Income Generation Opportunity - PDF
Added on 2021-04-21
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Running Head: Finance & Funding in Travel & Tourism Sector 1
Finance & Funding in Travel & Tourism Sector 2ContentsTask 1.1: Short term, medium term and long term funding sources................................3Task 1.2: Income generation opportunity.........................................................................5Task 2: Refer to PPT file..................................................................................................6Task 3: Budgetary report..................................................................................................6Task 4: Ratio analysis:....................................................................................................10Task 5: Breakeven point.................................................................................................14References.......................................................................................................................18
Finance & Funding in Travel & Tourism Sector 3Introduction:The report explains about the various types of sources which are required by the different business entities to manage and run the business as well as few new opportunities which could be adopted by the hospitality industries to enhance the revenues. Task 1.1: Short term, medium term and long term funding sources:BaseShort term fundingMedium term funding Long term funding Sole traders Bank OverdraftCredit cardsTrade creditOwner’s capitalFixed depositFactoring LeaseBank loansLong term bank loanAsset salesLoan from family and friends Owner’s capitalPartnershipBank OverdraftCredit cardsTrade creditCreditors Factoring LeaseBank loansFinancial institutionsWorkforce restructuringAsset salesLong term bank loanPrivate limited companiesBank OverdraftOwner’s capitalRetained profitPayablesFactoring LeaseBank loansCommercial BankAsset salesWorkforce restructuring Loan term bank loanVenture capitalPublic limited companiesRetained profitCapitalBank OverdraftPayables Bill discounting Factoring LeaseDebenturesBank loansPreference capital. Share capitalAsset salesWorkforce restructuring Venture capital
Finance & Funding in Travel & Tourism Sector 4(Ward, 2012)Sole traders:Sole trader is a person who executes and manages a business. A sole trader is also known as sole proprietorship. It is a simple business structure which is run by an individual. The entire business is owned by the single individual. Sole trader is legally responsible for allthe factors of the business and they are also required to manage and maintain the entire finance of the business at their own. Short term finance of the company could be managed through Bank Overdraft which could be raised by the trader through withdrawing more amount than the balance of bank account, Credit cards, Trade credit, Owner’s capital and fixed deposit (Ross et al, 2008). Further, medium term funds could be generated by the company through Factoring, Lease, Bank loans. And lastly, the long term loans could be financed by the sole traders through Long term bank loan, Asset sales, Loan from family and friends and Owner’s capital.Partnership:Partnership is an arrangement in which 2 or more parties come together and executes and manages a business. Partners share the liabilities and profits equally or according to their contract. It is a simple business structure which is run by the 2 or more people with a partnership agreement. Partners are legally responsible for all the factors of the business and they are also required to manage and maintain the entire finance of the business at their own. Short term finance of the partnership could be managed through factoring, Lease and Bank Overdraft which could be raised by the trader through withdrawing more amount than the balance of bank account. Further, medium term funds could be generated by the partnership firm through Factoring, Lease, Bank loans and financial institutes (Weaver, Weston and Weaver, 2001). And lastly, the long term loans could be financed by the partnership firm through Workforce restructuring, Asset sales, and partner’s capital.Private limited companies:Private limited company is a small business entity which is privately held. In private limited companies, the owner of the company is only responsible for the shares which are holding by him. The total number of members in private limited company is restricted to 50 members. Firms are also eligible to enjoy various tax advantages. Short term finance of the private limited companies could be managed through Bank Overdraft, payables, retained earnings and owners’ capital. Further, medium term funds could be generated by the private
Finance & Funding in Travel & Tourism Sector 5limited companies firm through Factoring, Lease, assets sales and commercial bank (Schlichting, 2013). And lastly, the long term loans could be financed by the private limited companies firm through asset sales, venture capital, loan from bank loan, restructuring etc. Public limited companies:Public limited company is a standard legal designation of LLC as it offers the shares to general public and though limited liabilities are also held by the company. This business entity is publicly held. In public limited companies, there is no owner of the company. The total number of members in public limited company is not restricted. Firms are also eligible to enjoy various tax advantages (Moles, Parrino and Kidwekk, 2011). Short term finance of the public limited companies could be managed through retained profit, capital, payables, billdiscounting, Bank Overdraft, capital etc. Further, medium term funds could be generated by the public limited companies firm through Factoring, Lease, debentures, preference share capital, assets sales and commercial bank. And lastly, the long term loans could be financed by the public limited companies firm through asset sales, share capital, venture capital, restructuring etc. It explains about various sources which could be used by the different business entity to raise the funds for short term, medium term and long term. Help sheet:Use of fundsCost of financeStatus and SizeFinancial situationAdministration chargesInterestSecurityshorttermBank OverdraftWorking capitalNilSmallCurrent financial situationLowNilNo securityCredit cardsWorking capitalNilSmallCurrent financial situationLowNilNo securityTrade creditWorking capitalNilSmallCurrent financial situationLowNilNo securityOwner’s capitalWorking capitalNilSmallCurrent financial situationLowNilNo securityFixed depositWorking capitalNilSmallCurrent financial situationLowNilNo security
Finance & Funding in Travel & Tourism Sector 6Creditors Working capitalNilSmallCurrent financial situationLowNilNo securityRetained profitWorking capitalNilSmallCurrent financial situationLowNilNo securityPayablesWorking capitalNilSmallCurrent financial situationLowNilNo securityBill discountingWorking capitalNilSmallCurrent financial situationLowNilNo securityMedium termFactoringMedium term investment 5%-8%MediumLong term financial situationHigh5%-8%No securityLeaseMedium term investment 5%-8%MediumLong term financial situationHigh5%-8%No securityBank loansMedium term investment 5%-8%MediumLong term financial situationHigh5%-8%No securityFinancial institutionsMedium term investment 5%-8%MediumLong term financial situationHigh5%-8%No securityCommercialBankMedium term investment 5%-8%MediumLong term financial situationHigh5%-8%No securityDebenturesMedium term investment 5%-8%MediumLong term financial situationHigh5%-8%Dependson the typePreference capital.Medium term investment 5%-8%MediumLong term financial situationHigh5%-8%Dependson the typeLongtermLong term bank loanLong terminvestment 8%-12%Huge in sizeLong term financial situationHigh8%-12%Dependson the typeAsset salesLong terminvestmen8%-12%Huge in Long term financial High8%-No security
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