CMI Unit 520 Managing Finance Level 5 Assignment Answers UK
CMI Level 5 Unit 520 Managing Finance is designed to equip students with the skills and knowledge necessary to effectively manage an organization’s finances. This unit focuses on financial management and covers topics such as budgeting, forecasting, and financial analysis. Upon successful completion of the unit, students will be able to demonstrate an understanding of financial principles and their application to managerial decision-making. They will also be able to prepare financial statements and carry out financial analyses. In addition, students will be able to identify sources of finance and assess the costs and benefits of different financing options.
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In this section, we are discussing some assignment briefs. These are:
CMI 520 Task 1: Understand finance within organizations.
It is important to understand how organizations are financed in order to make effective decisions about the use of resources.
AC 1.1 Analyze the relationship between the financial function and other functional areas within organizations.
The financial function of an organization is responsible for the management of its finances. This includes activities such as budgeting, forecasting, and financial analysis. The financial function works closely with other functions within the organization, such as marketing, operations, and human resources, in order to ensure that the organization’s finances are managed effectively.
- Marketing: The marketing function is responsible for generating revenue for the organization. This includes activities such as market research, product development, and advertising. The marketing department may need access to financial data in order to make informed decisions about product pricing.
- Operations: The operations function is responsible for the day-to-day running of the organization. This includes activities such as production, distribution, and customer service. The operations department may need access to financial data in order to make informed decisions about production costs.
- Human Resources: The human resources function is responsible for the management of the organization’s workforce. This includes activities such as recruitment, training, and employee relations. The human resources department may need to work with the finance team in order to manage employee benefits and payroll.
AC 1.2 Examine the impact of financial objectives on decision-making within organizations.
The financial objectives of an organization are the goals that it sets in relation to its financial performance. These objectives may include targets for revenue, profit, cash flow, and investment. The financial objectives of an organization will have a significant impact on decision-making. For example, if the objective is to increase profit, then decisions will be made with this goal in mind. This could involve measures such as reducing costs or increasing prices. If the objective is to increase cash flow, then decisions will be made with a focus on generating cash. This could involve measures such as reducing credit terms or increasing sales.
AC 1.3 Differentiate between management accounting and financial accounting.
Management accounting and financial accounting are two different but related fields. Both types of accounting involve recording, classifying, and summarizing financial transactions.
- However, the focus of management accounting is primarily on providing information that can be used by managers to make decisions about running the business. In contrast, financial accounting is focused on producing information that is required for external reporting purposes.
- Financial statements are the most common type of output from financial accounting, whereas management accounting reports can take many different forms depending on the needs of the manager.
As a result, management accounting is often more flexible and tailored to the specific needs of the organization, while financial accounting is more standardized.
AC 1.4 Analyze the impact of organizational and regulatory frameworks on an organization’s approach to financial management.
Organizational and regulatory frameworks play a significant role in financial management. Organizations are required to comply with financial regulations, which can impact the way they manage their finances. For example, organizations may need to disclose certain financial information to regulators or follow specific guidelines when it comes to financial reporting.
In addition, organizations operate within different legal structures, which can also impact financial management. For example, a company may be required to have a certain level of cash reserves in order to meet its obligations under the law. As a result, these frameworks can have a significant impact on the decisions that organizations make about their finances.
AC 1.5 Analyze the challenges organizations face accessing finance.
Organizations face many challenges when it comes to accessing finance.
- One of the most common challenges is finding sources of funding that are appropriate for the organization’s needs.
- Another challenge is ensuring that the organization’s financial statements are up-to-date and accurate. This is important in order to secure financing from banks and other lenders.
- Additionally, the organization must have a good business plan in place in order to convince potential investors to provide funding.
- Lastly, the organization must be able to manage its cash flow in order to avoid defaulting on loans or missing important payments.
All of these challenges can be difficult to overcome, but they are essential in order to secure the necessary financing for the organization.
CMI 520 Task 2: Know how to set and manage budgets.
It is important to understand how to set and manage budgets in order to make sound financial decisions.
AC 2.1 Differentiate between budget setting and financial forecasting.
Budget setting and financial forecasting are both important tools for businesses of all sizes. Both involve making plans based on expected future income and expenses. However, there are some key differences between the two processes.
- Budget setting typically happens at the beginning of a company’s fiscal year and involves setting aside money for specific expenses. Financial forecasting, on the other hand, looks at a company’s overall financial picture and projects future income and expenses based on current trends.
- Financial forecasting can be done more frequently than budget setting and can help businesses adjust their spending in response to changes in their industry or economic conditions.
As a result, both budget setting and financial forecasting are essential components of sound financial management.
AC 2.2 Evaluate budget-setting approaches used by organizations.
There are many different approaches that organizations can use when setting their budgets.
- The most common approach is to base the budget on historical data, using last year’s figures to predict this year’s likely expenses. This can be a helpful starting point, but it can also lead to problems if there are major changes in the business environment or if the organization has undergone significant changes.
- Another common approach is to use benchmarking to compare the organization’s budget with those of similar organizations. This can help to identify areas where the organization is doing well or where it could make improvements.
- Finally, some organizations use zero-based budgeting, which starts from scratch each year and only allocates funds to areas that can demonstrate a need for them. This approach can be effective in ensuring that resources are used efficiently, but it can also be very time-consuming and difficult to implement.
Whichever approach an organization chooses, it is important that the budget-setting process is well-planned and carefully considered.
AC 2.3 Formulate and justify a budget for an area of management responsibility.
When it comes to budgeting, every organization has different needs and priorities. As a result, there is no one-size-fits-all approach to creating a budget. However, there are some general principles that can be followed in order to create an effective budget for an area of management responsibility.
- First, it is important to identify the specific goals and objectives that the budget will support.
- Once these goals have been established, the next step is to determine the resources that will be required in order to achieve them. This includes both financial and non-financial resources.
- Finally, the budget must be carefully monitored and reviewed on a regular basis in order to ensure that it is still on track to meet the original goals and objectives.
By following these steps, you can develop a budget that is tailored to your specific needs and that will help you to achieve your desired results.
AC 2.4 Analyze the factors that impact budget management.
There are many different factors that can impact budget management.
Some of the most common include changes in the economy, changes in government regulations, new technology, and increased competition.
- Government regulations: The budget management process can be affected by changes in government regulations. For example, if the government imposes new taxes or cuts funding for certain programs, this can have a direct impact on the budget of the organization.
- Technology: New technology can also impact budget management. For example, if a new software program is introduced that can help to automate the budgeting process, this can save time and money for the organization.
- Increased competition: In today’s business environment, organizations are under more pressure than ever to operate efficiently and effectively. As a result, increased competition can impact budget management.
Organizations must be constantly vigilant in order to ensure that their budgets are on track and that they are not being outpaced by their competitors.
These are just a few of the many factors that can impact budget management. It is important for organizations to be aware of all of the factors that could impact their budget so that they can plan accordingly.
AC 2.5 Specify corrective actions to be taken in response to budgetary variance.
There are a number of corrective actions that can be taken in response to budgetary variance.
Some of the most common include adjusting budgeted amounts, revising forecasted amounts, and issuing new guidance to managers.
- Adjusting budgeted amounts: One corrective action that can be taken in response to budgetary variance is to adjust budgeted amounts. This can be done by either increasing or decreasing the amount of money that is allocated to specific areas.
- Revising forecasted amounts: Another corrective action that can be taken is to revise forecasted amounts. This involves making changes to the assumptions that were used in order to create the original budget.
- Issuing new guidance to managers: Finally, another corrective action that can be taken is to issue new guidance to managers. This can include providing new information about how the budget should be managed or changing the procedures that are used in order to make sure that the budget is followed.
These are just a few of the many corrective actions that can be taken in response to budgetary variance.
AC 2.6 Discuss reporting procedures for authorizing corrective actions to a budget.
There are a number of different reporting procedures that can be used in order to authorize corrective actions to a budget.
Some of the most common include creating a report that outlines the proposed corrective actions, presenting the report to a committee for approval, and then implementing the approved corrective actions.
- Creating a report: The first step in the reporting process is to create a report that outlines the proposed corrective actions. This report should include all of the relevant information about the proposed changes, as well as the justification for why these changes are necessary.
- Presenting the report: Once the report is created, it should be presented to a committee for approval. This committee can be made up of senior managers, financial analysts, or other budget experts.
- Implementing the approved corrective actions: After the report has been presented and approved by the committee, the next step is to implement the approved corrective actions. This can involve making changes to the budget, issuing new guidance to managers, or taking other corrective measures.
These are just a few of the many reporting procedures that can be used in order to authorize corrective actions to a budget.
It is important for organizations to choose the procedure that best fits their needs and the specific situation.
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