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Finance can be defined as the element which is the main requirement of a business entity to operate a business successfully. If an organisation is not having appropriate funds than it is not possible to perform operational and executional activities of business. It can be raised from different sources like investments, equities, bank loan, overdrafts etc. Hospitality industry is concerned with rendering services to the clients (del Mar Alonso-Almeida and Bremser, 2013). It is essential for the sector to render good quality services to the customers so that large market share can be captured.
Main aim of this report is to analyse the sources of funds that are required to an organisation who is operating business under hospitality industry. The organisation which is chosen for this report is Belgravia Hotels who is operating in lodging, contract services and restaurants. This business entity based in UK and operating business there successfully. In this assignment different topics are discussed including sources of funds and income, understanding the business in terms of the elements of cost and evaluation of business accounts. Analysis of business performance and application of the concept of marginal costing are also covered under this report.
1.1 Sources of funds available for business and service industry
A UK based hospitality company Belgravia Hotels operates in different sectors including lodging, contract services and restaurants. Now the hotel is willing to be developed and enhance position of all its divisions. For this purpose three different goals are decided by the organisation. All of them are as follows:
- Make investments in such projects that increase shareholders 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 funds that can be acquired from following sources:
Sources of funds:
These are the funds that are required by an organisation in order to execute business. Following are the sources that can be used by Belgravia Hotels who is operating business under service industry:
- Bank loan:It is the most common source of fund which can be adopted by Belgravia Hotels in order to develop its business. Bank require a collateral security from the borrower so that if the money is not received on time than bank may sold the asset and recover all the amount of loan. Borrower have to pay an interest on the 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 by Belgravia 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 than these 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 in order to enhance position of all the divisions of the company.
1.2 Evaluation of contribution made by range of methods of generating income
For every business like Belgravia Hotels there are various methods that helps to generate incomes all of them are described below:
These are the non repayable funds that are provided by one party to another. Belgravia Hotels can generated incomes from grants by acquiring them from outsider parties like government, trusts, corporations etc.
It is the main source of generating income in which services are delivered to the clients in order to increase sales. Higher incomes can be acquired by Belgravia Hotels by selling or rendering good quality services to the customers (Wood, 2013).
It can be defined as the financial support which provided by sponsors to an organisation. Belgravia Hotels can generate income from sponsors by attracting them through impressive presentation of business plan. If the company is having higher number of sponsors than higher income can be acquired from them.
It can be defined as the process of letting a business concern to other outsider parties. Belgravia Hotels can generate income by letting some parts of the hotel to externals. It will help to increase overall income of the organisation.
All the above described methods are used to generate income from different sources so that business can be developed and all the divisions can be enhanced.
2.1 Elements of cost, gross profit percentages and selling prices for products and services
It can be defined as the combination of the expenses that are faced by Belgravia Hotels in order to deliver services to the customers (Elements of cost, 2018). All the elements of cost that may take place for Belgravia Hotels are descri