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(DOC) Sources of Finance Assignment

Added on - 08 Dec 2020

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Finance
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................11.1 Sources of funds available for business and service industry..........................................11.2 Evaluation of contribution made by range of methods of generating income.................2TASK 2............................................................................................................................................32.1 Elements of cost, gross profit percentages and selling prices for products and services.32.2 Methods of controlling stock and cash in a business and service environment...............3TASK 3............................................................................................................................................53.1 Sources and structure of trial balance...............................................................................53.2 Evaluation of business accounts, adjustments and notes..................................................63.3 Process and purpose of budgetary control........................................................................83.4 Analysis of variances from budgeted and actual figures..................................................8TASK 4............................................................................................................................................94.1 Calculation and analysis of all ratios................................................................................94.2 Recommendation on appropriate future management strategies....................................10TASK 5..........................................................................................................................................105.1 Categorisation of costs as fixed, variable and semi variable..........................................105.2 Calculation of contribution per product and explanation of cost/ profit/ volumerelationship...........................................................................................................................115.3 Justification of short term management decisions..........................................................12CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13
INTRODUCTIONFinance can be defined as the element which is the main requirement of a business entityto operate a business successfully. If an organisation is not having appropriate funds than it is notpossible to perform operational and executional activities of business. It can be raised fromdifferent sources like investments, equities, bank loan, overdrafts etc. Hospitality industry isconcerned with rendering services to the clients (del Mar Alonso-Almeida and Bremser, 2013). Itis essential for the sector to render good quality services to the customers so that large marketshare can be captured. Main aim of this report is to analyse the sources of funds that are requiredto an organisation for operating business within hospitality industry. The organisation which ischosen for this report is Belgravia Hotels who is operating in lodging, contract services andrestaurants. This business entity based in UK and operating business there successfully. In thisassignment different topics are discussed including sources of funds and income, understandingthe business in terms of the elements of cost and evaluation of business accounts. Analysis ofbusiness performance and application of the concept of marginal costing are also covered underthis report.TASK 11.1 Sources of funds available for business and service industryA UK based hospitality company Belgravia Hotels operates in different sectors includinglodging, contract services and restaurants. Now the hotel is willing to be developed and enhanceposition of all its divisions. For this purpose, three different goals are decided by theorganisation. All of them are as follows:Make investments in such projects that increase shareholder’s values (Vasquez, 2014).Manage assets of the organisation.Improve decision making so that profits can be enhanced.To achieve all the above described objectives organisation needs to have sufficient fundsthat can be acquired from following sources:Sources of funds:These are the funds that are required by an organisation in order toexecute business. There are various types of sources that are helpful for Belgravia Hotels inoperating their business are discussed below:1
Bank loan:It is the most common source of fund which can be adopted by BelgraviaHotels in order to develop its business. Bank requires a collateral security from theborrower subject to borrowed loan. Bank may have sold the asset and recover all theamount of loan, if the money is not received on time. Borrower have to pay an interest onthe loan on a fixed rate for a fix period (Papargyropoulou and et.al., 2016).Selling old and unusable assets:This is the another option which can be used byBelgravia Hotels in order to get funds for the future development of the organisation.When a company is having some old assets that cannot be used for business purpose thanthese can be sold to raise funds. Acquired finance can be used for enterprise's perspective.Both the above described options of sources of funds can be used by Belgravia Hotels inorder to enhance position of all the divisions of the company.1.2 Evaluation of contribution made by range of methods of generating incomeFor every business like Belgravia Hotels there are various methods that helps to generateincomes all of them are described below:Grants:These are the non-repayable funds that are provided by one party to another.Belgravia Hotels can generate funds from grants by acquiring them from external parties likegovernment, trusts and corporations etc.Sales:It is the main source of generating income in which services are delivered to theclients in order to increase sales. Higher incomes can be acquired by Belgravia Hotels by sellingor rendering good quality services to the customers (Wood, 2013).Sponsorship:It can be defined as the financial support which provided by sponsors to anorganisation. Belgravia Hotels can generate income from sponsors by attracting them throughimpressive presentation of business plan. If the company is having higher number of sponsorsthan higher income can be acquired from them.Sub-letting:It can be defined as the process of letting a business concern to otheroutsider parties. Belgravia Hotels can generate income by letting some parts of the hotel toexternals. It will help to increase overall income of the organisation.All the above described methods are used to generate income from different sources sothat business can be developed and all the divisions can be enhanced.TASK 22
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