You are a longstanding manager in a family firm which is a small but growing organisation. Your particular responsibility is finance. A new member of the family has just joined the firm fresh from completing a post graduate (level 7) qualification at college. He is clear that in order to ensure the business’s continued success he must develop the financial skills required to assess and manage finance within the business. He wishes to begin byunderstanding the role of financial information in business strategyand given your experience he has asked for your advice.
Heintends to create a file on finance for strategic managers which he can use as an aide memoire.
Prepare the first section of the file providing examples where appropriate.
This must have the following sub sections
1. an assessment of why financial information is needed in business
2. an identification of the business risks related to financial decisions
3. a summaryof the financial information needed to make strategic business decisions.
Assessment Criteria 1.1/1.2/1.3
The second section of the file must provide information on published financial statements. You must include at least one actual example of published accounts in order to illustrate the points you are making. This section must include
1. an explanation of the purpose, structure and content of published accounts.
2. your interpretation of the financial information in these accounts
3. a calculation of the financial ratios from the accounts and an explanation of how they support strategic decision making
Assessment Criteria 2/1.2/2.2/3
The new manager has made it clear that he needs to understand how businesses assess and finance various activities. The next section of the file must therefore cover
1. an explanation which clearly distinguishes between long and short-term financial requirements for businesses
2. a table comparing the sources of long and short term finance for businesses
3. an examination of cash flow management techniques and an assessment of why the management of cash flow is so important