Finance in Hospitality

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H. Bank Reconciliation………………………………………………………...............27

2.2.3. Summary……………………………………………………………………................29

Chapter 3..............................................................................................……………….30

3.1. The Sources and Structure of the Trial Balance and to Make Adjustments to the Profit and Loss Accounts and Balance Sheet of R. Riggs on Discovery……………….30

3.1.1. The Structure of Trial Balance..............................................................................32

3.2 Business Accounts, Adjustments and Notes: R Riggs Accounts…………… ...........33

i. Furniture Purchased on Credit……………………………………………… ............33 . ii. Received Interest from Bank………………………………………………...............33

iii. Accrued Expenses…………………………………………………………….............34

3.3. The Process and Purpose of Budgetary Control and the Budgetary

Control Cycle..................................................................................................................35

3.3.1. The Process of Budget Control.............................................................................35

3.3.2. The Purpose of Budgetary Control.......................................................................36

3.3.3. The Budgetary Control Cycle................................................................................37

3.4. Analysis of Variance from Budgeted and Actual Figure..........................................38

3.4.1 Review of Variance Analysis of Yuri's Budget.......................................................38

3.4.2. Recommendations on the Results of Variance Analysis on Yuri's Budget...........40

Chapter 4...................................................................................................41

4.1 The Ratios to Offer a Consistent Interpretation of Historical Business

Performance: R Riggs Account………………………………………………………………41

4.2. Appropriate Recommendation for Future Management Strategies: R Riggs Business Account……………………………………………………………………………...43

Chapter 5.................................................................................................45

5.1. Classifying costs into fixed, Variable and semi-variable categories....................45

5.2. Break Even Position in Units and Value Terms.................................................48

5.3. The Proposals..................................................................................................51

6.0. Reference…………………………………………………………………………..... 53

7.0. Web Sites............................................................................................................55

Chapter 1

1.0. Sources of Funding available to Business and Services Industries with the Contributions Made by Various Methods of Generating Income for a Large Chain of Restaurants.

Introduction:

During HOSPACE 2013, it was made clear that hospitality industry in UK have problems of finance as the country is just recovering from economic challenges. The business is therefore bound to look beyond only banks as the sources of their funding for further growth.

Paul Dukes, 2013 said: “Obtaining debt finance for hotel acquisitions, renovations and extensions is tough without a significant chunk of fresh equity and an understanding bank. The current growing industry trend is to look beyond the banks for financing hospitality operations; and our expert panelists will be scrutinising, amongst other important finance topics, these sources of funding – ranging from venture capital groups and private equity firms, to ‘crowd funding’, ‘angel investors’, and ‘mezzanine capital finance’.”

Ben McClure, 2015 makes it clear how important it is, to look into the funding for hospitality industry that will not lead the industry into problems. At the same time, if the industry doesn’t utilize the money it can borrow judiciously, it might miss growth prospects.

The actual funding sources for UK hospitality industries are hereby critically looked into; with pros and cons of the sources.

1.1 Sources of Funding available to Business and Services Industries:

In order to finance any business as it applies to Hospitality especially a large chain of restaurants, there are generally two main Sources of Funding. These are Internal and External Sources. Eight of the sources are fully explained - the three of the internal sources and five from the external sources.

- Internal Sources: 1. Owner’s Own Money

2. Family and Friends

3. Retained Earnings

B. External Sources: 1. Bank: a. Loan

b. Overdraft

c. Credit Cards

2. Trade Credits

3. Crowd Funding

4. Business Angels

5. Venture Capital

6. Factoring and Invoice Discounting

7. Lease

8. Hire Purchase