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Finance in Hospitality Sector : Report

   

Added on  2020-07-23

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Finance in Hospitality
Finance in Hospitality Sector : Report_1

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1Sources of funding to new and existing business...................................................................1
1.2 Contribution of different methods for the purpose of generating income............................3
M1: Effective approaches to determine sources of finance........................................................3
D1: Range of various methods of generating income.................................................................3
TASK 2............................................................................................................................................4
2.1 Cost.......................................................................................................................................4
2.2 Methods of controlling stock and cash..................................................................................5
M2: Relevant theories and techniques of setting prices..............................................................5
D2: Critical evaluation to have planned, manage and organise a number of activities..............5
TASK 3............................................................................................................................................6
3.1 Source and Structure of Trial Balance..................................................................................6
3.2: Evaluation of budget account ..............................................................................................6
3.3 Process and Purpose of Budgetary Control...........................................................................8
3.4: Evaluating budget variances................................................................................................9
M3: Structure and approaches to assess the trail balance.........................................................10
TASK 4..........................................................................................................................................11
4.1: Calculation of different ratios of Belgravia Hotels............................................................11
4.2: Recommendation about future management strategies.....................................................12
TASK 5..........................................................................................................................................12
5.1: Classification of various types of costs..............................................................................12
5.2: Contribution per unit..........................................................................................................13
5.3: Justification of short term management decision...............................................................13
D3: Determining issues associated with performance by BEP analysis...................................14
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15
Finance in Hospitality Sector : Report_2

INTRODUCTION
Every business requires proper maintenance of accounts as well finance of the company
there are various methods that are being used by the company for the purpose of managing
finance. Hospitality sector is one of the fastest growing sectors and the need of managing finance
in this sector is growing quite rapidly (Jones, Hillier and Comfort, 2016). Some of the methods
of managing finances would include budgetary control, cash control, etc. Proper maintenance of
books of accounts is also important for making sure that business is managed efficiently.
Belgravia Hotels is well known company in the in Hospitality industry and is growing rapidly
due to demand from tourists and customers in this regard. It is necessary for the company to
manage its books of accounts efficiently so that business can be taken ahead to reach to its full
potential.
TASK 1
1.1Sources of funding to new and existing business
There are large numbers of sources through which a firm can raise funds for the purpose
of raising its business, these are described as follows:
New business
Personal investment: it is basically investment, which are being made by the owner himself in
the company the risk involved in this kind of capital is very low.
Advantages
It is a good sign if owner puts his own capital in the business, it gives a good message to
bankers and venture capital list that the owner himself are ready to put his money at risk
and believe in his idea.
The owner will put his best possible efforts for growing it’s business as his own capital is at risk
(Martínez, Pérez and Rodríguez del Bosque, 2013).
Disadvantages One of the disadvantage can be that there might be a lack of professional advice for
investment.
Venture Capital: It is the kind of private which is provided to small businessIn order to earn
huge profit but at the same time involves a lot of risk. Usually a venture capital list would invest
1
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in small and medium business and will hold necessary percentage of share in the firm but the
ultimate owner remains the entrepreneur (McManus, 2013).
Advantages
Guess the entrepreneur and initially start to take his business forward and build it in a
strong manner. Necessary resources can be arranged with the capital which is infused by
the venture capital list. It comes with no cost of capital as there is no interest that has to be paid on this capital
Disadvantage.
The control over company is lost by the entrepreneur as most of the stake would belong to
Venture capitalist (Campo, Díaz and Yagüe, 2014).
Already Established Business
Bank Loan: It is one of the most important and easy way of raising funds for small and
medium size business. They just have to apply to any commercial bank for raising funds in the
bank will give loans on the basis of eligibility of the consent business.
Advantages
It is an easy way of raising funds and there is minimum paperwork involved. The company do not have to share profits with those for provided funds and just have to
pay a fixed amount of interest.
Disadvantages
The business might have to pay interest which will be a liability for the company and
will reduce profits.
Debenture: It is issued by the company to general public to raise funds. It is the liability of the
company and the company will have to pay a particular date of interest to the debenture holders,
irrespective of the fact whether company is generating profits or not (Singh., 2016 ).
Advantages
The company will not have to share profits with dementia holders. Will give necessary
funds for expansion of Management. Control is not delegate to people for giving funds.
Retained Earnings: It is basically accumulated profits that are earned by company over
period of time. It does not involve any cost and it is your profits that earned by company through
its operations.
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