Financial Management Report: Westhorpe Leisure Investments Limited

This report presents a financial analysis of Westhorpe Leisure Investments Limited, a medium-sized hotel company. The report begins with an introduction to financial management, emphasizing its importance in efficient resource allocation and achieving financial stability. The main body of the report comprises two key tasks: the preparation of a cash budget for the period from January 2020 to June 2020, and the development of a profit budget forecast for the same period. The cash budget details cash inflows from various sources, such as bedroom sales, food and beverage, and rent, alongside cash outflows including operational expenses, marketing costs, and salaries. The profit budget forecast estimates sales revenue, cost of goods sold, other income, and various expenses to determine the net profit. The report concludes by reiterating the significance of financial management and the use of budgets in making informed business decisions. The financial analysis provides a clear overview of the company's financial performance and future projections, highlighting critical aspects of financial planning and forecasting.

Financial Management

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
TASK 1............................................................................................................................................3
Cash Budget for period: January 2020 to June 2020:..................................................................4
TASK 2............................................................................................................................................5
Profit budget forecast as at the 30th of June 2020 (for the period January 2020 to June 2020). 5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
Financial management relates to approach of efficiently managing funds/resources,
whether that is a organization or individual. It has various effects for individuals and businesses.
This is intended for efficient acquisition and allocation of resources for organizations. At the
other side, this is intended to handle the income for individuals to have a strong financial
performance and potential sustainability. In the corporate world, the term 'Financial
management' is mixture of 2 critical terms. 'Financing' and 'management' 'Financing' implies
funds and thus financial management applies to fund administration. This is the most efficient
way of scheduling, collecting, and spending funds (Shapiro and Hanouna, 2019). Basically,
financial management approach is nothing more than managing expenditures and revenue to
achieve economic stability. Economic security means that money is available at time
of requirement. This is a crucial problem for many organizations to tackle. Entities that include
companies (for fund procurement and investment), individuals (for projected expenses and
income procurement), governments (for the most effective use of taxpayer's funds), non-profit
organisations (for allocation of funds needed for operations to be carried out) etc.
In this regard this report is focused on case study of Westhorpe Leisure Investments
Limited which owns medium-size hotels(four stars) in South-east England and Wales. The report
consists of preparation of cash budget based on information provided in case study. Further this
report also contains a profit budget forecast of company for period Jan 2020 to June 2020.
MAIN BODY
TASK 1
Cash Budget: A cash budget is form of budget designed for forecasting cash inflows as well as
outflows for a given time-period. This budget demonstrates the planned cash-inflows
and outflows in the coming years. The aim of framing a cash budget is just to assess if the
company's cash flow is adequate to accomplish/meet its shorter-term funding requirements or
when excessive cash is held inactive and unconstructive in the organisation (Chandra, 2020).
Therefore, it allows the managers to assess funds surplus and deficit, so that necessary measures
could be made.

Cash Budget for period: January 2020 to June 2020:
Jan-2020 Feb-2020
Mar-
2020
April-
2020
May-
2020
June-
2020
Cash Inflows
Bedroom Sales
- Businesses 37800 45675 43750 49000 50925 51800
- Other Guests 84825 81250 91000 94575 96200 115700
Food and Beverage 44500 40100 43300 42600 40200 36500
Rent 950 950 950 950 950 950
Commission 25 55 20 15 10 40
Total Cash Inflow 168100 168030 179020 187140 188285 204990
Cash Outflows
General maintenance
expenses 5000 5000 5000 5000 5000 5000
Motor vehicle expenses 1000 1000 1000 1000 1000 1000
Marketing costs 60000
Lighting and heating 27500 27500
Business Rates 5416.67 5416.67 5416.67
Purchase of Complimentary
shampoos, conditioners, and
shower gels 9600 14400
Salaries and Wages 18333.33 18333.33 18333.33 18333.33 18333.33
18333.3
3
Housekeeping and kitchen
porter staff salary 11666.67 11666.67 11666.67 11666.67 11666.67
11666.6
7
Purchase of new branded 700

bedding bundles
Deposit of Incremental
Improvement 8800 22000
Purchase of new kettle tray
sets
Purchase of complimentary
room toiletries 46000
Free in-room beverages 2000 2000 2000 2000 2000
Printing and stationery costs 2000 2000 2000 2000 2900 2000
Laundry Services Expenses 6250 6250 6250 6250 6250
Purchase of Van 25000
Total Cash Outflows 63000 101850 83250 66066.67 52566.67
161166.
67
Opening Cash Balance 265000 370100 436280 532050
653123.3
3
788841.
67
Net Cash Out Flow 105100 66180 95770
121073.3
3
135718.3
3
43823.3
3
Closing Cash Balance 370100 436280 532050
653123.3
3
788841.6
7 832665
TASK 2
Profit budget forecast: It is a planned financial projection for a company's net profit. A
manager responsible for forecasting a company's potential financial results must produce profit
forecast to offer a fair estimation of the expected net sales that will allow the corporation and its
stakeholders to determine how well company achieves its profitability objectives (Zietlow,
Hankin, Seidner and O'Brien, 2018).

Profit budget forecast as at the 30th of June 2020 (for the period January 2020 to June 2020)
Sales
Bedroom Sales
- Businesses £ 303450
- Other Guests £ 563550
Food and Beverage £ 247200
Total Sales (A) £ 1114200
Costs of Goods Sold
Opening Inventory £ 105500
Purchases
Complimentary room toiletries £ 23000
Free in-room beverages £ 12000
Branded bedding bundles £ 1450
Complimentary shampoos, conditioners, and shower £ 12000
Less: Closing Inventory £ 50000
Total (B) £ 103950
Gross Profit [C = (A – B)] £ 1010250
Other Income
Rent £ 5700
Commission £ 165
Total (D) £ 5865
Expenses

General maintenance expenses £ 30000
Motor vehicle expenses £ 6000
Marketing costs £ 30000
Lighting and heating £ 55000
Business Rates £32500
Salaries and Wages £ 110000
Housekeeping and kitchen porter staff salary £70000
Printing and stationery costs £ 12900
Laundry Services Expenses £ 37500
Depreciation £ 4800
Total Expenses (E) £ 388700
Net Profit [C + D - E] £ 627415
CONCLUSION
From above study this has been articulated that financial management is wider filed
which covers a systematic approaches to make effective forecast of business's performance and
enhance credibility of business decisions. Budgets are key aspects in financial management
which involve making projection of different aspects of business like cash, sales, purchases,
profitability etc. This allow managing personnel to make decision and selective most effective
course of action among multiple alternatives. Finance manager should conduct an assessment of
the corporation 's capital needs. It will focus on the projected costs and income and on the
potential infrastructure and initiatives of concern. Estimates ought to be created in an acceptable
way that improves the company's earning potential. When the estimate has been made, capital
structure has to be determined. This includes an study of shorter-term and longer-term debt-
equity funds. It will rely on the allocation of capital that the organization holds and the extra
funds that need to be generated by outside entities.

REFERENCES
Books and Journals:
Shapiro, A.C. and Hanouna, P., 2019. Multinational financial management. John Wiley & Sons.
Chandra, P., 2020. Fundamentals of Financial Management|. McGraw-Hill Education.
Zietlow, J., Hankin, J.A., Seidner, A. and O'Brien, T., 2018. Financial management for nonprofit
organizations: policies and practices. John Wiley & Sons.