1.1 Prepare and interpret a profit and loss account (income statement) of a limited company from data provided

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1.1 Prepare and interpret a profit and loss account (income statement) of a limited company from data provided

Unit M/503/0114 Financial Management

Learning Outcome The learner will: Assessment Criteria The learner can:
1. Be able to construct the financial statements of companies
1.1 Prepare and interpret a profit and loss account (income statement) of a limited company from data provided
1.2 Prepare and analyse a balance sheet (position statement) of a limited company from data provided
1.3 Prepare and analyse a cash flow statement from data provided
1.4 Prepare and interpret simple group accounts from data provided
1.5 Explain the need for accounting standards
2. Be able to compute, analyse and evaluate financial statements using a range of financial ratios
2.1 Calculate profitability, liquidity, efficiency and investment ratios
2.2 Provide a critical analysis of financial performance using some or all of the ratios as above
3. Be able to demonstrate an understanding of the principal management accounting techniques
3.1 Explain the following: fixed costs, variable costs, break even
3.2 Make appropriate calculations and appropriate decisions based on management accounts from case study material
3.3 Explain the role and methodology used in budgetary control
3.4 Prepare cash budgets from data provided
3.5 Explain the relevance of capital investment appraisal and make relevant decisions
3.6 Calculate and analyse the following: payback period, accounting rate of return and net present value
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4. Be able to demonstrate an ability to recognise the sources of business finance and an awareness of capital markets
4.1 Explain the possible sources of short term finance available to a business
4.2 Explain the possible sources of long term finance available to business
4.3 Understand the functions of a stock exchange
4.4 Outline the process of issuing share capital
5. Be able to understand the need for the expansion of businesses
5.1 Explain the distinction between a merger and a takeover
5.2 Explain the following: horizontal, vertical and conglomerate integration
6. Be able to demonstrate an understanding of budgetary control and standard costing
6.1 Explain the methodology and importance of standard costing as a management aid
6.2 Calculate and analyse the following variances from sample data: material price, material usage, total material cost, labour rate, 

labour efficiency and total labour cost

6.3 Explain the differences between basic, ideal and attainable standards
Assessment Methods
There are no mandatory assessment methods for this unit.
The following provides examples of assessment methods that could be used to generate evidence for this unit. 

This list is not an exhaustive list and other methods can be used by the centre.
 Recognition of Prior Learning/Achievement
 Observation
 Professional Discussion
 Product Evidence
 Expert Witness Testimony
 Witness Testimony
 Simulation