Modification History
Not Applicable
Unit Descriptor
Unit descriptor |
This unit covers the process of managing business capital in an agricultural or horticultural enterprise and defines the standard required to: 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. |
Application of the Unit
Application of the unit |
This unit applies to having the ability to assess capital needs, assess appropriate equity levels for a business, establish and maintain appropriate financing arrangements, review the mix of liabilities, and monitor equity and return on equity. |
Licensing/Regulatory Information
Not Applicable
Pre-Requisites
Prerequisite units |
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Employability Skills Information
Employability skills |
This unit contains employability skills. |
Elements and Performance Criteria Pre-Content
Not Applicable
Elements and Performance Criteria
ELEMENT |
PERFORMANCE CRITERIA |
1. Assess the capital needs of the business |
1.1. Working capital and capital requirements for development is determined. 1.2. Return on capital/opportunity cost of development capital determined. |
2. Assess appropriate equity levels for the business |
2.1. Risks associated with the business are assessed. 2.2. Personal and business risk preferences are identified. 2.3. Equity levels in comparable enterprises are analysed using benchmark data. |
3. Establish and maintain appropriate financing arrangements for the business |
3.1. Capacity to service debt/meet liabilities is determined. 3.2. Sources of funds are identified and terms and conditions compared and evaluated. 3.3. Negotiations are conducted to ensure the establishment of the most favourable terms and conditions. 3.4. Loan funds are sourced and agreements checked. 3.5. Costs of finance are monitored within defined budget limits. 3.6. Relationships with finance providers are managed. 3.7. The economic environment is monitored and implications for the business assessed. |
4. Monitor and review the mix of liabilities |
4.1. Regular reviews are conducted of the mix of liabilities and the costs and benefits associated with reconfiguring loans are determined. 4.2. Loans are reviewed and renegotiated as appropriate. |
5. Monitor equity, return on equity |
5.1. Review valuations on assets and monitor the effect on equity. 5.2. Returns on assets and returns on equity are calculated and used to assist business performance. |
Required Skills and Knowledge
REQUIRED SKILLS AND KNOWLEDGE |
This section describes the skills and knowledge required for this unit. |
Required skills |
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Required knowledge |
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Evidence Guide
EVIDENCE GUIDE |
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The evidence guide provides advice on assessment and must be read in conjunction with the performance criteria, required skills and knowledge, range statement and the Assessment Guidelines for the Training Package. |
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Overview of assessment |
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Critical aspects for assessment and evidence required to demonstrate competency in this unit |
The evidence required to demonstrate competency in this unit must be relevant to workplace operations and satisfy holistically all of the requirements of the performance criteria and required skills and knowledge and include achievement of the following:
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Context of and specific resources for assessment |
Competency requires the application of work practices under work conditions. Selection and use of resources for some worksites may differ due to the regional or enterprise circumstances. |
Range Statement
RANGE STATEMENT |
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The range statement relates to the unit of competency as a whole. |
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Capital needs may be: |
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Risks may include: |
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Sources of funds may include: |
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Unit Sector(s)
Unit sector |
Agribusiness |
Co-requisite units
Co-requisite units |
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Competency field
Competency field |