QCF Syllabus

Management of Financial Resources and Performance

Unit Title Management of Financial Resources and Performance

Unit Reference Number D/602/5727
Guided Learning Hours 180
Level 7
Number of Credits 25

Unit purpose and aim(s):

This unit aims to give learners a sound understanding of:
the evaluation of performance using financial statements
the use of management accounting information in the planning and control of resources
how contemporary management accounting methodology can support the management and control of resources.
the management and performance of resources in business strategy and planning
alternative financing to achieve organisational objectives
the use of financial data in long-term capital decision making
the international aspects of financial strategy
how organisations manage risk

Learning Outcome 1

The learner will: Know how to use financial statements to evaluate performance, and appreciate the limitations of such analysis.

Assessment Criteria Indicative Content

The learner can:
1.1 Identify, calculate and interpret
key performance ratios from an
organisations financial
statements.
1.2 Discuss the limitations of
financial statements and
consider the impact of these
limitations to the analysis.
1.3 Use financial statements and
other published financial data to
evaluate comparative
performance.
1.1.1 Calculate and interpret efficiency, liquidity and financing ratios.
1.1.2 Calculate and interpret investment ratios i.e. dividend and earnings yield, PE, and
gearing.
1.1.3 Analyse and make recommendations for how performance can be improved.
1.2.1 Understand the different accounting treatments of assets e.g. depreciation,
inventory, capitalisation, valuation.
1.2.2 Consider treatment of intangible assets, e.g. goodwill, patents, brands etc.
1.2.3 Be familiar with International Accounting Standards and appraise differences in
financial reporting.
1.3.1 Use financial statement and online data to compare performance with competitors
and industry averages.
1.3.2 Use industry comparison information and subscriber intelligence services.
Learning Outcome 2
The learner will: Know how to use management accounting information in the planning and control of an organisations
resources and appraise its effectiveness.
Assessment Criteria
The learner can:
2.1 Evaluate the different
methodologies and approaches
to costing products, services,
functions and activities.
2.2 Use marginal cost methodology
to support short term decision
making.
2.3 Critically analyse the role and
limitations of traditional budgets
and approaches to driving value
through better budgeting.
Learning Outcome 3
The learner will: Know how to critically appraise and evaluate contemporary management accounting methodology to support
the effective management and control of resources.
Assessment Criteria
The learner can:
3.1 Appraise the role of activity
based management, and use
activity based costing method to
support re-engineering, product
costing, budgeting and
benchmarking.
3.2 Use cost management
methodology to support lean
enterprise, business excellence
and value chain analysis.
3.3 Prepare and present strategic
management accounting
information to analyse
investment in advanced
manufacturing technology and
support competitive strategy.
Indicative Content
2.1.1 Describe and explain the treatment of direct and indirect costs in costing products
and services.
2.1.2 Describe and evaluate different cost treatment of job, process and contracts.
2.1.3 Understand the features and consequences of absorption costing.
2.2.1 Describe and evaluate the distinction between fixed and variable cost.
2.2.2 Undertake cost-volume-profit analysis and short term decision analysis.
2.2.3 Understand relevant cost and its application to decision-making.
2.3.1 Define budgeting and conditions where traditional functional budgets can be
effective.
2.3.2 Understand the problems and motivational impact of functional annual budgets.
2.3.3 Evaluate alternatives to functional budgets activity based, continuous, and the
Beyond Budgeting Roundtable.
Indicative Content
3.1.1 Consider relevance lost and problems of traditional management accounting and
treatment of overhead.
3.1.2 Appraise activity based costing in providing costs of products, services, customers
and in profitability analysis.
3.1.3 Use activity based management to support re-engineering, product costing,
budgeting and benchmarking.
3.2.1 Appraise the relationships between lean enterprise , business excellence and value
chains.
3.2.2 Evaluate the contribution of financial analysis to areas of world class operating e.g.
cost benefit of quality, throughput accounting, analysis of waste, value analysis of
the activity chain.
3.2.3 Undertake a resource audit of the value chain to measure effectiveness of each
element, and competitive advantage of each process.
3.3.1 Identify the place of management accounting in analysing response to competitors,
strategic positioning and competitive advantage.
3.3.2 Appraise investments in advanced technology by incorporating tangible and
intangible benefits.
3.3.3 Use the balanced scorecard to support the achievement on strategy and vision.
Learning Outcome 4
The learner will: Know how to identify and critically assess the management and performance of tangible and intangible
resources in business strategy and planning.
Assessment Criteria
The learner can:
4.1 Appraise the impact of resource
decisions on an organisations
performance and effectiveness.
4.2 Identify and map the processes
and activities of an organisation
and use these to improve
resource allocation.
4.3 Evaluate the use of
benchmarking an organisations
products, processes and
practices to identify
opportunities to deliver value.
Learning Outcome 5
The learner will: Understand organisational objectives and alternative finance available to fund the achievement of these
objectives.
Assessment Criteria
The learner can:
5.1 Debate the tensions between
financial and strategic objectives.
5.2 Identify and evaluate alternative
sources of finance available to
organisations.
5.3 Appraise the role of treasury
management in the financing,
risk and control of liquidity.
Indicative Content
4.1.1 Identify and appraise methods by which resources are allocated to achieve
corporate strategy.
4.1.2 Use appropriate criteria to evaluate the allocation of resources.
4.1.3 Identify and manage gaps between strategic need and availability.
4.2.1 Understand the principles of process re-engineering and business re-engineering.
4.2.2 Apply the principles of process re-engineering and appreciate the impact on
management style.
4.2.3 Appreciate the use of process and activity mapping to reduce activity, delayer and
eliminate unnecessary activity.
4.3.1 Define and assess the value of alternative forms of benchmarking.
4.3.2 Identify the purpose, dynamics and stages of benchmarking.
4.3.3 Critically assess inherent problems and virtues of best in class benchmarking.
Indicative Content
5.1.1 Distinguish between profit maximisation and shareholder wealth maximisation.
5.1.2 Debate tensions between, and common interest of, shareholder and stakeholder
expectations.
5.1.3 Debate agency issues and tensions of managers, shareholders, debt providers in
determining corporate strategy.
5.2.1 Explain the features, advantages and disadvantages to the organisation and the
investor of the alternative sources of equity and debt.
5.2.2 Calculate the cost of each source and return to the investor.
5.2.3 Calculate operating and financial leverage and explain the opportunities and
dangers of different levels of gearing.
5.3.1 Explain the role of the treasury manager in obtaining the appropriate mix of finance.
5.3.2 Explain the different types of risks for a business and how these may be reduced by
treasury management.
5.3.3 Explain and consider alternative working capital policies and dangers of liquidity
issues.
Learning Outcome 6
The learner will: Know how to use financial data, techniques and tools to evaluate long term capital decisions.
Assessment Criteria
The learner can:
6.1 Appraise capital investment
projects, using alternative
methodologies.
6.2 Calculate an organisations cost
of capital and explain the
limitations of such calculations.
6.3 Evaluate strategic investment
opportunities and financially
appraise strategic proposals.
Learning Outcome 7
The learner will: Understand the international aspects of financial strategy.
Assessment Criteria
The learner can:
7.1 Identify the financial risks of
operating in an international
market.
7.2 Appraise international
investment decisions.
7.3 Evaluate financing options for
multinationals and overseas
subsidiaries.
Indicative Content
6.1.1 Understand the distinction between profit and cash and the relevance to long term
investment decisions.
6.1.2 Calculate the accounting rate of return, payback and net present value of an
investment proposal.
6.1.3 Explain the features and advantages of the alternative investment appraisal
techniques.
6.2.1 Calculate the costs of the constituent elements of capital i.e. equity, preference and
debt.
6.2.2 Calculate the weighted average cost of capital using market and balance sheet
values.
6.2.3 Explain the benefits and limitations of the different approaches to calculating the
cost of capital.
6.3.1 Evaluate the suitability of a strategic investment in terms of strategic fit and
exploiting core competences.
6.3.2 Consider the acceptability and feasibility of a strategic investment against
performance criteria, stakeholder expectations and strategic capability.
6.3.3 Consider quantitative and qualitative issues of strategic proposals and the extent to
which market factors and competence enhancement can be evaluated financially.
Indicative Content
7.1.1 Appraise the role and importance of international financial markets.
7.1.2 Identify financial risk specific to operating in international markets.
7.1.3 Evaluate approaches to managing economic, translation and transaction risk in
international operations.
7.2.1 Appreciate the risks and complexities of capital budgeting in an international
context.
7.2.2 Calculate forward rates and evaluate an international capital project.
7.2.3 Appraise indirect and non-quantifiable benefits and costs of international
investment decisions.
7.3.1 Evaluate the main internal and external sources of finance available to
multinationals.
7.3.2 Explain the Eurocurrency (Eurodollar) market and its role in international finance.
Learning Outcome 8

The learner will: Understand the sources and consequences of risk for organisations and know how these risks may be managed.

Assessment Criteria Indicative Content

The learner can:
8.1 Identify types and sources of risk
for organisations including those
operating internationally.
8.2 Use appropriate techniques for
evaluating and managing an
organisations risk.
8.3 Prepare and utilise risk
management reports.
8.1.1 Identify types and sources of risk for organisations, the sensitivity and degree of
organisation control.
8.1.2 Appraise the additional risks associated with international operations.
8.1.3 Identify methods for dealing with risks specific to overseas operations.
8.2.1 Prepare and interpret risk maps and surveys.
8.2.2 Prepare contingency plans for dealing with potential risk.
8.2.3 Identify and assess techniques to manage risk through avoidance, reduction,
transference and retention.
8.3.1 Debate the need and value of a formal risk management report.
8.3.2 Identify the emphasis given to risks in the report linked to sensitivity and impact.
8.3.3 Understand the content of the risk management report and how each risk should be
managed.

Assessment:

Written assignment of 3500 words, plus or minus 10% (unless otherwise stated).
All learning outcomes will be assessed.

Recommended Reading:

Please refer to the Tuition Resources section of the Members Area of the ABE website (www.abeuk.com) for the
recommended reading for this subject.