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Introduction to Finance in Hospitality

   

Added on  2020-06-06

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Finance in Hospitality
Introduction to Finance in Hospitality_1
Table of ContentsINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................31.1 Sources of funding to new and existing business .................................................................31.2 Contribution of different range of methods of generating income.......................................4TASK 2............................................................................................................................................42.1 cost.......................................................................................................................................4(a) Elements of cost ....................................................................................................................4(b) Gross profit percentages and selling price.............................................................................52.2 Methods of controlling stock and cash..................................................................................5TASK 3............................................................................................................................................63.1: Source of trail balance..........................................................................................................63.2: Evaluating business account ...............................................................................................73.3: Process and purpose of budgetary control ..........................................................................93.4: Calculation of variable cost variance...................................................................................9TASK 4..........................................................................................................................................104.1: Calculation and evaluation of ratios...................................................................................104.2: Recommendation ..............................................................................................................10TASK 5..........................................................................................................................................115.1: Making categories of various costs....................................................................................115.2: Calculation of Contribution per units.................................................................................115.3: Justification of short-term management decision .............................................................11CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13
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INTRODUCTIONFinance is an essential aspects which would help business to manage and operate theiroverall business operations in effective manner. The primary role of managers is to collectvarious information which would assist them to gain maximum competitive advantages overother companies. As in hospitality sector which is related with finance in order to play aneffective role in managing better service and operations (Altinay, Paraskevas and Jang, 2015). The primary aspects of this project is focusing different sources of finance and itsimplications on hospitality sectors. Financial management would be more essential concepts thatis being analyse under this report. On the basis of various various data collection some valuablerecommendation is been done in more effective manner toward hospitality sectors.TASK 11.1 Sources of funding to new and existing business There are large number of sources of funds for new and existing business which arementioned below:New businessesPersonal Investment: One of the major source of fund is personal investment in theirown new business with the help of their own cash and collateral on your assets.Advantages: It provides the message to the investors and bankers that having long termcommitment with projects and ready to take high risks.Disadvantage: Lack of professional investment advice.Venture capital: It is a type of private equity which provides funds to small andemerging firms which have potential to earn large number of profits and having high growthopportunities. Advantages: It helps the entrepreneur to build their company with OPM throughspecialist investor support.Disadvantage: Loss of control over operations (Bar-Tal, 2012).Existing businessBank loan: One of the effective source through large number of funds are raised.Advantages: Easy to raise financeDisadvantage: Have to pay high interest rates3
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Debentures: Another source which helps to raise money from public.Advantages: Control is not surrendered to investorsDisadvantage: Need to pay interest even run in lossRetained earnings: Out of the profit which is not paid as dividendAdvantages: Provides financial stabilityDisadvantage: Improper utilisation of funds1.2 Contribution of different range of methods of generating incomeThere are different methods which helps the business to earn large number of profits aredefined below:Sales promotion: It is important promotional mix element which helps to bringawareness among the customers about diversified business products and services. It includes theuse of media and non-media marketing communications which helps to increase demand,improved quality of product and stimulate market demand. The major benefits of this method areattraction of new customers, retention of old customers, drive their competitors out of the marketetc (Bowie, Buttle and Brookes, 2016).Sub-Letting: It includes the process of leasing of the property or machine to use by someother person. It provides the opportunity to the management of business is to earn profit in theform of rent or interest.Sponsorship: It refers to the providence of support by the business regardingperformance of any act, event, activity or organisation. Such support is provided by theorganisation in financial and any other form. It helps to earn large number of profits throughdiversified activities.TASK 22.1 cost(a) Elements of cost Cost: It is an amount which is paid by the organisation regarding production of theirproducts and services. The monetary valuation of every aspect is included in cost like material,labour, efforts, opportunity cost etc.The major three elements of cost are defined below:4
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