Management Accounting and Financial Management Group Report

Structure of the Report:

Scenario

As a group of friends, you have decided to start a new business but the problem is that you don’t

have sufficient funds to do so. This means that you have only little of your own savings and your

family and friends cannot provide you with the necessary finds either. You decided to consider

external funding for your business idea as you think it is a very good business idea.

You must write a Proposal Report to secure funding for a new business venture that you would like to

start.

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Structure of the Report:

Section 1. Introduction of the business idea (group task – 15%):

This section should include the following:

What is your business idea?

What are the unique selling points of your product?

Explain why an estimation of business start­up costs is required?

Explain what kind of costs are included to business start­up­costs

What are your start­up costs?

How much of funding do you require?

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Section 2. Budgeted Financial Statements (Group task – 30%):

What is ‘budgeting’? Explain the purpose and importance of budgeting

Define Budgeted Income Statement and Budgeted Balance Sheet; explain their purpose and

importance.

Explain what your estimates are based on.

Prepare very simple Budgeted Income Statement and Balance Sheet.

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Section 3. Cash Flow Forecast (individual task – 40%):

What is a ‘cash flow forecast’?

What are the benefits and disadvantages of a cash flow forecast?

Identify cash inflows (money in) and cash outflows (money out) per year.

Prepare a cash flow forecast for 5 years

Explain any changed in cash inflows and cash outflows over the period of 1 year (12 months). What

are your estimates based on?

Analyse the closing cash balances per year. Consider whether additional funding might be required in

any of the years. If yes, what funding would you consider and why? Alternatively, you may consider

how the surplus of cash should be managed.

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Section 4. Cost – Volume Profit Analysis (individual task – 40%):

Explain ‘break­even analysis’

What are the benefits and disadvantages of creating a break­even analysis?

Create a break­even analysis for your business ­ what can your business learn from your break­even

analysis based on your estimated costs?

Estimate the target profit for Year 1 (or Year 2) and calculate how many units have to be sold to

achieve this target profit. What should be the sales revenue in order to achieve this target profit.

Explain ‘margin of safety’

Calculate the margin of safety for your business based on your target profit.

Discuss how changes in costs, volume and selling price may affect the profitability. Support the

discussion with the relevant calculations.

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Section 6. Sources of Finance ­ Calculations (individual task – 40%):

List and explain various internal and external sources of finance that are available to the business in

general.

Choose 4 possible sources of finance that you might consider to fund your business idea.

Evaluate the pros and cons of each of these 4 sources of finance.

Indicate what is your preferred source of finance from the range of possible funders and why. You

must indicate and explain the costs associated with this choice and justify why it is acceptable and

the most advantageous for your plan.

Explain why the remaining 3 sources of finance were not selected specifically to this proposal

Explain what would be the impact on your business idea if you don’t get the necessary funding or if

you have selected an inappropriate form of finance.

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Section 7. Conclusion (group task – 15%):

Conclusion – You must end the proposal with a conclusion in which you briefly summarise everything

that you have said in your proposal, emphasize the potential of your idea and express the hope that

you will be given the funding. You must convince your potential financier of the success of your

idea.

Group Reflection: a reflective discussion of the project work as a group (including the challenges

faced and how you tried to overcome them) and what you learnt from the group project.

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Section 8. The list of References (part of individual mark)

List all the references you have used in­text throughout the report in alphabetical order. Remember to

use the Harvard referencing style (see the VLE for instructions!).

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PLEASE CHOOSE A BUSINESS IDEA OF YOUR (WRITER’S CHOICE) THAT WOULD BE LOGICAL,

EFFECTIVE , AND WOULD BE FUNCTIONING COMFORTABLY IN LONDON, UK.

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