Importance of Source of Finance Report - The City Hotel Plc
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Added on 2020-01-28
Importance of Source of Finance Report - The City Hotel Plc
Added on 2020-01-28
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Table of ContentsINTRODUCTION......................................................................................................................4TASK 1......................................................................................................................................4A. Sources of finance available for various businesses.........................................................4Implications of financial resources........................................................................................5B. Appropriate sources of finance for The City Hotel..........................................................5Task 2.........................................................................................................................................6A. Cost of funding in terms of debt v equity.........................................................................6B. Importance of financial planning......................................................................................6Task 3.........................................................................................................................................7A) Importance of budgeting and computation of cash budget for City Hotel.......................7B) Unit cost computation.......................................................................................................8C) Assess the viability of Hotel Expansion...........................................................................9Task 4.......................................................................................................................................12A) Financial Statement of City Hotel..................................................................................12B) Comparing the statements of two firms..........................................................................13C) Ratio Analysis.................................................................................................................13Conclusion................................................................................................................................15References................................................................................................................................16
Index of TablesTable 1: Cash Budget.................................................................................................................7Table 2: Unit cost calculations...................................................................................................8Table 3: Cash flow.....................................................................................................................9Table 4: Appendix....................................................................................................................15
INTRODUCTIONManaging Financial Resources and Decisions is an important task of an organisation,in order to increase the productivity and growth of the company. The present report studyabout the importance of sources of finance with the context of The City Hotel plc. Further itwill also discuss about the impact of needs of decisions that are made by variousstakeholders.TASK 1A. Sources of finance available for various businessesInternal sources are those sources which the owner of the company will himselfprovide fund to establish a new firm or for some other business activities. These financialsources are categorised in various forms, some of them are discussed below:Retained profits: Whenever business organisation trades successfully then largeamount of profit will be generated. Some of these capitals are reserved for the futurerequirement of the company. Therefore, it is known as retained profits (Siano and et.al. 2010).Sale of assets: Many of the business professionals sale their some personal assets andproperties in order to get equivalent amount of money.Borrowing from friends or relatives: By borrowing money from family or otherperson, an equivalent amount of sum can be accumulated. External sources of finance are other extrinsic methods to accumulate surplusamount for the functioning of the business operation. Some of these are explained below:Bank loans: Banks provide large sum of money to large organisations for longerperiod of time. In exchange of some collateral security by an organisation, theyprovide loan.Mortgage: Mortgage is special type of loan facility which make available huge fundsfor large organisations like, The City Hotel to purchase any property or land. Leasing: In the process of leasing, organisations hire or lease any building, land orother property for their use, where monthly payments have to be made by The CityHotel.
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