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Managing Financial resources and decisions

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HND Business management discipline allow students to have an opportunity to deploy the theoretical knowledge gained from the class experience and along with this students can have first hand experience on the real world situations. Unit 2 managing financial resources and decisions have the learning objective to impart knowledge on sources from which businesses gain finance, understanding implications of finance as resource within the business organization, making financial decisions based on financial information available and finally evaluating the financial performance of the business organization. Detailed objectives for this unit are given as under:

  • LO1 To understand the sources of finance available to a business
  • LO2 Understand the implications of finance as a resource within a business
  • LO3 Be Able to make financial decision based on financial information
  • LO4 Be able to evaluate the financial performance of a business

Managing financial resources and decision Introduction

To introduce the topic of managing financial resources and decision one needs to put the feet in the shoe of entrepreneur and think about the various resources required. No doubt, as a businessman finance is equally important to any other resource like Human resource. So effective management of finance may lead a business towards success. Similarly, budgets are used to manage financial decisions and one should know “why are budget used to manage financial resources”. While asking the question “why are budgets used to manage financial resources?”, one should examine the process of budgeting and its implication for business success. Finance is important source and importance of financial resources in health and social care is even higher.

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Entrepreneur should have knowledge in order to evaluate appropriate sources of finance for a business project so that cost of finance or tenor for finance can be managed. Managing financial resources takes the front seat while judging success specially for new projects as they need fund and startup businesses need to arrange funds through multiple sources. Both internal and external sources of finance needs to be deployed. Examples of internal sources of finance include IPO, deploying profits earned, sale of fixed assets, business revenues and others. Financial resources in a business would impact costing as well as stability of finance since tenor would depend on source of finance selected.

Students pursuing HND business management or HND health and social care needs to work on Unit 2 Managing financial resources and decision and require help to complete their HND Assignments. HND Assignment Help allow students an opportunity to accomplish their work with ease while learning the concepts. HND Assignment Help is one stop solution for all assignment worries.

Sample Assignment for Unit 2 Managing financial resources and decisions

Contents

Introduction. 2

Plan for collection and types of Primary and secondary data: 2

Survey Methodology: 3

Analyzing Business Information: 4

Analysis: 5

Measures of dispersion: 6

Use of Quartiles, Percentiles and correlation coefficient in decision making: 7

Graphs for data analysis: 8

Power point Presentation: 12

Business Report: 15

Use of Information processing tools in inventory management: 15

Project Plan: 15

Investment appraisal Tool: 17

Conclusion: 18

Managing financial resources and decisions Introduction

Kitchen Design Ltd wants to explore the business opportunities in market of Bathroom Design and equipments. Currently, the company is in contemporary kitchen installation. Present assignment discusses and analyses the data collection methods for effective decision making by looking in different ways of data analysis. The collected data has been analyzed by various tools to check the effectiveness. Details has been presented with help of various charts to describe industry trends of various product categories. Last part covers the cost benefit analysis of data processing investment to be made:

Plan for collection and types of Primary and secondary data:

Data can be primarily divided into two parts:

Primary Data: Primary data is collected by researcher themselves for the specific purpose of research. This is first hand data as this is collected for specific project. Thus, this doesn’t exist before. Being project specific, this includes high investment in form of time and money. Conducting survey, filling up questionnaire, observations, experiments, personal interviews. These are also called data collection techniques (Akkoyun, 2012).

Surveys and Questionnaire: This involves asking small and direct question from target audience to know about their preferences and dislikes. Surveys are generally in verbal form whereas questionnaire are in written form.

Experiments: These are logical series of events to know the end result. These can be in open or close environment.

Observation: This is most widely used method for data collection for social science. The chances of personal biases are higher here as observer has his own opinion or biasness.

Secondary Data: Data which is collected for some other purpose/project but is related to the present research. This data is an extended form of primary data and supports it. This can be collected from data management companies, Internet, publication, press release, other research house reports and others.

Data collector should follow the code of conduct and must aims for most reliable, authentic and updated data for the client (Adkins, 2014).

Survey Methodology:

Survey means to conduct a small interview to the target audience. Methods used for same can be questionnaires, personal interviews. This forms primary source of collecting primary data. Various open and close ended questions are given to target customer.  This also includes collecting secondary data through various internal sources such as past research, company annual report, publications and others.

In present case, small questionnaires can be used for collecting data related to Kitchen Design present market value and to know customer preferences for bathroom design and equipment industry (Saxena, 2015).

Sampling Frame:

Under sampling frame, the target audience is divided upon certain categories.  This can be based on age, income, gender and others.

The sampling frame related to bathroom design and equipment can be based on income and age of customers.

Questionnaire for present research:

Questionnaire is low cost medium to reach out large number of audience. Care should be taken that question asked in same as direct and should not consume much time of audience to fill out the same. The questionnaire for present research can be as:

  1. Select your Gender:
  2. Male
  3. Female.
  4. What is your age group:
  5. 0-13 years.
  6. 13-20 years.
  7. 21-35 years.
  8. 35 to 50 years.
  9. 50 years and above.
  10. Employment status.
  11. Self employed
  12. Employee
  13. Unemployed.
  14. Annual Income
  15. Upto 5000
  16. 5000-10000
  17. More than 10000.
  18. Do you know about  or purchased about Kitchen Design products
  19. Heard and Purchased.
  20. Know about the company but not purchased.
  21. Don’t know the company.
  22. How was experience using Kitchen Design products:
  23. Good
  24. Bad
  25. Not used the product
  26. What is most important factor while purchasing bathroom equipments:
  27. Design.
  28. Durability.
  29. Cost
  30. Will you like to buy products of Kitchen designs, if entered into bathroom design and Equipments:
  31. Yes
  32. No
  33. Don’t know.
  34. How was experience to buy Kitchen design Products:
  35. Satisfactory.
  36. Unsatisfactory.
  37. Not applies to me

Analyzing Business Information:

For any decision to be made, available data to be represented in systematic and logical sequence. Representative values are used to present the data in logical systematic manner and to reach out for conclusions based on same.

  1. Mean: Representative value to provide the average of data. This provides the average and gives a single figure to data. Here this can be calculated as Total of sales divided by number of months. This reflects the average sales recorded per month (Olawale, 2010).
  2. Median: Data being arrange in ascending order, median reflects middle most values in data. As data number is even, this will be average of two middle values.
  3. Mode: This represents the highest frequency number in any given data. This value reflects the most desirous number in data.

Calculations of these three provide results as shown in table below:

Months Country (000 £) Minimalist (000 £)
January 90 430
February 80 360
March 130 350
April 170 350
May 240 320
June 280 330
July 290 310
August 310 300
September 300 300
October 180 370
November 140 400
December 90 420
Mean 192 353
Median 175 350
Mode 90 350

Analysis:

Given above data of Country and Minimalist, two main lines of Kitchen design. The mean represents the average sales made by these lines per month. Mean of Country line is 192 in comparison of mean of Minimalist line of 353. This means that a sale per month of Minimalist is much higher than sale of first line. From the median, it can be seen that, median of minimalist line is near to average but same is not in case of country business line. Mode as represent the figure with highest frequency, so the same is 90 and 350 for these divisons, which shows that sales figure of 90 is recorded for more than once in country line. Same way, sales figure of 350 is recorded for more than once in Minimalist line.

Measures of dispersion:

These methods measures the variation risk from the mean of data, calculated for specified data.

i. Range: Range is difference of largest and smallest value in a set of data. This helps to know the amount of dispersion of data. Range is directly proportional to data dispersion. The highest and lowest values can be obtained by MIN and MAX function in excel (Saxena, 2015).

  Country Minimalist
Highest Value 310 430
Lowest Value 80 300
Range 230 130

ii. Inter Quartile Range: Interquartile range is difference between two quartiles. Data values are divided into four equal part. Data is to be made into ascending order.

This can be calculated in excel by applying formula as Quartile (Cell range, 1 or 3).

Months Country (000 £)
February 80
January 90
December 90
March 130
November 140
April 170
October 180
May 240
June 280
July 290
September 300
August 310
Months Minimalist (000 £)
August 300
September 300
July 310
May 320
June 330
March 350
April 350
February 360
October 370
November 400
December 420
January 430

Q1= 120                                                          Q1= 317.5

Q3= 282.50                                                     Q3= 377.50

IQR= 162.50                                                   IQR= 60

  1. Standard Deviation: A quantity reflects the difference of one data entry from mean of group. This can be computed in excel by command of STDEV (cell numbers) over the data.
  Country Minimalist
Standard Deviation 88.30 44.78

Use of Quartiles, Percentiles and correlation coefficient in decision making:

Quartiles:  Under quartiles, data is divided into four equal parts. Each part represents 25% data.  This is used to know that particular data falls in preview of which quartile and hence represents what percentage of data. They decide about prioritize of data value. Hence, helps in decision making.

Percentiles: Like quartiles, percentiles divide the data into 100 equal parts. This is used for large data as divided into 100 parts. It helps to provide ranking to values.

Correlation coefficient: This measures the effect of change in one variable to others. Correlation coefficient can be positive or negative. Positive correlation means positive or same line effect in other variable with change in first variable whereas negative correlation represents the opposite. As calculated in excel via command CORREL, correlation coefficient between country and minimalist lines comes to be -0.86. This implies increase in sales of one line results in decrease in sales of other line (Adkins, 2014).

Graphs for data analysis:

Graphs are easy and interactive way to present data numbers to intended users. Graph     simplifies data, makes them eye catching and provide a much deeper and clear picture of numbers.

Pie Chart is one of most popular way and easy way to analyse data. Share of these products in Industry is reflecting through below chart.  Below chart shows the highest holding of Budget category in the market, holding around 40% of share. This is followed by Victorian. Wetroom and Sauna who are struggling for market share. This giving a clear message to management to look for Budget and Victorian category to maximize the revenue generation in new project.

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ii. Sale of Victorian: Below chart reflects sale of Victorian in past 4 years. Sales of Victorian is in increasing trend from past 4 years. Continuous growth shows good investment opportunity in Victorian. Company should allocate its resources in this segment looking the past track record and increasing trend of Victorian.

Sale of Budget:

Budget segment seems good both on total numbers and growth side. Especially in past 2 years, they have gained much sales. Looking the below graph, management should think to enter in this category for good profits and revenue in future. This category seems to be in growing stage and will increase the share in business in coming years.

  • Sale of Wetroom:

The line chart shows the declining phase of wetroom category. Sales number of this are decreasing continuously. Also, market share is low in comparison to industry size. Looking below chart, company should avoid to make any investment for Wetroom category.

Sale of Sauna:

Sauna category has also seen declining trends in past 4 years. Also, the decline percentage is high. This shows low customer demand and interest in this category. Company should aroud the Sauna category to enter.

Analysis using the scatter graph with trend lines:

As seen in above graph, on top is Budget category holding maximum share of Industry and is in growth trend also. Below that is Victoria segment having low market share than Budget. However, trend line shows that growth in this segment has remained high. Trend line is steeper. Below that is Sauna category, this category was performing better than wet room till 2015. However, after 2015, its sales portion has reduced even less than Sauna. Looking trend line, it is expected that this category will soon be wiped out of market. In the last comes the wet room category. This category is also in declining sales. However, the decline is less steep. The existing players in this will be able to survive for next 2-3 years.

Power point Presentation:

Business Report:

The Board,

Kitchen Design Limited.

Subject: Analysis of data collected for bathroom design and equipments divison

This report represents the various data analysis of Bathroom industry and its product categories. On basis of sales figures of latest financial year, it can be said that budget product category holds highest market share, followed by Victorian.

Also, however, as per trend line analysis, growth rate in Victoria is high and this is expected to grow further in coming years. Budget category is also in growing mode.

Other categories i.e. Wetroom and Sauna are in decreasing trend.

Also, out of company two line of activities, minimalist and country, minimalist have much higher average sales than of country. Also, both of these are in negative correlation to each other. It is suggested to management to enter into Victorian and Budget segment and to avoid the wetroom and sauna categories.

Use of Information processing tools in inventory management:

Inventory management is one of critical aspect of managing the business activities. Insufficient inventory hurts the smooth production process whereas extra inventory carries higher interest cost and risk of being obsolete. Especially in bathroom designs, where new products are arrived frequently. Information processing tools such as MIS and ERP helps to manage inventory efficiently as they help to record inventory in better way, categorize them in different categories and providing easy and effective reports.

Project Plan:

Below table shows various activities, their duration and preceding activities.

Activities                                                                                     Duration        Preceding Activity

                                                                                                   (Days)

1          Obtain estimate for new MIS                                                           6                                          –

2          Reconfigure communication cable as necessary                  3                                           1

3          Staff selection and appointment                                           2                                                      –

4          Office rearrangements                                                                      5                                          1

5          Testing of communications                                                   5                                          3

6          Induction and instruction for new system users                   5                                                      3

7          Sites re-wiring                                                                       6                                      2, 4, 5

8          Set up of sites computer links                                               4                                          7

9          Install new hardware                                                           4                                          7

10        Test new hardware                                                                3                                  6, 7, 8, 9

11        Test new system                                                                    3                                          10

Investment appraisal Tool:

Company has decided to buy an ERP solution for themselves. The initial cost offered and benefits offered are different. Below methods are used for selecting the most beneficial system:

Net Present Value: Under Net present value method, all future cash flows are discounted and bring at present value. A discounting rate is applied on them. After getting present value of future cash inflows and outflows, these are compared. The one with highest net cash inflow is best suit for business.

Internal rate of return: This method provides the rate at which net present value of all cash flows become Nil. The higher IRR means more beneficial projects.

Below table describes the valuation of two different option under NPV and IRR method. Projected cash flows from two different options are as below:

Year Supplier A Supplier B
2016 -900000 -1200000
2017 250000 300000
2018 300000 350000
2019 350000 375000
2020 375000 400000
2021 400000 425000
NPV 311,514.00 164,385.00
IRR 23% 15%

As per calculations made in excel, supplier A is with better NPV and higher IRR. Suppler A is with NPV of 311514 against NPV in supplier B of 164385. Also, IRR of supplier A is much better than IRR of supplier B. On basis of above analysis, supplier A should be chosen.

Conclusion:

We have looked for data collection and data analysis in above assignment. We have also analyzed the data with various techniques. Report to management based on various charts has been submitted. Trend line has provided deeper picture of category performance. Also, we looked that Supplier A is providing better machinery to borrower as its providing better NPV as well as better IRR to customer.

References:

Backes, G. 2010, “Primary and secondary analysis of local elected officials’ decisions to support or oppose pharmacy sale of syringes in California”, Journal of urban health and care : bulletin of the New York Academy of Medicine, vol. 87, no. 4, p. 553-560.

de Motta, A. & Ortega, J. 2013, “Incentives, Capital Budgeting, and Organizational Structure”, Journal of Economics & Management Strategy, vol. 22, no. 4, pp. 810-831.lmassri, M.M., Harris, E.P. & Carter, D.B. 2016;2015;, “Accounting for strategic investment decision-making under extreme uncertainty”, The British Accounting Review, vol. 48, no. 2, pp. 151-168. Accessed from https://www.hndassignmenthelp.co.uk/hnd-assignments on 13th July, 2019

Holland, C.L., Bowker, L.K. & Myint, P.K. 2013, “Barriers to involving older people in their resuscitation decisions: the primary–secondary care mismatch highlights the potential role of general practitioners”, International Journal of Clinical Practice, vol. 67, no. 4, pp. 379-384.

Jarrow, R. 2014, “Computing Present Values: Capital Budgeting Done Correctly”, Finance Research Letters, vol. 11, no. 3, pp. 183. Accessed from https://www.hndassignmenthelp.co.uk/hnd-assignments on 13th July, 2019

Najera, D.A., McCullough, E.L. & Jander, R. 2012, “Interpatch foraging in honeybees—rational decision making at secondary hubs based upon time and motivation”, Animal Cognition, vol. 15, no. 6, pp. 1195-1203.

Olawale, F., 2010, “An investigation into the impact of investment appraisal techniques on the profitability of small manufacturing firms in the Nelson Mandela Metropolitan Bay Area, South Africa”, African Journal of Business Management, vol. 4, no. 7, pp. 1274.

Saxena, A.K. 2015, “Capital budgeting principles: bridging theory and practice”, Academy of Accounting and Financial Studies Journal, vol. 19, no. 3, pp. 283. Accessed from https://www.hndassignmenthelp.co.uk/hnd-assignments on 13th July, 2019

Adkins, R. & Paxson, D. 2014, “Stochastic Equipment Capital Budgeting with Technological Progress”, European Financial Management, vol. 20, no. 5, pp. 1031-1049.

Akkoyun, O. 2012, “Simulation-based investment appraisal and risk analysis of natural building stone deposits”, Construction and Building Materials, vol. 31, no. 1, pp. 326-333.

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