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Finance in Hospitality Industry

   

Added on  2021-02-18

15 Pages3782 Words397 Views
Finance in Hospitality Industry

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1AC 1.1 Sources of funding available for business and service organisations in the hospitalityindustry........................................................................................................................................1AC 1.2 Methods of generating income:.......................................................................................2TASK 2............................................................................................................................................3AC 2.1 elements of cost:..............................................................................................................3AC 2.2 Evaluation of methods of Controlling Stock and Controlling Cash in hospitalitybusiness and services environment..............................................................................................3Methods of Controlling Stock:.................................................................................................3Methods of Controlling Cash:..................................................................................................4TASK 3............................................................................................................................................5AC 3.1 Trial Balance:..................................................................................................................53.2 Preparation of new trial balance and explanation of adjustment and notes..........................5AC 3.3 process and purpose of budgetary control:......................................................................63.4 Analysis of variances from actual and budgeted figures.......................................................7TASK 4............................................................................................................................................94.1 Calculation and Analysis of ratios.........................................................................................94.2 Recommendation of management strategies for two theme parks based on ratio calculated...................................................................................................................................................10TASK 5..........................................................................................................................................11AC 5.1 Fixed, Variable And Semi-Variable:.............................................................................11AC 5.2 Contribution per product or customer and Margin of safety:.......................................11AC 5.3 short-term management decisions:................................................................................12CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13

INTRODUCTIONAccounting is a language of business. Financial accounting reflects the financial positionof a business while management accounting focuses on overall performance of business andincludes decision making process. The present report is about the use and application ofaccounting techniques in a business of hospitality organisation. These techniques assist themangers of business to take financial decisions. The report is based on determination of sourcesof fund allocation of such funds, application of sot and budgetary control systems to enhanceprofitability. An evaluation on the basis of ratios is carried out for two different parks todetermine the financial position and profitability condition of the parks. On the basis of suchfinding management strategies are also suggested to those parks as well.TASK 1AC 1.1 Sources of funding available for business and service organisations in the hospitalityindustryOrganisations have to select the that funds out of various sources according to their need andaccess. Some sources of fund are as follows:Internal sources:Retained earning: it is the usage of profit in the business. It is known as Ploughing backof profit earned.Advantages DisadvantagesIn this source of finance, no additional issue ofshares of capital and no dilution of ownershipand control in the business (Pedersen., 2017).This source of finance are not practicallybeneficial as its cost is equal to the cost ofequity.Sales of asset: Business sells off its assents and generates cash.AdvantagesDisadvantagesIt gives a short term and long term financingaccording to kind of asset sold.Business have to incur capital loss as assets aresold on its scrap value.External sources:Issue of share : Share are issued in Capital market.AdvantagesDisadvantages1

Organisations can issue share in the marketaccording to their need and it is divided in thesmall amount so anyone can purchase share.Cost of issuing shares are more than theissuance of bonds and debentures.Lending form bank: Loans are taken form bank by paying interest.AdvantagesDisadvantagesInterest rate are fixed throughout of yourperiod so payment can be easily estimated.Loans are not flexible as interest has to be paidon not using the resources.Hire purchase: Asset are purchased in instalment.AdvantagesDisadvantagesIn this possession of asset can be taken withoutfull payment of asset.Due to instalment, higher price are charged onthis then its original cost.AC 1.2 Methods of generating income:Sales Promotion: Sales promotion is method of generating income. In the context ofhospitalityIndustry, sales promotion tools are used like coupon, samples, packages etc. are used tosecure different corporate clients. Direct sales are the highly beneficial tool to identify theservice related need of clients so hotel can serve their customer in customized form madeavailable in accordance of them which is the core functioning of this industry.Commission: In hospitality industry, various tour and travels businessman approaches tohoteliers for letting their client and customer travel in their facility. For that they givecommission to them. So it is methods of generating incomes for hoteliers (Cogneau,Dupraz and Mesplé-Somps., 2018.). In other case new hotel can approach to that travelagencies for let their customer to go to new hotels so new hoteliers can get a newcustomer base through paying commission.Sub-Letting: For generating incomes, many hoteliers sub let some part of their hotel tothose attractive activists or amusements persons. By this subletting rent are the sources ofincome and customer coming to that sublet part are attracted to come into their hotels. Itis double beneficial sources of generating incomes. 2

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