Assignment Context and Business Scenario Scenario The City Hotel plc is a large size hotel company operating in London. The company has recently acquired a long term contract to provide lodgings and entertain to its customers. The operational manager believes that, City Hotel plc will need additional rooms of highest quality and comfort to fulfil this contract and needs at least £25 million to acquire new buildings on lease. What you must do Task 1: You have been appointed as the financial advisor of Best City Hotel plc and you are required to advise management of the hotel on sources of finance to fund the additional rooms require. A. Identify the appropriate sources of finance available for the business for its operations and assess the implication of different sources. B. Evaluate the appropriate sources of finance for the expansion plan of the above hotel. you will have applied an effective approach to study and research the various source of finance for the expansion project. Task 2: Management of The City Hotel plc is unsure about the capital structure of the company and asks for your advice about the cost of financing the expansion. A. Analyse the cost of funding the project using equity versus debt finance and recommend your choice. B. Explain the importance of financial planning and assess the information needs for financial decision making and explain the impact of finance on the financial statement. you will discuss the cost of debt and equity as funding sources and apply effective judgement to recommend your choice Task 3: Investment decisions are the most important decisions that a company makes. They commit a substantial amount of money to decisions which are likely to have a large impact as a company's apparatus over a long period of time. A. Discuss the importance budgeting and analyse the budgets for variation and make appropriate decisions for the City Hotel. B. Explain how you would calculate unit cost and make pricing decisions based on appropriate information at the City Hotel. C. Assess the viability of the hotel expansion project using investment appraisal techniques. Task 4: When nearing the end of a company’s financial year, there are a number of procedures that need to be performed to ensure that the business’s finances are in order. Across all industries, the financial health of a company is measured against three major financial statements: Income Statements, Statement of Cash Flows and the Statement of Financial Position. A. Discuss the above mentioned financial statements of The City Hotel or any other relevant company. B. Select two different types of companies (one could be the City Hotel) and compare the formats of financial statements. C. Interpret the financial statements using appropriate ratios of a public limited company and compare with another. you will have provided an appropriate structure of the financial statements.
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