Assignment on Finance in Hospitality
Added on -2020-07-22
| 32 pages| 9383 words| 36 views
Trusted by 2+ million users,
1000+ happy students everyday
Showing pages 1 to 8 of 32 pages
FINANCE IN HOSPITALITY
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................5TASK 1............................................................................................................................................61.1 Identify different sources of finance.................................................................................61.2 Evaluate the contribution made by an entity using different techniques of generatingincome for a large chain of restaurants.................................................................................10TASK 2..........................................................................................................................................122.1 Discuss elements of cost, gross profit percentages and selling prices for products andservices.................................................................................................................................122.2 Evaluate methods of controlling stock and cash in a business.......................................14TASK 3..........................................................................................................................................173.3 Process and purpose of budgetary control......................................................................173.4 Variance analysis of Yuri's budget.................................................................................18TASK 4..........................................................................................................................................193.1 Source and structure of trial balance..............................................................................193.2 Profit and loss account and balance sheet of R. Riggs to discover mistakes in financialrecording...............................................................................................................................214.1 Ratio analysis for R. Riggs based on financial statements.............................................23Interpretation:-.................................................................................................................244.2 Strategies to improve business's performance................................................................25TASK 5..........................................................................................................................................265.1 Fixed, variable and semi-variable costs..........................................................................265.2 Break-even position and number of units to be sold to reach out set target...................265.3 Suggestion for appropriate selling units.........................................................................29CONCLUSION..............................................................................................................................29REFERENCES..............................................................................................................................30
INDEX OF TABLESTable 1: Analysing sources of finance.............................................................................................8Table 2: Sale price of a product.....................................................................................................12Table 3: Variance analysis.............................................................................................................18Table 4: Trail balance ...................................................................................................................19Table 5: profit and loss account to analyse financial position of R. Riggs....................................20Table 6: Balance sheet for R. Riggs...............................................................................................21
ILLUSTRATION INDEXIllustration 1: Using formula for evaluating EOQ.........................................................................15Illustration 2: Journal entry............................................................................................................19Illustration 3: Ratio analysis to analyse financial performance of R. Riggs..................................23Illustration 4: Ratio analysis to analyse financial performance of R. Riggs..................................23Illustration 5: Ratio analysis to analyse financial performance of R. Riggs..................................23Illustration 6: Ratio analysis to analyse financial performance of R. Riggs..................................23
INTRODUCTIONIncreasing demands of external business environment will be easily meet by the servicesoffered by the Hospitality industry. This particular industry is also recognised as service industrythat satisfy variety of needs and expectations of various users located in the external businessenvironment. Role of finance has explained in the given project report as this resource is thebasic need of an individual. Financial resources are used in n entity in order to uplift the currentbusiness condition as the desired motive of an entity is to take care about the current need afteranalysing its future expectations. This report focuses on the significance of finance as a resourceas the usage of finance is regarded as the best suitable for an entity as the hospitality sector'smajor aim is to cater the needs of all the customers by enhancing the overall quality of servicesoffered to them. Accounting of business is done in an entity in order to manage all the businesstransactions by proper recording of al the transactions in an entity that helps in determining thecurrent financial performance of an entity as the expenditures are analysed in order to eradicatefrom its roots. Expenditures level in the business can be minimised by compensating them withhe overall income generated by an entity in order to create additional value for an entity in theexternal business environment. Stakeholders arse satisfied by providing appropriate informationabout the business as creating loyal customer is the common aim of an entity that needs to befulfilled by an enterprise. This report focuses on different financial principles in order todetermine the ability of an entity in order to reduce their obligation by increasing its overall skillsand the capabilities over a certain period. Current report has segmented into various parts out ofwhich one is related to the selection of various sources of finance in order to start an entity as thesources of finance gets changed with the service industry. In the present report various scenarioshas given that targets different aspects to be considered by n entity as the desired aim of thebusiness owner lies on analysing the costs associated with each and every procedures as costs areanalysed in order to minimise the overall cost burden lies on an entity. Financial performance ofan entity will be ascertained by using ratio analysis as the important approach that focuses on theprofitability, liquidity and efficiency of an entity as different variety of ratios are determined.
TASK 11.1 Identify different sources of financeAn entity owner deals in a service industry are required to select different sources offinance in order to fulfil all the current business needs by using variety of sources of finance inorder to enhance the quality of service provided by an entity to its users. Decision of businessexpansion taken by an entity owner based on various financial resources used in an entity.However, fund can be allocated through different sources for effective business operations. Inthis regard, internal and external sources of allocating finance understand as:Internal sources: These are those sources which are available internally as in hand oforganization. For example; retained earning, personal savings etc. It can be described as follows:Retained earnings-This is commonly used by existing business user which are operatingtheir business currently in a similar industry. Retained profit is generated when dividendpaid by an individual and al other expenses excluded from the current profit produces byan enterprise owner. This source of finance choose by an entity are regarded as thepersonal property of owner in which entity owner invests its own money in order togenerate higher sales and the revenue.Personal savings: Business owner can allocate fund by using his personal savings alsotake financial aid from friends and family. Therefore, adequate fund can be allocatedefficiently for further business operations and improving its quality services effectively.External source: Adequate and required fund can be allocated through external sources astaking advantage of loan from bank, borrowing money from other business entities, venturecapitalist etc. In this regard, some of the essential funding external sources can be expressed as;Bank loan- It is regarded as the basic source of external finance in which business ownerwill borrow fund from the bank or financial institution according to their current needsand expectations. An entity owner will use this source of fund as in this approach theycan take any amount of loan as there is no specific limit imposed on them (Gadenne,2017). The nature of business condition or new start type will ascertain the amount ofloan taken by an individual. Collateral security need to be given by a user to borrowmoney along with specific interest charged on the total amount of loan borrowed whichwill be repay in a specific time period.
Equity- Internal source of finance in which candidates are attracted towards the currentbusiness in order to take up the shares of an entity and in return provide money to thebusiness. Funds received from the shareholder are used in a business in order toaccomplish desired aims d targets of an entity (Chang, Fernández and Gulan, 2017).Shareholders are provided with specific share in a firm as they get voting rights in orderto participate in the business proceedings as they become owner of a business concern.Debentures- It is a written document that includes the amount of debt taken by a firmfrom a lender on a specific coupon interest rate that will be paid in a given time mutuallydecided by both lender and the borrower. Lender provides money to an entity in returnget debenture as a legal evidence to get their money back without any kind of defaultalong wit specific rate of coupon interest paid to the debenture holder for providingmoney to a business. Debentures are shown as debt in the books of account of thebusiness concern as this needs to be repay by them in instalments decided by both theparties.Venture capital-An entrepreneur prefer this mode of finance in which business expert ina particular industry will provide finance to an individual in order to fulfil all theirdreams by setting up their business. A person who provide finance to an entrepreneurwill take interest in the firm of an entrepreneur as they provide business expertise alongwith the finance in order to set up their business in the best possible manner.Micro finance loan- An individual will take loan from small financial institutionaccording to their requirement as an entity owner will take money from this institution inless interest rates as this institution are come into existence in order to help a newentrepreneur (Gadenne, 2017). Employer who intend to open its business requires financefrom different sources in order to enhance the overall condition of an entity as theirdesired aim is to capture higher market share. Community help- Hospitality association are come into existence that will help an entirewho intends to open its new business, renovating its current unit or expanding theirexisting business segments can take help from this institution. Role of this institution is toprovide financial as well as non-financial help required by a person in setting up theirbusiness in order to achieve al te desired aims and targets set by the industry. These
communities will help a firm by proving guidance through all the industry who are themember of this association as the primary motive of this club is to enhance the existingtalent of a person by increasing creativity or innovation in an individual.Government- Legal authority will support the fresh talents of an individual as theircommon motive is to improve the overall economy by generating higher sales and therevenue in their economy (Deakins and North, 2016). The government will launchvarious schemes and programs in order to improve the existing performance of itseconomy by focuses on promoting desired needs of all the entrepreneur. Incubationcentres are specifically launched in order to promote the desired aims and targets framedby an entity. Talent of a person will be recognised by an entity as their focus is onincreasing their current skills and the capabilities in a person that can be used in thefavour of a country.Table 1: Analysing sources of financeSources of financeCost associatedSuitabilityBank loanInterestsIt is not suitable for higherinvestment of the business as incurrent case investment is of£450000 that means a user arerequired to pay £450000*10%= £45000 yearly interest for 5years.Total costs= £450000+(£45000*5)= £450000+£225000= £675000Retained earnings No costIt is not suitable for newbusiness owner as this sourceof finance is available for
Found this document preview useful?
You are reading a preview
Upload your documents to download
or
Become a Desklib member to get accesss
Paid Plans
Free Plan
Single Unlock
Monthly Plan
Yearly Plan