Unit 3 Business Finance – Pearson BTEC International Level 3 Assignment Brief

BTEC Level 3 Assignment Brief

Vocational Scenario or Context

As a budding entrepreneur, itching to start your own enterprise, you realise that you need to understand business finance. No enterprise is successful, if the entrepreneur that runs it does not understand finances i.e. where you can source finance from, where revenue can come from and how this links to the objectives, size and type of the enterprise that you are running. Now is your opportunity to find out! You will need to write a report (as this is also an important skill for an entrepreneur) to present your findings.

Task 1

You will need to research the different sources of finance and revenue that are available to different businesses. You will need to research businesses:

• Of differing sizes (e.g. small, medium, large)
• At different stages of development (e.g. start-up, sole trader, partnerships, private and public limited etc)
• That have different business objectives (e.g. expand, to develop products, to develop in new markets, to relocate etc)
• That offer different products (e.g. goods or services or both)
• That operate in different sectors (e.g. retail, electronics, health etc)

In your report, you must include the following for the different businesses at the different stages of their development:

• An explanation of the features of different internal and external sources of finance that are available
• How different sources of internal and external finance can be accessed
• An explanation of how the features of the different internal and external sources of finance influence the decisions made
• An explanation of the different sources and suitability of revenue that is available
• An analysis of the similarities and differences in the approach taken by the different businesses to securing business finance.
• The advantages and disadvantages, including the business risks, of the different types of internal and external sources of finance
• A judgement on how far different types of internal and external business finance meet the requirements
• An evaluation of how far the different types of internal and external finance meet the needs of the different businesses.
• A conclusion determining the most appropriate types of business finance for the different businesses at different stages of their development.

Checklist of evidence required

An individual report

Criteria covered by this task:

Vocational Scenario or Context

You are a budding entrepreneur, looking to further your financial literacy skills. A sole trader has approached you and asked for your help. They want you to analyse the performance of their business, identifying the current business risks and suggest ways that their business performance could be improved. You realise this is a great opportunity for you to truly understand how financial information can help a business monitor and improve their performance including how to prepare a formal financial report.

Your report should include the following:

• Title
• An introduction of the details that are included in the report
• Part One: Cash flow and break-even calculations and analysis, risks faced by the business
• Part Two: Analysis of performance, conclusions and recommendations

Task 1

Choose a sole trader of your choice, but ensure you can have access to the appropriate financial data. You will need to present your findings in a financial report to the sole trader. Write a title for your report and an introduction to the business.

Part One of your financial report must include:

• An explanation of the purpose of:
   -> Cash flow forecasts and statements
   -> Break even analysis for the selected sole trader
  
  
• An accurate cash flow forecast and statement and a break-even chart and calculation
  Calculations and in-depth analysis using data from the sole trader’s cash flow forecasts and statements and break even, to identify risks to the business. You should demonstrate your understanding of common risks e.g. an increase in fixed or variable costs, a reduction in selling price, decline in sales revenue etc
  
  
• A detailed examination of the factors that impact on the business risks.
  A broad range of conclusions and actions that the business could take to address these risks, based on the analysis of your calculations
  

  Task 2

Part Two of your financial report must include:

• An explanation of the purpose and the main components for sole traders of:
   -> Statements of comprehensive income
   -> Statements of financial position
  
  
• Using the financial data from the sole trader, you must prepare an accurate:
   -> Statement of comprehensive income
   -> Statement of financial position
  
  
• These must be professionally accepted and in a vertical format
• For both of the above statements, you need to make adjustments for:
   -> Depreciation
   -> Prepayments
   -> Accruals
   -> Changes in capital
  
  
• Accurate ratio calculations (measuring profitability, liquidity and efficiency), using data you have extracted from the above statements
  
  
• An analysis of the business’s performance i.e. a detailed examination of the ratio calculations
  
  
• A wide range of justified recommendations for improving the business’s performance, based on the outcomes of the ratio analysis.

Checklist of evidence required

Financial report including: cash flow forecasts and statements break-even analysis risks and possible solutions statement of comprehensive income statement of financial position ratio analysis recommendations on how to improve the business’s performance

Criteria covered by this task: