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. Assess the capital needs of the business | 1.1 Determine working capital and capital requirements for development 1.2 Determine return on capital or opportunity cost of development capital |
2. Assess appropriate equity levels for the business | 2.1 Assess risks associated with the business 2.2 Identify personal and business risk preferences 2.3 Analyse equity levels in comparable enterprises using benchmark data |
3. Establish and maintain appropriate financing arrangements for the business | 3.1 Determine capacity to service debt and meet liabilities 3.2 Sources of funds are identified and terms and conditions compared and evaluated 3.3 Conduct negotiations to ensure the establishment of the most favourable terms and conditions 3.4 Source loan funds and check agreements 3.5 Monitor costs of finance to keep them within defined budget limits 3.6 Manage relationships with finance providers 3.7 Monitor the economic environment and assess implications for the business |
4. Monitor and review the mix of liabilities | 4.1 Conduct regular reviews of the mix of liabilities and the costs and determine the benefits associated with reconfiguring loans 4.2 Review and renegotiate loans as appropriate |
5. Monitor equity, return on equity | 5.1 Review valuations on assets and monitor the effect on equity 5.2 Calculate returns on assets and returns on equity and use to assist business performance |
The candidate must be assessed on their ability to integrate and apply the performance requirements of this unit in a workplace setting. Performance must be demonstrated consistently over time and in a suitable range of contexts.
The candidate must provide evidence that they can:
assess capital needs
assess appropriate equity levels for a business
establish and maintain appropriate financing arrangements
review the mix of liabilities
monitor key indicators of financial returns for the business.
The candidate must demonstrate knowledge of:
preparation of financial reports
impacts resulting from changes to various macroeconomic factors
sources of finance
negotiation techniques
concept of equity, Return on Assets (ROA), Return on Equity (ROE), Internal Rate of Return (IRR)
bank and lending institution policies and requirements.
Competency is to be assessed in the workplace or simulated environment that accurately reflects performance in a real workplace setting.
Assessors must satisfy current standards for RTOs.