[Solved] LO1 Understand sources of funding and income generation for business and services industries

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[Solved] LO1 Understand sources of funding and income generation for business and services industries

Here, you are supposed to present a report covering the following learning outcomes:

• LO1 Understand sources of funding and income generation for business and services industries.
• LO2 Understand business in terms of the elements of cost.
• LO3 Be able to evaluate business accounts.
• LO4 Be able to analyse business performance by the application of ratios.
• LO5 Be able to apply the concept of marginal costing.

LO1 Understand sources of funding and income generation for business and services industries

Understand sources of funding and income generation for business and services industries Funding: sources eg retained profits, loans, banks, investors, small business schemes, franchise, hire purchase, sponsorship, lease schemes, creditors, debt factoring Income generation: methods eg sales, commission, sub-letting, sponsorship, grants, tracking mechanisms

1.1 review sources of funding available to business and services industries

1.2 evaluate the contribution made by a range of methods of generating income within a given business and services operation

LO2 Understand business in terms of the elements of cost

2.1 discuss elements of cost, gross profit percentages and selling prices for products and services

2.2 evaluate methods of controlling stock and cash in a business and services environment Understand business in terms of the elements of cost Elements of cost: sales; materials; consumables; labour; overheads; capital; gross and net profits; discount costing Selling prices: product and service costing; formula to achieve a specific gross profit percentage; differential gross/net profit margins; marginal costing; effect of competition; freelance; commission; peak/off-peak trading Control of stock and cash: methods eg storage, purchasing, cash, security, reconciliation, stock-taking Taxation: income tax; Value Added Tax (VAT); corporation tax; schedules; rates; personal/capital allowances; post-tax profits, implications

LO3 Be able to evaluate business accounts

3.1 assess the source and structure of the trial balance

3.2 evaluate business accounts, adjustments and notes

3.3 discuss the process and purpose of budgetary control

3.4 analyse variances from budgeted and actual figures, offering suggestions for appropriate future management action Be able to evaluate business accounts Trial balance: source; structure eg summary of accounts from sales, purchase and nominal ledgers Final accounts: types eg sole trader, partnerships, limited company, trading account, profit and loss account, balance sheet, adjustments for depreciation, accruals, prepayments, bad debt provision; format eg vertical, double-entry, appropriation account; assets/liabilities eg capital, fixed, current, notes to accounts Profit and cash budgets: purpose; types eg profit, cash flow, operating, master; variance analysis to include sales (volume and average spend), cost variances (raw material, labour, overhead), profit variances (gross and net)

LO4 Be able to analyse business performance by the application of ratios

4.1 calculate and analyse all ratios to offer a consistent interpretation of historical business performance

4.2 recommend appropriate future management strategies for a given business and services operation Be able to analyse business performance by the application of ratios Sales profitability ratios: gross and net profit; Return On Capital Employed (ROCE) Liquidity ratios: current; acid test Efficiency ratios: debtors and creditors payment periods; stock turnover Financial ratios: interest earned; gearing

LO5 Be able to apply the concept of marginal costing

5.1 categorise costs as fixed, variable and semi-variable for a given scenario

5.2 calculate contribution per product/customer and explain the cost/profit/volume relationship for a given scenario

5.3 justify short-term management decisions based on profit/loss potentials and risk (break-even) calculations for a given business and services operation Be able to apply the concept of marginal costing Costs categorisation and contribution: fixed and variable costs; contribution calculation eg product/customers, cost/profit/volume relationship Application: break-even; profit/loss potentials; setting selling price and discounting