Finance in the Hospitality Indusry Assignment Example | Topics and Well Written Essays - 2000 words

Finance in the Hospitality Indusry - Assignment Example Suppliers offer credit by supplying goods that do not require an immediate payment. However, a good number of suppliers provide a credit to individuals that have developed an established track record. A majority of retailers are presently offering various products on credit, such as equipments, via a financial institution. In addition, an individual can obtain a loan and other financial products such as an overdraft facility and asset financing via various financial institutions. Financial institutions range from banks to credit unions. In relation to an internal equity, an individual can finance a firm by the help of saved funds or ploughed back profits. An internal equity is majorly employed by various individuals that are seeking to start a business or running an established business. An internal equity is cheap since an individual is not expected to pay fees for borrowing money (Robinson, 2009). The other method of financing a firm is via an external equity, which includes friend s, government, venture capitalist, stock market and private investors among others. A government may provide financing to a new or existing business. Venture capitalists are large institutions that provide a large amount of money for a potential or existing firm. However, venture capitalists are characterized by the need to have a large share of a firm to effect management about the firm’s operations. ... However, this approach is associated with a number of flaws given that a majority of markets are characterized by various inefficiencies. As a result, an individual can easily fall short of raising a required level of capital. Given that the William’s family is required to raise more than sterling pounds 62,000 to take over The Enchanted Valley B&B, the family should consider approaching the London Stock Exchange since it is more efficient than other stock markets in the world. This would give the family a chance to raise an adequate capital due to favorable qualities of the firms, such as a strategic location and executive finishing. The family should also approach various private investors. The family should, however, ensure that the investors do not seek more than 50% of the company’s share. These methods are appropriate for the Williams family to raise the required level of capital without risking transferring the power of making the firm’s management decisio ns. Sources of the Firm’s Generating Income The firm generates an income from a number of services and products. The key products that offer an income include food and beverages which amounted to $135,000 (selling revenues). Having resulted in a cost of $45,000 and allowance of $5,000, the firm experienced a gross profit of $85,000. The other income was generated by rooms’ rental which amounted to $600. Other services such as parking contributed to a significant profit of $3100. This means that beverages and food contributed to 95.83% (85,000/88,700*100%) of the total gross profit. On the other hand, rooms’ rental contributed to 0.068% of the gross income (600/88,500*100%).