A brief look at the financial aspects of starting a hotel

Type :

Term papers

Pages :

17 pages

Format :

.doc

Published date :

08/25/2009

Category :

Economics & finance

Sub category :

Finance

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Summary :

Introduction
Basic factors that should be taken into consideration for a financial projection
Cost of project
1. The total cost of project will estimated on the following aspects
2. Human resources requirement for a hotel industry
Financing the project
1. Sources of finance
2. Share capital
3. Types of share
4. The debt equity ratio works out as
Profitablity statement
Constituents of a profitiblity statement
Interest on loan
The compoments of a cash flow statement
1. Cash flow
2. The components of a balance sheet
3. Break even analysis
4. Debt service and coverage ratio (DSCR)
Ratio analysis
1. Importance of ratio analysis
2. Classification of ratio
Calculation of ratio
1. Operating ratio
2. Net profit ratio
3. Return on share holders investment
4. Return on total assets
5. Operating profit ratio
6. Fixed assets turnover ratio
7. Total assets turnover ratio
8. Gross profit margin ratio
Conclusion

Abstract

The word financial viability means to find out, whether it is financially viable to start a three star hotel as this project report is based on three star hotels. In simple words, financial viability is to find out whether starting a three star hotel is financially successful or not. financial planning includes the selection of objectives and selection of policies, programs and procedures to achieve the objectives. The considerations relating to the present capital needs, requirements of investors and possibilities of expansion resolve themselves into a present determination of:

- The amount of capital to be raised.
- The form and proportionate amount of securities to be issued.
- Policies as to the administration of capital.

It is not too much to emphasize the correct estimate of the present and future needs of the capital; a sound capital structure and proper projection of capital will lead to success of the company.