List the assessment methods to be used and the context and resources required for assessment. Copy and paste the relevant sections from the evidence guide below and then re-write these in plain English.
ELEMENT | PERFORMANCE CRITERIA |
Elements describe the essential outcomes. | Performance criteria describe the performance needed to demonstrate achievement of the element. |
1. Identify costs, calculate prices and prepare profit statement | 1.1 Identify and document costs associated with production and delivery of business products and services 1.2 Calculate prices based on costs and profit margin, as an hourly charge-out rate for labour or unit price for products 1.3 Calculate breakeven sales point to establish business viability and profit margins 1.4 Identify appropriate pricing strategies in relation to market conditions to meet business profit targets 1.5 Prepare projected profit statement to supplement the business plan |
2. Develop a financial plan | 2.1 Set profit targets or goals to reflect owner’s desired returns 2.2 Identify working capital requirements necessary to attain profit projections 2.3 Identify noncurrent asset requirements and consider alternative asset management strategies 2.4 Prepare cash flow projections to enable business operation in accordance with business plan and legal requirements 2.5 Identify capital investment requirements accurately for each operational period 2.6 Select budget targets to enable ongoing monitoring of financial performance |
3. Acquire finance | 3.1 Identify startup and ongoing financial requirements according to financial plan/budget 3.2 Identify sources of finance, including potential financial backers, to provide required liquidity for the business to complement business goals and objectives 3.3 Investigate cost of securing finance on optimal terms 3.4 Identify strategies to obtain finance as required to ensure financial viability of the business |
Evidence of the ability to:
develop a financial plan which identifies financial requirements of the business, including cash flow projections and a projected profit statement
follow the financial plan, including:
demonstrating an awareness of appropriate legal requirements
implementing strategies to monitor financial performance
identify sources and investigate costs of securing appropriate financial assistance.
Note: If a specific volume or frequency is not stated, then evidence must be provided at least once.
To complete the unit requirements safely and effectively, the individual must:
explain breakeven analysis
clarify costing for the business, including margin or markup, hourly charge-out rates and unit costs
summarise financial decision-making relevant to the business
outline methods and relative costs of obtaining finance
summarise principles for preparing balance sheets
provide a detailed explanation of:
principles for preparation of cash flow forecasts
principles for preparation of profit and loss statements
purpose of financial reports
explain relevant accounting terminology
describe working capital cycles.
Assessment must be conducted in a safe environment where evidence gathered demonstrates consistent performance of typical activities experienced in the Management and Leadership – Small and Micro Business field of work and include access to:
software for financial calculations
relevant legislation, regulations, standards and codes
relevant workplace documentation and resources
case studies or where possible, real situations.
Assessors of this unit must satisfy the requirements for assessors in applicable vocational education and training legislation, frameworks and/or standards.