Cash Budget for Cardiff Central Hotel

This report presents a cash budget for Cardiff Central Hotel, including estimated receipts and payments for each month of the year 2019-20. The budget shows the inflows and outflows of cash, as well as the sources of income and expenses for the hotel.

INDIVIDUAL RESEARCH
REPORT

TABLE OF CONTENTS
TABLE OF CONTENTS................................................................................................................2
EXECUTIVE SUMMARY.............................................................................................................1
REFERENCES................................................................................................................................2

INTRODUCTION
Budgeting refers to process involving preparation of spending plan for the business. the
spending plan of company is known as budget. Creating the plan enables company to determine
in prior to analyse whether company is having enough funds for meeting the operations of
business. as budgeting helps the business in effective allocation of the resources to make most
efficient utilisation for the growth of company. Budgeting require the company to ensure that
enough funds are resources are available for carrying out the business operations. Present report
is based over Westhorpe Investments managing several hotels in which report is addressed over
Cardiff Central hotel. Hotel is having 50 bedrooms over five floors, with basement, conference
and small retail space on ground floor to reception foyer. Report includes preparation of cash
budget for the hotel based on estimation and assumptions for the year. It will also include profit
budget forecast for the year. It will enhance the understanding of concepts of budgeting.
TASK 1
Cash Budget for the year 2019-20 of the Cardiff Central Hotel
Jan February March April May June
£ £ £ £ £ £
Receipts :
Collection
from Room
Sales
1,22,625 1,26,925 1,34,750 1,43,575 1,47,125 1,67,500
Food &
Beverage
44,500 40,100 43,300 42,600 40,200 36,500
Rent 950 950 950 950 950 950
Commission 25 55 20 15 10 40
Total Receipts 1,68,100 1,68,030 1,79,020 1,87,140 1,88,285 2,04,990
Payments :
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Laundry 6,250 6,250 6,250 6,250 6,250 6,250
Printing and
stationary
2,000 2,000 2,000 2,000 2,900 2,000
Toiletries 46,000
Salaries 1,10,000
Wages 11,667 11,667 11,667 11,667 11,667 11,667
Marketing
cost
60,000
Payment to
suppliers
0 2,000 12,300 2,000 16,400 2,000
Van 28,000
Petrol and
diesel
1,000 1,000 1,000 1,000 1,000 1,000
Restaurant
Improvements
8,800 22,000
General
Maintenance
5,000 5,000 5,000 5,000 5,000 5,000
Lighting &
heating
27,500 27,500
Rates 21,668 5,417 5,417
Total
payments
25,917 73,917 1,02,517 49,584 48,634 2,52,834
Balance b / f 2,65,000 4,07,183 5,01,297 5,77,800 7,15,356 8,55,007
Net cashflow
in month
1,42,183 94,113 76,503 1,37,556 1,39,651 -47,844
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Balance c / f 4,07,183 5,01,297 5,77,800 7,15,356 8,55,007 8,07,163
July August Sept Oct Nov Dec
£ £ £ £ £ £
Receipts :
Collection
from Room
Sales
2,18,560 2,44,040 2,19,415 1,94,830 1,48,155 1,16,055
Food &
Beverage
45,300 44,800 37,700 28,900 38,000 51,000
Rent 950 950 950 950 950 950
Commission 25 35 30 45 50 35
Total Receipts 2,64,835 2,89,825 2,58,095 2,24,725 1,87,155 1,68,040
Payments :
Laundry 6,250 6,250 6,250 6,250 6,250 6,250
Printing and
stationary
2,000 2,000 2,000 2,000 2,900 2,000
Toiletries
Salaries 1,10,000
Wages 11,667 11,667 11,667 11,667 11,667 11,667
Marketing
cost
Payment to
suppliers
2,750 2,000 2,000 3,500 2,000 2,000
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Van
Petrol and
diesel
1,000 1,000 1,000 1,000 1,000 1,000
Restaurant
Improvements
13,200
General
Maintenance
5,000 5,000 5,000 5,000 5,000 5,000
Lighting &
heating
27,500 27,500
Rates 5,417 5,417 5,417 5,417 5,417 5,417
Total
payments
34,084 46,534 60,834 34,834 34,234 1,70,834
Balance b / f 8,07,163 10,37,915 12,81,206 14,78,467 16,68,359 18,21,280
Net cashflow
in month
2,30,751 2,43,291 1,97,261 1,89,891 1,52,921 -2,794
Balance c / f 10,37,915 12,81,206 14,78,467 16,68,359 18,21,280 18,18,486
Working Notes
Calculation for cash collection for the year from January to December
Jan Februar
y
March April May June
Room sales 1,30,500 1,25,000 1,40,000 1,45,500 1,48,000 1,78,000
Food & beverage 44,500 40,100 43,300 42,600 40,200 36,500
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Rent 950 950 950 950 950 950
Commission 25 55 20 15 10 40
Room Sales
Business concerns
35%
37800 45675 43750 49000 50925 51800
Individuals 84825 81250 91000 94575 96200 115700
Collection from
sales
122625 126925 134750 143575 147125 167500
July August Sept Oct Nov Dec
Room sales 2,40,400 2,46,000 2,05,100 1,89,300 1,26,000 1,10,700
Food & beverage 45,300 44,800 37,700 28,900 38,000 51,000
Rent 950 950 950 950 950 950
Commission 25 35 30 45 50 35
Room Sales
Business concerns
35%
62300 84140 86100 71785 66255 44100
Individuals 156260 159900 133315 123045 81900 71955
Collection from
sales
218560 244040 219415 194830 148155 116055
Calculation for computing the payments made to suppliers of business necessities
Payment to
Suppliers
Jan Februar
y
March April May June
In room
beverages
2000 2000 2000 2000 2000
Bedding bundles 700
Kettle trays
Complimentary 9600 14400
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items
Total 0 2000 12300 2000 16400 2000
Payment to
Suppliers
July August Sept Oct Nov Dec
In room
beverages
2000 2000 2000 2000 2000 2000
Bedding bundles 750
Kettle trays 1500
Complimentary
items
Total 2750 2000 2000 3500 2000 2000
Analysis
Cash budget refers to the plan of expected receipts of cash sand the disbursements during
period. The inflows & outflows of cash include revenues, payment of expenses and receipts and
repayment of loans. In simple words cash budgets is referred as estimated projection of cash
position of company in future. Cash budget is prepared after purchases, sales and expenditures
are expected. Cash budget covers where the funds will be deployed and from where the funds
will be coming into company. It is very essential for the business to ensure that it has sufficient
cash for carrying out the activities and operations of business (Miller, 2018). On the basis of cash
budget company could evaluate whether funds are enough and if not it could arrange for the
funds at proper time. Every company after the end of the period compares the budget with actual
figures to identify the variations. On the basis of variations steps are taken to reduce the
variations.
The above budget of Cardiff Central shows the inflows and outflows of cash in company
for each month. The revenues of hotel are continuously increasing over the year. It has main
revenues from room sales which have been increasing over the period. Food and beverages are
second source of income which shows fluctuating inflows of the cash. Hotel has also rented the
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space to beauty parlour from which it receives rent equally for the period and commission is
other source of income.
It could be evaluated from the outflows that it has maintained significant control over cash
outflows. It makes monthly payments for the laundry expenses throughout the year. printing and
stationary is also paid monthly with increase only in May and November. Payments for the
salaries are made half yearly to the employees of company. The wages of the company are paid
weekly by the company. Inflow towards marketing cost is 60000 that is paid in June for the year.
Payment to the suppliers is made on one month credit. Company has purchased a Van in March.
There will be equal expense of petrol and diesel over every month (Bogsnes, 2016). Payments
for restaurant improvements will be made in two instalments. General maintenance expenses are
paid every month and lighting charges are paid quarterly. Payments of company are not
increasing in proportion to sales.
It could be analysed that hotel is having enough cash throughout the year for carrying out
the activities and operations of business smoothly without interruptions. It is not required to
borrow funds and should invest them over short term returns.
TASK 2
Projected Profit or loss budget for the year of Cardiff Central Hotel
Jan Feb Mar Apr May Jun
Room sales 1,30,50
0
1,25,000 1,40,000 1,45,500 1,48,000 1,78,000
F & B sales 44,500 40,100 43,300 42,600 40,200 36,500
Total sales
revenues
1,75,00
0
1,65,100 1,83,300 1,88,100 1,88,200 2,14,500
Rental Income 950 950 950 950 950 950
Commission Income 25 55 20 15 10 40
Total Revenues 1,75,97
5
1,66,105 1,84,270 1,89,065 1,89,160 2,15,490
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Expenses
In room beverages 2000 2000 2000 2000 2000 2000
Bedding bundles 700
Complimentary
items
2000 2000 2000 2000 2000 2000
Laundry 6,250 6,250 6,250 6,250 6,250 6,250
Printing and
stationary
2,000 2,000 2,000 2,000 2,900 2,000
Toileteries 3,833 3,833 3,833 3,833 3,833 3,833
Salaries 18,333 18,333 18,333 18,333 18,333 18,333
Wages 11,667 11,667 11,667 11,667 11,667 11,667
Marketing cost 5000 5000 5000 5000 5000 5000
Petrol and diesel 1,000 1,000 1,000 1,000 1,000 1,000
General
Maintenance
5,000 5,000 5,000 5,000 5,000 5,000
Lighting & heating 9166.7 9166.7 9166.7 9166.7 9166.7 9166.7
Rates 5416.7 5416.7 5416.7 5416.7 5416.7 5416.7
Depreciation van 416.7 416.7 416.7 416.7
Depreciation
minibus
333.3 333.3 333.3 333.3 333.3 333.3
Total Expenses 72000 72000 73116.67 72416.67 73316.67 72416.67
Profit 1,03,97
5
94,105 1,11,153 1,16,648 1,15,843 1,43,073
Analysis
Profit budgets are prepared to assess the profitability of company during the year. Budgets
of the hotel are made on the basis of forecasts for year. The business profit budget covers all the
incomes and expenditures and not just the cash items. It could be evaluated from the above
budgeted forecast that company will be effectively managing the incomes and expenditures.
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Management will effectively carry out the operations over the period (Rubin, 2019). The charge
for depreciation on van will start from March when it is put to use. It has to maintain effective
control over the costs and expenditures to achieve the desired goals and objectives.
CONCLUSION
It could be summarised from the above report that it budgeting plays an important role in the
success of the organisation. There are various types of budgets prepared by the company for
effective utilisation of the resources. Budgets help the company to make effective allocation of
resources for making effective utilisation of the resources.
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REFERENCES
Books and Journals
Miller, G., 2018. Performance based budgeting. Routledge.
Bogsnes, B., 2016. Implementing beyond budgeting: Unlocking the performance potential. John
Wiley & Sons.
Rubin, I.S., 2019. The politics of public budgeting: Getting and spending, borrowing and
balancing. CQ Press.
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