Finance in Hospitality Sector Assignment - Belgravia Hotel

FINANCE IN
HOSPITALITY
SECTOR

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1. Reviewing the sources of funding and their benefits in generating income for business......3
P1.2 Evaluate contribution made by methods of income generation...........................................5
TASK 2............................................................................................................................................6
P2.1 Discuss elements of cost and profit and setting selling prices.............................................6
P2.2 Evaluate methods of controlling stock and cash and discussing cost and benefit of two
methods........................................................................................................................................6
TASK 3............................................................................................................................................7
P3.1 3.2 Trial balance and assess the source and evaluate business accounts.............................7
P3.3 3.4 Purpose and process of budgetary control in organization and assess budgetary
variances to recommend for improvement in the future..............................................................9
TASK 4..........................................................................................................................................11
P4.1 Calculation of financial ratios............................................................................................11
P4.2 Recommendation of appropriate management strategies to improve in the future...........12
TASK 5..........................................................................................................................................12
P 5.1 Categorize costs as variable, fixed and semi-variable......................................................12
P 5.2 Calculation of per product contributions and relationship between cost, profit and
volume........................................................................................................................................13
P 5.3 Justify importance of Break-Even analysis for short-term decision making....................14
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Balancing financial environment in business is main priority of the accounting
professionals. Therefore, the needs of funds in each business operations will be determined and
analyzed by business professionals to analyze the revenue and the costs implicated in such
activities. In present report, there will be discussion based on financial management in
hospitality sector of UK on which Belgravia Hotel has been considered as having appropriate
study and analysis over the facts. This report ascertains the requirements of funds in hospitality
industry as to have satisfactory growth in revenue as well as management of accounts will rise
their market value. Similarly, there has been discussion based on various sources of funds which
in turn will be useful to make appropriate changes in the operations.
TASK 1
P1. Reviewing the sources of funding and their benefits in generating income for business
To ascertain financial needs of business, there has been availability of various sources of
funding which will be through the internal sources or with the external sources which will be
assistive and helpful to the entity to have the required amount of capital funds for the operations.
Moreover, here are various sources which will be helpful to meet the capital requirement of
Belgravia Hotel. Moreover, there are various internal external sources which will be evaluated as
follows:
Internal sources of funding:
Owner’s Equity: This is the most convenient and satisfactory source of funding as there
will not be required to make the return in the generated capital as well as it will not need the time
to have returns (Kallmuenzer and Peters, 2018). The owners or partners of the firm will bring
their personal savings in the operations of the business which will be effective and primary
source of gathering the amount of funds in each activity. Therefore, there is need to have
appropriate balance of amount which will be use in each business activities of a hospitality
industry. Belgravia Hotel will have satisfactory growth in the capital structure if directors or
owner of this firm will bring their savings in operational practices.
Operating activities: By contrasting with these techniques it comprises with making the
operational efforts such as manufacturing goods and services and deal with them in market. Sales

revenue and the gains after deducting all the costs or operations will be helpful to use for the next
tasks or for development of business. In hospitality industry, to make the most appropriate deals
in market, they have to make sale of their services among consumers. Moreover, the revenue
generated through serving consumers will be very helpful and beneficial to have satisfactory
amount of profits.
Sale of assets: The unused and the unequipped assets needed to be sold out the firm as to
have the satisfactory gains through this. Moreover, if a firm seeks for the shortage of funds in the
operations that they can sell out assets like machinery, land, building, equipment, etc. Belgravia
Hotel will have efficient amount of earnings if they will make sale of such assets (Kasemsap and
et.al, 2018).
Externals sources:
These are the roots which are other than internal sources of gathering the capital funds for
the operations. It will be helpful to the firm in relation with gathering the amount of capital
which they desired. Moreover, they have to make payment of interest in return to the particular
amount. Similarly, there will be time limit for the amounts obtained by the firm in order to meet
the funds requirements. Thus, the external sources of funds can be analyzed as:
Shareholder’s equity: These are the sources of fund which help the business in selling
the equity ownership of business in the market. These are the marketable gains which have been
collected through selling shares and securities among investors. In this regard, the investors
mainly seek for details relevant with financial health of firm. Moreover, it will be suggested to
the Belgravia hotel that they must make periodical disclosure of the firm’s financial database
which will be attractive to investors to show their interest in investing in entity. It will be a
suitable technique to raise the capital funds of the business. In addition, shareholders mainly seek
for having appropriate returns over their invested money in the business. Thus, the appropriate
dividend policies will be attractive and satisfactory to the investors in terms of making trust over
the business as well as for analyzing the requirements of firm (Claveria, Monte and Torra, 2015).
Bank loan: These are the borrowings which a firm can have through banks and financial
institutions in against the property or assets of entity. Therefore, Belgravia Hotel will have
satisfactory amount of loans from the banks on which they have to make payment of interest
amount and the time period of loan will decide the terms of loans. The short and long term loan
will be helpful as to meet the financial requirements on right time. In addition, it will be a