Project Report: Financial Analysis of Wil's Grill Catering Proposal

This project report presents a case study of Wil's Grill, focusing on a new catering business proposal. It evaluates the business's financial performance over the past three years, revealing poor results, and assesses the potential benefits of the new project. The report includes a SWOT analysis, profit a...Read More

Running Head: Applied Hotel Financial Management
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Project Report: Applied Hotel Financial Management

Applied Hotel Financial Management 2
Executive summary:
The report represent about a case study of Wil’s grill where the business has a new
proposal to open a catering business. In the file, last 3 years performance has been evaluated
and measured that the performance of the business was not good at all and thus the new
projects could be beneficial for the business. The new proposed projects explain that the
profitability level in both the projects would be positive but project B would offer higher
return to the Wil’s grill and thus the business should opt option B.

Applied Hotel Financial Management 3
Contents
Introduction.......................................................................................................................4
SWOT analysis.................................................................................................................4
Profit and loss statement case...........................................................................................5
Profit and loss statement...................................................................................................5
Cash flow projections.......................................................................................................6
Key findings......................................................................................................................6
Conclusion........................................................................................................................6
References.........................................................................................................................7
Appendix...........................................................................................................................8
Menu design..................................................................................................................8
Profit and loss statement...............................................................................................8
Cash flow statement....................................................................................................11

Applied Hotel Financial Management 4
Introduction:
Financial management in hospitality industry plays crucial role in order to measure
the financial aspect and make the better strategies in order to enhance the overall performance
of the business. In the report, the financial statement of the business has been studied along
with that the financial projection study has also been performed on the basis of available
information in the case. Mainly, the report has been prepared to identify that which project is
better for the wil’s grill.
SWOT analysis:
SWOT analysis measures all the internal and external information to identify the
strength, weakness, opportunity and threat in the business. The SWOT analysis study of the
business is as follows:
Strength:
 Mobile app, social media accounts,
website dealing etc are the main strength
of the business.
 Loyal employees and their dedication
towards the work is also a strength for
the business
 The chef and their variety of cuisine can
also be considered as one of the
important strength of the business.
 The debt level of business is zero which
reduces the financial risk level of the
business and improves the profitability
position in the business (Brigham &
Ehrhardt, 2013).
 The cleaning food’s demand is higher in
the market and the hygiene level of the
business makes it easier for the business
to attract the customers towards the
Weakness:
 The permanent office has not been
established by the business which makes
few things complex in the business.
 There is lack in the standardize prices of
food products in the business which
affect the customer loyalty level.
 The employees of the business are not
permanent.
 The budget available for the new
equipment and kitchen tool is limited
(Fridson & Alvarez, 2011).

Applied Hotel Financial Management 5
business.
Opportunity:
 The improved demand for the “Clean
food” has been improved on the basis of
US studied which would improve the
total revenue of the business (Moyer,
McGuigan, Rao & Kretlow, 2011).
 Customers are even willing to pay extra
for the clean and hygiene food which
would help the business to improve the
market share.
 The net margin level of the business
would be improved because of the
catering business.
Threat:
 Competition level is huge in the market.
 There is already established catering
business in the market.
 Healthier chokes are the main aim of the
hotel industry now days.
 Food trends change rapidly.
It explains that there is huge internal and external aspect of the business which could be
managed in order to improve the performance of the business.
Profit and loss statement case:
Available profit and loss statement in the case stud y explains about rapid changes in
the revenue and the expenses level of the business. The business has attended various new
events in last 3 years and because of that the revenue and expense level of each of the year
have been varied. The profit and loss statement explains that the food cost of the business is
37% which was estimated to be 30% only (Higgins, 2012). It explains that the control on the
food cost is important to improve the profitability level. The statement explains that direct
labour cost, operating cost etc has also been changed from the last year. Though, the net
margin study expenses that the reduction in the fixed operating expenses have helped the
business to maintain the profit level in the business (Madura, 2011).
Profit and loss statement:
Profit and loss statement has been attached in the appendix part for both the options.

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Cash flow projections:
Cash flow projection statement has been attached in the appendix part for both the
options.
Key findings:
The profit and loss statement of last 3 years, future 3 years and the forecasted cash
flow statement of the business explains that the catering business is a good option for the
business to be diversified and meet the common goal of improving the profitability level. The
overall study explains that in case of street food, the profits of the business are positive as
well as the cash level of the business is also higher (Brigham & Houston, 2012). Further, the
study on catering and maintain the street food explains that the profitability level and cash
level of the business is higher in this option and thus the business should go for option B
(catering and maintain street food).
Conclusion:
The report concludes that the changes are the important factor and thus the wil’s grill
must make few changes into its operations and adopt the street food catering services to
improve the profitability level and cash management level in the business.

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References:
Brigham, E. F., & Ehrhardt, M. C. (2013). Financial management: Theory & practice.
Cengage Learning.
Brigham, E. F., & Houston, J. F. (2012). Fundamentals of financial management. Cengage
Learning.
Fridson, M. S., & Alvarez, F. (2011). Financial statement analysis: a practitioner's
guide (Vol. 597). John Wiley & Sons.
Higgins, R. C. (2012). Analysis for financial management. McGraw-Hill/Irwin.
Madura, J. (2011). International financial management. Cengage Learning.
Moyer, R. C., McGuigan, J., Rao, R., & Kretlow, W. (2011). Contemporary financial
management. Nelson Education.

Applied Hotel Financial Management 8
Appendix:
Menu design:
Menu
Appetizers
Smoked Brisket $ 138.00
Veggie Kabob $ 120.75
Garden Fresh $ 112.70
Sandwich
Gatorade $ 75.67
Loaded French fries $ 64.69
Marinated chicken $ 43.13
Cheese with beans and potato $ 86.17
Smoked Turkey $ 211.51
Salads
Mixed filled Greens $ 120.75
Mac and Cheese, Cole slaw,
Beans
$ 92.00
Beverages
Unsweetened tea $ 9.49
Fresh Squeezed $ 17.25
Profit and loss statement:
Option A:
2017 2018 2019 Assumption
Income
Food sales
$
122,000.00
$
162,000.00
$
212,000.00
Total income
$
122,000.00
$
162,000.00
$
212,000.00
Cost of goods sold
Food purchase
$
36,600.00
$
48,600.00
$
63,600.00
Direct labour payroll $ $ $

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20,395.00 28,274.85 38,151.10
Business Licenses
$
4,005.00
$
4,125.15
$
4,248.90
Total COGS
$
61,000.00
$
81,000.00
$
106,000.00
Gross profit
$
61,000.00
$
81,000.00
$
106,000.00
Operating expenses
Advertisement & promotion
$
7,500.00
$
7,650.00
$
7,803.00
It has been
assumed
that all the
expenses are
fixed and it
has been
increased by
2% each
year
because of
the inflation
rate.
Automobile expenses
$
4,635.00
$
4,727.70
$
4,822.25
Bank service charges
$
216.30
$
220.63
$
1,000.00
Computer and internet expenses
$
1,030.00
$
1,050.60
$
1,071.61
Office supplies
$
54.59
$
55.68
$
1,000.00
Professional fees
$
6,000.00
$
6,120.00
$
6,242.40
Propane
$
571.65
$
1,000.00
$
1,500.00
Reimbursement
$
109.18
$
500.00
$
1,000.00
Rent expenses
$
2,500.00
$
3,000.00
$
3,500.00
Repairs and maintenance
$
94.76
$
96.66
$
98.59
Restaurant supplies
$
2,000.00
$
3,000.00
$
4,000.00
Supplies
$
1,500.00
$
2,000.00
$
4,000.00
Uniforms
$
75.19
$
76.69
$
1,000.00
Utilities
$
800.00
$
816.00
$
1,800.00
Total operating expenses
$
27,086.67
$
30,313.96
$
38,837.85
Net ordinary income
$
33,913.33
$
50,686.04
$
67,162.15
Other income
Ask my accountant
$
1,652.12
$
1,701.68
$
1,752.73
Total other expenses
$
1,652.12
$
1,701.68
$
1,752.73
Net operating income
$
32,261.21
$
48,984.36
$
65,409.41

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Option B;
2017 2018 2019 Assumption
Income
Food sales
$
147,000.00
$
217,000.00
$
307,000.00
Total income
$
147,000.00
$
217,000.00
$
307,000.00
Cost of goods sold
Food purchase
$
44,100.00
$
65,100.00
$
92,100.00
Direct labour payroll
$
28,335.00
$
43,614.85
$
63,291.10
Business Licenses
$
4,005.00
$
4,125.15
$
4,248.90
Total COGS
$
76,440.00
$
112,840.00
$
159,640.00
Gross profit
$
70,560.00
$
104,160.00
$
147,360.00
Operating expenses
Advertisement & promotion
$
7,875.00
$
8,032.50
$
8,193.15
It has been
assumed
that all the
expenses are
fixed and it
has been
increased by
2% each
year
because of
the inflation
rate.
Automobile expenses
$
4,866.75
$
4,964.09
$
5,063.37
Bank service charges
$
227.12
$
231.66
$
1,050.00
Computer and internet
expenses
$
1,081.50
$
1,103.13
$
1,125.19
Office supplies
$
57.32
$
58.47
$
1,050.00
Professional fees
$
250.00
$
270.00
$
280.00
Propane
$
600.23
$
1,050.00
$
1,575.00
Reimbursement
$
114.64
$
525.00
$
1,050.00
Rent expenses
$
1,562.00
$
1,840.00
$
1,900.00
Repairs and maintenance
$
99.50
$
101.49
$
103.52
Restaurant supplies
$
2,100.00
$
3,150.00
$
4,200.00
Supplies
$
275.00
$
210.00
$
220.00
Uniforms
$
78.95
$
80.53
$
1,050.00
Utilities $
840.00
$
856.80
$
1,890.00

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Total operating expenses
$
20,028.00
$
22,473.65
$
28,750.23
Net ordinary income
$
50,532.00
$
81,686.35
$
118,609.77
Other income
Ask my accountant
$
1,652.12
$
1,701.68
$
1,752.73
Total other expenses
$
1,652.12
$
1,701.68
$
1,752.73
Net operating income
$
48,879.88
$
79,984.66
$
116,857.04
Cash flow statement:
Option A:
Cash Flow
Statement 2017 2018 2019
Cash flows from
Operations
Cash receipts from
customers
(enter positive
amounts) Cash Sales
$
122,000.00
$
162,000.00
$
212,000.00
Funding from
Creditors
Stock purchased
-$
36,600.00
-$
48,600.00
-$
63,600.00
Cash paid for
(enter negative
amounts) Total Expenses
-$
27,086.67
-$
30,313.96
-$
38,837.85
Net Cash Flow
from Operations
$
58,313
$
83,086
$
109,562
Investing Activities
Cash receipts from
(enter positive
amounts)
Sale of property and
equipment -
Matured Investments -
Cash paid for
(enter negative
amounts)
Purchase of property and
equipment -9000 -9000 -9000
Net Cash Flow
from Investing
Activities
-$
9,000
-$
9,000
-$
9,000
Financing
Activities
Cash receipts from

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(enter positive
amounts)
Increase in short term
debt - - -
Increase in long term
debt - - -
Increase in equity
(proceeds from owners) - - -
Cash paid for
(enter negative
amounts) Repayment of loans - - -
Dividends - - -
Net Cash Flow
from Financing
Activities - - -
Net Increase in
Cash
$
49,313
$
74,086
$
100,562
Cash at End of Year
$
49,313
$
74,086
$
100,562
Option B:
Cash Flow
Statement 2017 2018 2019
Cash flows from
Operations
Cash receipts
from customers
(enter positive
amounts) Cash Sales
$
147,000.00
$
217,000.00
$
307,000.00
Funding from
Creditors
Stock purchased
-$
44,100.00
-$
65,100.00
-$
92,100.00
Cash paid for
(enter negative
amounts) Total Expenses
-$
20,028.00
-$
22,473.65
-$
28,750.23
Net Cash Flow
from Operations
$
82,872
$
129,426
$
186,150
Investing
Activities
Cash receipts
from
(enter positive
amounts)
Sale of property and
equipment -
Matured Investments -
Cash paid for
(enter negative
amounts)
Purchase of property and
equipment -9000 -9000 -9000

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Net Cash Flow
from Investing
Activities
-$
9,000
-$
9,000
-$
9,000
Financing
Activities
Cash receipts
from
(enter positive
amounts) Increase in short term debt - - -
Increase in long term debt - - -
Increase in equity (proceeds
from owners) - - -
Cash paid for
(enter negative
amounts) Repayment of loans - - -
Dividends - - -
Net Cash Flow
from Financing
Activities - - -
Net Increase in
Cash
$
73,872
$
120,426
$
177,150
Cash at End of Year
$
73,872
$
120,426
$
177,150