal source of fund is that which is generate by organisation with help of internal
sources. The key feature of this is that there is no outside dependency for fulfilment the need of
fund. It is source of finance which is generated by the business itself with normal course of
operations.
There are various types of internal source of fund such as retained earning, sale of asset and
reduction in working capital.
 RETAINED EARNING – It can be defined as the net earning after drawing capital by
owner or by paying a dividend to shareholders. This is also called as ' Ploughing Back of
Profits'.
Formula for the calculation of retained earning :-
Retained Earning = Net Profits – Dividend / Drawings
 SALE OF ASSET – The cash which is generated by the selling of asset and fund is used
internally for financing the capital needs. Main aim of the sale of asset is generally to
reduce bad debt risk, increase in cash flow and liquidation of assets.
 REDUCTION IN WORKING CAPITAL – Working capital is divided into 2
components: Current assets and Current liabilities where current assets include stock,
account receivables and current liabilities are account payables- creditors and bank
overdraft (Ciabuschi, Perna and Snehota, 2012). Blue Inc should use proper inventory
management that helps in reducing working capital, as the object is to sell out the stock to
minimum inventory level before the supplier needs to be paid.

External sources of fund:
The fund which is come from outside the organisation. There are various type of external
sources of funds such as equity shares, debentures, and bank overdrafts.
 EQUITY SHARES – It is the source which is mostly used by the Blue Inc. The key
characteristic of equity share is 'sharing of ownership rights' so the current shareholders'
right is diluted to some extent. It is costly in nature because the dividend which is offered
to shareholder is not tax deductible.
 DEBENTURES – Another source of fund used by Blue Inc is debentures which prefer
debt over the equity. It is cheaper in nature because the interest paid to debentures holder
is tax deductible (Wahl and Prause, 2013).
 BANK OVERDRAFTS – It is short term financing which is used for day to day
requirement that arises because of the time gap between their payments and collections.
Firm can use this source for arranging funds to perform their operations smoothly.
TASK 2
P5 Interpretation of trading, profit & loss account and balance sheet for firm
Gross profit: It is the total gain that firm make after deducting all costs associated with
developing and selling of products.
Formula for computing:
Gross profit: Total sales- COGS (Cost of good sales)
: 87912-38481=49431
Gross profit margin: It is a financial metric that uses by firm in order to assess business
model and financial position of enterprise by revealing profit out of revenues.
Gross profit margin: Gross profit /Total revenue *100
: 49431/87912*100=56.22%
Net profit: It is the actual gains of company after eliminating all expenditure from gross
profit (Obschonka, Silbereisen and Schmitt‐Rodermund, 2012).
Income statement
Particular Amount
Sales 87912
Less: COGS 38481

Gross profit 49431
Less: Overhead expense
Wages 28566
Carriage outwards 139
Rent 4400
Rates and insurance 3561
Advertising 1369
bad debts 879
Fixed expenses as depreciation 120
Van 2500
Total overhead exp, 41534
Net profit 7897
Net profit margin: It is the remaining percentage of revenue after deducting all expenses
from total sales.
Net profit margin: Net income / Total sales *100
: 7897/87912*100= 8.98%
Current ratio: It is the liquidity ratio which measures ability of firm to meet its ability to
pay its long term and short term obligations (Hahn and Gold, 2014).
Current ratio: Current assets/Current liabilities
: 72000/50000=1.44
Return on capital employed: It is the indicator of profitability and efficiency of firm's
investment.
ROCE: EBIT/ capital employed *100
: 7897/130000+75000*100
: 3.85%
a):
Fixed assets:
Land and building 150000
Machinery 180000
Vehicles 90000

Total fixed assets 420000
b):
Current assets
Stock 34000
Debtors 26000
Bank 12000
Total current assets 72000
c)
Current liability
Trade creditor 18000
Taxation 19500
Dividends 12500
Current liability 50000
d):
Particular Amount
Fixed assets:
Land and building 150000
Machinery 180000
Vehicles 90000
Total fixed assets 420000
Current assets
Stock 34000
Debtors 26000
Bank 12000
Total current assets 72000
Total Assets 492000
e):
long term liability
Long term loans 75000

Capital 130000
Net assets employed 205000
P6 Use of budgets as a means of exercising financial control of company
Calculation of contribution
Selling price ₤15.00
Less: various costs
Direct materials ₤2.50
Direct labour ₤5.50
Variable overhead ₤1.00
Contribution 6
Break-even point: FC/contribution
10000/6= 1666 units.
(a): In case there is increase in Direct material costs
An increase in direct material
costs to ₤3.00 per product
Selling price 15
Less: various costs
Direct materials 3
Direct labour 5.5
Variable overhead 1
Contribution 5.5
Break-even point= 10000/5.5=1818 units
(b): Reduction in selling price:
Calculation of contribution
Selling price 14
Less: various costs
Direct materials 2.5
Direct labour 5.5

Variable overhead 1
Contribution 5
Break-even Point: 10000/5=2000 units
(c): An increase in fixed cost:
Calculation of contribution
Selling price ₤15.00
Less: various costs
Direct materials ₤2.50
Direct labour ₤5.50
Variable overhead ₤1.00
Contribution 6
BEP: 11000/6=1833 units
(d): A decrease in variable overhead
Calculation of contribution
Selling price 15
Less: various costs
Direct materials 2.5
Direct labour 5.5
Variable overhead 0.75
Contribution 6.25
BEP: 10000/6.25=1600 units.
Unit sold Total cost Total revenue
1666 14994 24990
1818 17271 27270
2000 18000 28000
1833 16497 27495
1600 14000 24000