Financial Management Report: Cardiff Central Hotel (Jan-Jun)

This report presents a financial analysis of the Cardiff Central Hotel, focusing on its cash and profit budgets for the period from January to June. Task 1 details the hotel's cash budget, outlining collections from room sales, food and beverage, rent, and commission, alongside various payments such as laundry, salaries, marketing costs, and supplier payments. The working notes provide a breakdown of cash collections, including room sales and food and beverage sales. Task 2 presents the hotel's profit budget over the same six-month period, detailing total revenues, expenses like in-room beverages, laundry, salaries, marketing costs, and depreciation. The profit budget evaluates the hotel's profitability, emphasizing the importance of resource allocation for achieving business goals. The report concludes that the hotel demonstrates adequate profit throughout the year, highlighting the use of effective planning tools for estimating income and expenditures and the need for effective monitoring and control for long-term sustainability.

Financial Management for Hotel
Industry

TABLE OF CONTENTS
TASK 1............................................................................................................................................1
Cash budget for Cardiff Central Hotel for January to June ........................................................1
TASK 2............................................................................................................................................3
Profit Budget of Hotel for six months..........................................................................................3

TASK 1
Cash budget for Cardiff Central Hotel for January to June
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 :
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
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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 cash flow in
month 1,42,183 94,113 76,503 1,37,556 1,39,651 -47,844
Balance c / f 4,07,183 5,01,297 5,77,800 7,15,356 8,55,007 8,07,163
Working Notes
Cash Collections
Jan February 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
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
Payment to Suppliers
Payment to
Suppliers Jan February March April May June
In room beverages 2000 2000 2000 2000 2000
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Bedding bundles 700
Kettle trays
Complimentary
items 9600 14400
Total 0 2000 12300 2000 16400 2000
TASK 2
Profit Budget of Hotel for six months
Jan Feb Mar Apr May Jun
Revenues
Room sales 1,30,500 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 1,75,000 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 1,75,975 1,66,105 1,84,270 1,89,065 1,89,160 2,15,490
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
Toiletries 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
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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 72416.6
Profit 1,03,975 94,105 1,11,153 1,16,648 1,15,843 1,43,073
Interpretations
It could be evaluated from the above profit budget that hotel is having adequate profit
throughout the year. It is essential for the business to make allocation of the resources adequately
for meeting goals and objectives of business. The profit budget enables the company to analyse
in advance whether it will be having adequate profits or not carrying out the expenses and
estimated sales. The profit budget does not includes capital budget but provides for the
depreciation to be charged for the year. Budget is prepared on accrual basis considering the
credit policies for sales and purchases. The budget has been prepared considering the current
market scenario and rise in prices that could occur as per the economic scenario. Profit budget is
an effective planning tool which is used by the organisation for estimating the incomes and
expenditures of the business as per previous trends and scenarios. Management make predictions
using effective tools and software. The current budget of the hotel is adequate and requires the
business to ensure that effective monitoring and control is exercised for long term sustainability.
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