Finance in Hospitality : Assignment

FINANCE IN
HOSPITALITY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Discuss sources of funding to business............................................................................1
1.2 Discuss contribution of different methods of income generation....................................2
2.1 Outline elements of cost, gross profit and selling prices for products and services in the
restaurant................................................................................................................................3
2.2 Discuss methods of controlling stock and cash................................................................3
TASK 2 ...........................................................................................................................................4
3.1 Source and structure of trial balance................................................................................4
3.2 Preparation of balance sheet.............................................................................................5
3.3 Outline process and purpose of budgetary control in the businesses...............................6
3.4 Advice for enhancing performance of the business.........................................................7
TASK 3............................................................................................................................................8
4.1 Computation of financial ratios........................................................................................8
4.2 Recommendations to restaurant.......................................................................................9
TASK 4............................................................................................................................................9
5.1 Categorise various costs...................................................................................................9
5.2 Marginal costing statement...............................................................................................9
5.3 Significance of break even analysis...............................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Finance is helpful for the business to meet daily needs which are utmost required by it.
The present report deals with hospitality and event planning business which raises source of
finance for the entity. The report also deals with budgetary control process and purpose of using
in the business. The financial ratios are also calculated for the organisation and as such, financial
health is highlighted in the best possible way. Moreover, income generation methods are also
discussed for the revenue generation of the business and various types of costs are also
discussed.
TASK 1
1.1 Discuss sources of funding to business
1. Friends and family -
The sources of finance are numerous and as such, friends and family is one of them. This
is one of the safest form of raising funds as family and friends can trust to the business. The
funds cane be raised from friends by the start up business with much ease. It is the safest form of
finance as they do not make pledge of goods and even may show interest in the business so that
good return may be generated (Jones and et.al, 2016).
2. Angel investors -
Another source of funding is through angel investors. This is another good source in
which the angel investors provide funds to business in return for ownership in it. This means that
certain part of ownership is being provided to business and as such, part of profits are also given
to them with reference to amount of loan provided by them. The part of profits are being shared
with angel investors.
3. Bank loans -
The loan from bank is also another source of raising funds for meeting day to day
requirements of the business so that operational activities are met with much ease. It is required
by the organisation that it should be able to take loans by seeking strength of it as loans are
repaid with interest amount along with the principal amount. As such, debt paying capacity is to
be analysed before taking loans from financial institution (Radojevic, Stanisic and Stanic, 2015).
4. Retained earnings -
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This is another source of raising funds with much ease. Retained earnings are ulitmate
source as business usually retain some part of profit which is then used for future activities. The
retained earnings are net income of the business which is usually deducted out of dividends paid
to shareholders. It is good source of finance as through this, it can pay out debt in the easiest way
(Lopes, 2016).
1.2 Discuss contribution of different methods of income generation
The business can be flourished with numerous ways which increases income of restaurant
in the best possible way. The restaurant can earn income by giving some part of it to another
person selling ice-cream which might raise income of himself and in turn can help restaurant to
earn that extra income as when customers' come for the purpose of eating ice cream, then they
might have food in the restaurant as well. This raises income and is an effective method for
generating profit.
Another method is through mailing prospective customers' regarding any new food or
offer is quoted by business. This is cost effective method as it involves low cost of direct mailing
to customers and generates huge income. In this way, technology has imparted new way of doing
business. This has great impact on the consumers' and as a result, income is produced by the
restaurant with much ease. Organising certain contests also inject sales and customers are lured
by such promotion technique (Liu and Pennington-Gray, 2015). It is done through by using radio
stations as this helps to build relationship with customers and they participate in such contests
and business is benefited by it.
Social media strategy is also huge source of income generation. As whole world is on the
social media networking websites, business attracts customers by offering certain discounts
related to food and impacts customers a lot, this helps business to generate income with much
ease. Several posts are being updated on the official page of the restaurant and as such, people
are attracted in the best possible way by posting advertisements related to new offers. This
injects sales and ultimately income is generated by implementing such strategy. The above said
methods are helpful for restaurant business as by implementing such strategies, income is
generated in the best possible way (Singal, 2014).
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