Module 4: Sourcing Essentials
Using the following financial information:
(a) Evaluate the finances of this organisation highlighting the strengths and weaknesses of their position.
(b) Provide a justified recommendation as to whether you would consider this organisation for a sourcing exercise for Facilities Management Services emphasising any limit that should be placed on the financial exposure (maximum contract value).
Financial Profit and Loss Statement
12 month period ended 31 March 2014 £ or $ (delete) ‘000
12 month period ended 31 March 2013 £ or $ (delete) ‘000
Turnover
161,438
138,276
Cost of sales
(124,677)
(112,654)
Gross Profit
36,761
25,622
Other operating expenses
(32,561)
(26,984)
Operating profit
4,200
(1,362)
Interest receivable
17
18
Profit/ (loss) before taxation
4,217
(1,344)
Tax on profit/ (loss) on ordinary activities
(1,545)
(8)
Profit/ (loss) for the financial year
2,672
(1,352)
Balance Sheet at 31 March 2014 (continued overleaf)
Notes
12 month period ended 31 March 2014 £ or $ (delete) ‘000
12 month period ended 31 March 2013 £ or $ (delete) ‘000
Fixed Assets
Intangible assets
1,202
1,352
Tangible Assets
1
1,726
1,786
2,928
3,138
Current Assets
Stocks
2
726
1,446
Debtors
35,975
30,457
Cash
12,253
5,483
Total Assets
51,882,
40,524
Creditors, amounts falling within one year
(43,524)
(33,842)
Creditors, amounts falling due after more than one year
3
(73)
(111)
Provisions for liabilities
4
(4,079)
(2,340)
Net assets
4,206
4,231
Sourcing Essentials V3, Mar 2015 © CIPS 2014, Page 2 of 2
Balance Sheet at 31 March 2014 (continued)
Capital and Reserves
Share capital
1,135
1,135
Profit and loss account
3,071
3,096
Total shareholders’ funds
4,206
4,231
Notes to the Accounts
(1) Tangible fixed assets consists of plant and machinery, computer equipment and other equipment
(2) Stocks consists of 31 Mar 2013 31 Mar 2012
Raw materials and consumables 576 724
Finished goods 150 722
726 1,446
(3) Creditors due after more than one year consists of hire purchase agreements for equipments
(4) Provisions for liabilities consists of tax liabilities, pension liabilities and the liability for the lease of properties
Guidance
The answer to this task should consist of approximately 3,000 words and should be supported by a title, your candidate number, contents page, executive summary, references and a bibliography. Any source materials such as web sites, reports, articles, market data, journals or texts should be referred to in your work.
Syllabus Coverage
The following content from the Practitioner syllabus can be used to answer this assessment:
• The use of pre-qualification criteria or processes for supplier appraisal in the sourcing process
• Sources of information on suppliers such as financial reports, credit rating agencies or other appropriate publications and sources
• The assessment of financial statements to evaluate the financial, commercial and technical capabilities of potential suppliers in the sourcing process
• The use of ratio analysis to evaluate potential suppliers
This assessment helps you achieve the following capabilities:
• Evaluate the use and choice of pre-qualification criteria or processes for supplier appraisal in the sourcing process taking into account stakeholder requirements
• Research information on suppliers using appropriate sources of information to select appropriate suppliers
• Evaluate the financial, commercial and technical capabilities of potential suppliers and make recommendations on their selection
• Analyse key ratios that indicate profitability, liquidity, gearing and investment in order to evaluate the suitability of potential suppliers
