REYNOLDS'S HOTEL & LEISURE SUPPLIES-FINANCE ASSIGNMENT

Reynolds's Hotel & Leisure Supplies-Finance Assignment

Table of Contents

TASK I3

Cash Budget3

Process of budget setting & Advantages to Businesses4

Advantages & Disadvantages of Converting Sole Trader into Partnership5

TASK II6

Financial Performance7

Profitability Ratios8

Liquidity Ratios9

Turn Over Ratios9

Leverage Capital Structure Ratios10

Financial Ratio Analysis11

Are Returns Adequate?12

Is the ROCE Sustainable?13

Earnings in perspective15

Profitability and efficiency16

Conclusion16

References18

Reynolds's Hotel & Leisure Supplies-Finance Assignment

TASK I

Cash Budget

 

July

Aug

Sept

Oct

Nov

Dec

Jan

Feb

Mar

April

May

June

Cash Sales

7,500 6,000 3,000 3,000 7,000 8,000 1,000 2,000 4,000 5,000 6,000 7,500

Credit Sales

 

6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500

Total Sales

7,500 12,500 9,500 9,500 13,500 14,500 7,500 8,500 10,500 11,500 12,500 14,000

Purchases

3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000

Shop

200,000

 

 

 

 

 

 

 

 

 

 

 

Fixtures

12,000

 

 

 

 

 

 

 

 

 

 

 

Van

10,000

 

 

 

 

 

 

 

 

 

 

 

Loan Payment

675 675 675 675 675 675 675 675 675 675 675 675

Council Tax

 

 

 

 

 

3,000 4,000

Repair & Maintenance

500 500 500 500 500 500 500 500 500 500 500 500

Wages

2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000

Xmas bonus 1,000

 

 

 

 

 

 

Insurance Premium

3,000

 

 

 

 

 

 

 

 

 

 

 

Telephone Expenses

75 75 75 75 75 75 75 75 75 75 75 75

Total cash Expenses

231,250 6,250 6,250 6,250 6,250 10,250 6,250 6,250 6,250 6,250 6,250 10,250

Total (223,750)

6,250 3,250 3,250 7,250 4,250 1,250 2,250 4,250 5,250 6,250 3,750

According to the forecasted earnings and decrease account and money allowed for (attached in excel sheet), we can effortlessly state that this task is not financially viable. The tendency of snareearnings is not very attractive. We can glimpse from the projected earnings and decrease account thatsnare earnings begins from contradictory and feels 10k in July. From August to December, the tendencyis falling which shows that there might be some likelihood of decrease in the first year. But if we glimpsethe snare earnings for the entire year, its affirmative and votes for the acceptance of the project. Coming to money allowance, we can state that money allowance is displaying a clear signal of money shortfallwhich is contrary to the acceptance of the project. (Barlett and Steele 2007)

 

Process of allowance setting & Advantages to Businesses

Budgets can take numerous types and assist numerous functions.  Budgets can supply thecornerstone for comprehensive sales goals, staffing designs, inventory output, moneyinvestment/borrowing, capital expenditures (for vegetation assets, etc.), and on and on.  Budgets supplybenchmarks contrary to which to contrast genuine outcomes and evolve corrective measures.  Budgets give managers "preapproval" for execution of expending plans.  Budgets permit managers to supplyahead looking guidance to investors and creditors.  Budgets are essential to assure banks and other lenders to continue credit.

This part will show the expert allowance which is a comprehensive set of articles identifying salesgoals, output undertakings, and financing actions.  These articles lead to ahead looking economicdeclarations (e.g., projected balance sheet, etc.).  Other kinds of allowances (e.g., flexible budgets) areenclosed in later chapters. (Areeda and Turner 2008)

 

Advantages & Disadvantages of Converting Sole Trader into Partnership

A joint project is a enterprise run by two or more persons together. There should be a in writingaffirmation detailing this arrangement. Profits are generally distributed between partners as asserted bythe agreement. Although earnings may be distributed unequally, liabilities which may originate aredistributed jointly. This is certain thing that every individual engaged should be very clear about. Even if you only own 1% of the enterprise you will still be to blame for 100% of the liability.

A joint project is a very dodgy kind of enterprise to get engaged in, just because of all the promisefor confrontation, and the economic result confrontation between partners would be probable to have on the business. However, now the Limited Liability Partnerships Act has obtained Royal Approval and will become Law by the end of the year. There are several benefits to LLP encompassing limiting liability (as with a Limited Company) and the levy benefits of a Partnership. 

When you first set up the enterprise you should announce Inland Revenue that you are self-employed. You can find more data about how to manage this, encompassing a pattern you can use to notify Inland Revenue about your enterprise, in Leaflet P/SE/1 "Thinking of Starting a Business?" You willfurthermore require to load up in a Self Assessment Tax Return. The newest proposal designated day forlevy comes back is 31st of January. There are economic punishments for late submission. (Archer and Taylor 2008)

As a direct of thumb you are generally better off, from a Tax and NI issue of outlook, to set up as a ...