• Understand why a business needs funds

Appreciate the difference between short and long term finance
• Understand the difference between short and long term capital needs

Identify internal and external sources of funds available to business
• Understand the difference between internal sources of capital and external sources
• Knowledge of the different sources available to a business
Understand the impact on business of different sources of funds
• Show awareness of the possible impact of debt capital compared to owners funds

Explain the basis upon which the choice of sources of funds is made
• Understanding of the factors to be considered in determining an appropriate source of funds
• Show appreciation of the significance of size of the business, capital need, length of time and risk
• Recommend and justify an appropriate method(s) of finance in a given situation

Explain the importance of cash
• Understand why cash is important to a business
• Understand the concept of a cash flow forecast
• Show awareness of the importance of cash flow forecasts
Construct and interpret a simple cash flow statement
• Show analytical understanding of the significance of timing in cash flow forecasting

Explain the concept of profit
• Show understanding of why profit matters to a private sector business
• Show awareness of the distinction between retained and distributed profit

Understand the main elements of a profit/loss account statement
• Interpret a simple profit/loss account
• Use profit and loss accounts as an aid to decision making
Explain the function of profit
• Explain the importance of profit as a reward for enterprise and risk taking
Distinguish between cash and profit
• Show awareness of why cash and profit differ

Understand the main elements of a balance sheet
• Understand the difference between assets and liabilities
• Interpret a balance sheet and deduce simple conclusions such as to determine how a business is financing its activities and what assets it owns

Gross and net profit, current and acid test ratio, return on capital employed (ROCE)
Alternative ways that businesses can judge their success e.g. ROCE, market share
Interpret the performance of a business by using simple accounting
ratios (return on capital, gross and net profit margin, current ratio)
• Using accounting ratios make evaluative comments on the success and performance of a business
• Understand the concept of liquidity
• Use a balance sheet to aid decision making

• Understand the concept and importance of working capital

• Awareness of the concept of a financial budget

• Show awareness of the different users of accounts
• Show knowledge of what users might look for in the accounts of a business
• Show how users such as lenders [e.g. a bank] might use accounts as the basis upon which to make decisions