Sourcing Essentials

Developing Contracts V2, March 2015 © CIPS 2014, Page 1 of 2

Practitioner Corporate Award Assessment 3 Module 4: Sourcing Essentials Question 1: 100% of the total marks 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