Y/505/9235 Advanced Finance for Decision Makers ATHE/06/04

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Aims : This unit demonstrates the links between business decision making, risk assessment and financial information. Once finance is placed in context, the unit covers financial reporting and the way financial performance is measured. It investigates how businesses are financed through their fixed and working capital requirements. It explains how the financial management of each organisation is influenced by its governance and ownership structure as well as accounting standards and the ethical basis on which financial reporting is organised.

Learners who aspire to management positions will develop financial knowledge and understanding needed to make sound and responsible business decisions.

Assessment Guidance: To achieve this unit, learners must achieve the learning outcomes and meet the standards specified by the assessment criteria for the unit. Additional assessment guidance is provided on the ATHE sample assignment brief. This is an extensive unit covering a wide range of financial information and techniques and the relevance and implications for business. Learners must demonstrate understanding of the impact of various elements of financial information and analysis on risk assessment and decision-making. In addition learners need to show understanding of the relationship between finance and business ownership, governance and ethics. Learners will need to use published accounts to complete their work and where appropriate use examples from their own experience or from research to illustrate the points which are made.

Learning Outcomes

Assessment Criteria

1. Understand the role of financial information and financial analysis in business risk assessment and decision-making.

  • Examine the factors that guide and drive decision making in business.
  • Assess the significance of financial factors in business decision making.
  • Identify the characteristics of business risks that impact on financial and business decisions.
  • Summarize financial priorities that should be considered in business decision making

2.Understand how financial statements and their structure provide a sound basis for business decision making.

  • Compare the accrual and cash flow approaches to accounting and financial reporting and the implications of each for business decision making.
  • Explain the structure and content of final accounts and their uses for business decision making.
  • Interpret financial information in balance sheets, income statements and sources and applications of funds statements.
  • Differentiate between financial decisions relating to capital expenditure and those relating to revenue expenditure.
  • Calculate financial ratios from final accounts that can be used to support business decision making

3. Understand sources of finance and how businesses finance fixed assets and working capital.

  • Differentiate between long-term financing needs and working capital needs for businesses.
  • Compare the sources of long-term financing and working capital financing for businesses .
  • Identify why access to working capital is critical to business continuity.
  • Examine critically the techniques needed to manage cash flow and the key business decisions on which cash flow impacts.
  • Evaluate methods for making capital expenditure or investment decisions and the criteria that may be applied in the evaluation.
  • Explain the possible benefits and drawbacks of off-balance sheet financing.

4. Understand how different ownership structures influence financial performance.

  • Analyse critically the financial implications of different business ownership structures .
  • Analyse the corporate governance, legal and regulatory environments of different business ownership structures.
  • Compare and contrast the stakeholder interests of owners and managers in decision making.
  • Evaluate the significance of Return on Capital Employed (ROCE) and other overall performance measures for the long-term sustainability of businesses.
  • Examine the importance of Earnings Per Share (EPS) as a measure of business performance.

5. Understand how accountability for financial reporting and the integrity of reporting are influenced by ethical, governance and accounting standards. 

    • Differentiate between business ethics, governance and accounting ethics as controls on business accountability.
  • Assess the role of the Director of Finance or the Chief Financial Officer as a guardian of business ethics.
  • Analyse the key concepts and principles of corporate governance that may impact on business decisions.
  • Examine the key national and international financial reporting standards relevant to business decisions.
  • Examine the key requirements for published accounts of a Public Limited Company (PLC).

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