DANANG UNIVERSITY OF ECONOMICS

BTEC HND IN BUSINESS (MANAGEMENT)

ASSIGNMENT COVER SHEET
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REGISTRATION NO.
UNIT TITLE
ASSIGNMENT TITLE
ASSIGNMENT NO
NAME OF ASSESSOR
SUBMISSION DEADLINE

Unit 2: Managing Financial Resources and Decisions

Finance as a Resource
1 of 2

I, __________________________ hereby confirm that this assignment is my own work and not
copied or plagiarized from any source. I have referenced the sources from which information is
obtained by me for this assignment.

________________________________
Signature

_________________________
Date

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FOR OFFICIAL USE

Assignment Received By:

MFRD A1 QCF FEB 2013 DUE

Date:

Unit Outcomes
Outcome

Evidence for
the
criteria

Assessors
decision

Feedback

First

Understand
the sources
of finance
available to
a business

Identify the
sources of
finance
available to a
business

1.1

Assess the
implications of
the different
sources

1.2

Evaluate
appropriate
sources of
finance for a
business project

1.3

Analyse the
costs of
different
sources of
finance

2.1

Explain the
importance of
financial
planning

2.2

Assess the
information
needs of
different
decision
makers

2.3

Explain the
impact of
finance on the
financial
statements

2.4

Internal
Verification
Re-

LO1

Understand
the
implications
of finance
as a
resource
within a
business
LO2

Merit grades awarded

M1

M2

M3

Distinction grades awarded

D1

D2

D3

MFRD A1 QCF FEB 2013 DUE

Evidence for
the
criteria

Outcome

Feedback

Assessors
decision

Internal
Verification

Assignment
( ) Well-structured; Reference is done properly / should be done (if any)

Overall, youve

Areas for improvement:

ASSESSOR SIGNATURE

DATE

DATE

NAME:.........................................................................................

(Oral feedback was also provided)

STUDENT SIGNATURE
NAME :..............................................................................
FOR INTERNAL USE ONLY
VERIFIED
YES
NO
DATE

: ...........................................................................

VERIFIED BY : ...........................................................................
NAME

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MFRD A1 QCF FEB 2013 DUE

SCENARIO
Phan completed his Diploma and wanted to start a business enterprise. He had
different ideas in his mind. He came across an old text book about herbs and their
medicinal properties. He developed ideas about using those herbs in developing new
products. His idea was to introduce a new product, which would be good for health.
He was thinking about giving it the shape of a brand. He knew that making a
branded product and selling that as a popular brand is not an easy task. He studied
many case studies on similar products and evolved different ideas about how he
should produce.
Phan has approached you as he is very keen on start his own business and he
would like to know various sources of finance to support his business stated below.
While going through these ideas, he had various options, which were based on his
studies:
Launch the product like a commodity - just like coca cola. Coca cola was also
launched as a product sold by druggists initially. It took a long time for coca cola to
reach to masses. Phan was thinking of giving his product a tinkering similar to Coca
cola. It required huge amount of investment into the business. Phan have an idea to
take two or three partners in order to launch his products.
The second option was to launch it like a medicine. Medicines cant be advertised
directly. They have to be marketed to the doctors directly - who will recommend it the
patients. Here the option was to make it not strictly like a medicine. Phan have an
idea to form his business operation as partnership then become a private limited
company.
Phan had idea to create a new marketing channel. During his prior studies in the
Diploma programme, he had made presentations on terms like viral marketing,
network marketing etc. Viral marketing is word of mouth marketing. Network
marketing also relies on networking on people. Phan had an idea about introducing
the product using similar strategy. He had seen success of AMWAY succeeding in
network marketing. Similarly, he had seen his own institution AFTERSCHOOOL
using viral marketing. Now he was not sure about which strategy to use. Phan knew
that great products have failed in markets - he didnt want failures - he wanted a sure
success and for this the only way was brainstorm and find the best option.
Currently Phan is a sole proprietorship seeking seed money. Incorporation will be
decided at a later date as investors are secured. He has estimated required capital
is: sale of house 385,000 and redundancy payment of 68,000. Phan also
estimated start-up cost requirements are as follows: Legal 1,000; Rent 2,000;
Utilities 400; Telecom System 400; Insurance 300; Storefront Build-out 15,000;
Expensed Equipment 4,000; Website development 1,000.

MFRD A1 QCF FEB 2013 DUE

Phan maintains a bank account showing a small credit balance and he planned to
approach his bank for the necessary additional finance. He intends to start up in
business on his own account, using 30,000 which he currently has savings. Phan
asked your advice to prepare cash budget for October 2012 to March 2013 and
provides the following additional information. They are as follows:
Phan estimated to purchase a fixed assets costing 16,000 and intended to
settle off at the end of September. Life of the fixed assets are expected are 5
years and have nil residual value.
He also estimated stocks costing 10,000 will be acquired on the end of
September and subsequent monthly purchases will be at a level sufficient to
replace forecast sales for the month.
Estimated monthly sales are 6,000 for October, 12,000 for November and
December, and 21,000 from January 2013 onwards.
He also fixed selling price at the cost of stock plus 50%.
There are 2 months credit will be allowed to customers and he received one
month credit from his suppliers of stock.
Operating expenses, including rest, are estimated at 3,200 per month.
Phan also planned to withdraw monthly cash as a drawing from his business
amounted to 2,000.

Role
You are acting as a financial project adviser to Phan evaluating the different sources
of finance and providing information on the implication of finance as a resource in the
business. You are to provide Phan a brief report on the following task.
Tasks

Identify the sources of finance available to Phan

Assess the implications of the different sources of finance to Phan

(1.1)

(1.2)
Hints:
Discuss the implication, if any, of the corporate tax on debts financing for Phan?
Explain the implications in both legal and financial aspects to Phan in issuing debts and equity
shares to raise their capital?
Is a corporate tax adjustment required when estimating the cost of Phan as Limited Company
the ordinary shares?
Discuss the dilution of control implications if of Phan as Limited Company decided to issue
new shares which include ordinary shares and/or preference shares, to raise their required
capital.
Discuss the implication of failure to pay interests on debt and ordinary dividend from the
perspective of Phan as Limited Company.

MFRD A1 QCF FEB 2013 DUE

MFRD A1 QCF FEB 2013 DUE

Evaluate appropriate sources of finance for Phan

(1.3)

Hints:
Explain the advantages and disadvantages of different sources of finance available to support
the expansion of a selected business from sole trader to partnership, private limited company
and public limited company.
Evaluate different sources of finance appropriate to each expansion stage.

Analyse the costs of different sources of finance for Phan

(2.1)

Hints
Evaluate various costs incurring with each sources of finance available to Phan.

Explain the importance of financial planning to Phan

(2.2)

Assess the information needs of different decision makers

(2.3)

Explain the impact of finance on the financial statements to Phan

(2.4)

Hints:
Explain, using examples, how a business may manage inflows and outflows, P/L and B/S and
explain how a business may manage its working capital.
Analyse a cash flow forecast highlighting how a problem could occur and explaining why a
business may encounter problems in managing cash flow. Think about overtrading, excessive
borrowing etc. Analysis also the P/L and B/Sheet

MFRD A1 QCF FEB 2013 DUE

GRADING
Pass

is achieved by meeting all the requirements defined in the assessment

criteria. (Refer page 2 of the assignment brief)

Merit

Identify and apply strategies to find appropriate solutions

(M1)

Characteristics / Possible Evidence Accurate evaluation of various

costs of finance taking into consideration all the relevant variables and
selected appropriate sources of finance for given situation.
Select and apply appropriate techniques.

(M2)

Characteristics / Possible Evidence Apply range of methods and

techniques in analyzing the implications of alternative sources of finance,
assess the costs using of various sources of information and description of
all key components on spread sheet.
Present and communicate appropriate findings

(M3)

Characteristics / Possible Evidence report should contain clearly

defined objectives, rationale and recommendations for appropriate
sources of finance and are presented in a clear, structured format.
Appropriate technical language is used. Appropriate use is made of text,
images, charts and tables.
Distinction Use critical reflection to evaluate own work and justify valid conclusions (D1)
Characteristics / Possible Evidence Evaluate and synthesize relevant
theories and techniques to generate and justify valid conclusions based
on appropriate sources of finance, costs of different sources of finance
as well as recommending steps to strengthen managing working
capital.
Take responsibility for managing and organising activities

(D2)

Characteristics / Possible Evidence The various sources of finance,

its costs implications and managing working capital to Phan are
sufficiently discussed by examining their pros and cons.
Demonstrate convergent, lateral and creative thinking

(D3)

Characteristics / Possible Evidence The implications of the different

sources of finance and management of working capital are analysed indepth by linking theory with the case study.

MFRD A1 QCF FEB 2013 DUE

PRESENTATION
1. The assignment should have a cover page that includes the assignment title,
assignment number, course title, module title, Lecturer/tutor name and
students name. Attach all the pages of assignment brief/cover sheet with your
report and leave them blank for official use.
2. Ensure that authenticity declaration has been signed.
3. This is an individual assignment.
4. Content sheet with a list of all headings and page numbers.
5. A fully typed up professionally presented report document. Use 12 point Arial
or Times New Roman script.
6. Your assignment should be word-processed and should not exceed 2,500
words in length. A CD should be included with references and
accompanying notes.
7. Use the Harvard referencing system.
8. Exhibits/appendices are outside this limit.
9. The assignment should be not contain a bibliography but should contain a
list of any references used in the assignment.
NOTES TO STUDENTS FOR SUMMISSION

Check carefully the submission date and the instructions given with the
assignment. Late assignments will not be accepted.

Ensure that you give yourself enough time to complete the assignment by the
due date.

Do not leave things such as printing to the last minute excuses of this nature
will not be accepted for failure to hand-in the work on time.

You must take responsibility for managing your own time effectively.

If you are unable to hand in your assignment on time and have valid reasons
such as illness, you may apply (in writing) for an extension.

Failure to achieve a PASS grade will results in a REFERRAL grade being

given.

Take great care that if you use other peoples work or ideas in your
assignment, you properly reference them in your text and any bibliography.

NOTE: If you are caught plagiarizing, the University policy and

procedures will apply.

MFRD A1 QCF FEB 2013 DUE