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Elements and Performance Criteria

1. Assess the capital needs of the business
   • Determine working capital and capital requirements for development
   • Determine return on capital or opportunity cost of development capital
2. Assess appropriate equity levels for the business
   • Assess risks associated with the business
   • Identify personal and business risk preferences
   • Analyse equity levels in comparable enterprises using benchmark data
3. Establish and maintain appropriate financing arrangements for the business
   • Determine capacity to service debt and meet liabilities
   • Sources of funds are identified and terms and conditions compared and evaluated
   • Conduct negotiations to ensure the establishment of the most favourable terms and conditions
   • Source loan funds and check agreements
   • Monitor costs of finance to keep them within defined budget limits
   • Manage relationships with finance providers
   • Monitor the economic environment and assess implications for the business
4. Monitor and review the mix of liabilities
   • Conduct regular reviews of the mix of liabilities and the costs and determine the benefits associated with reconfiguring loans
   • Review and renegotiate loans as appropriate
5. Monitor equity, return on equity
   • Review valuations on assets and monitor the effect on equity
   • Calculate returns on assets and returns on equity and use to assist business performance

Range Statement

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Performance Evidence

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.

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Knowledge Evidence

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.

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