Reference no: EM132428464 , Length: word count:3000
Business Decision Making for the Hospitality Industry - Berlin School of Business and Innovation
Assignment - Business Decision Making for the Hospitality Industry
Question 1:
Discuss the usefulness of the statement of profit and loss and statement of financial position when making a decision. Explain the information that the following ratios provide:
a) Gross, operating and earnings margins
b) Return on capital employed and return to equity
c) Acid Test
d) Financial gearing and interest cover
Question 2:
What are the costs of holding inventory? What is the economic order quantity and what would that number be given the information below?
• Annual demand 40,000 units
• Ordering costs €178 per order
• Holding costs per unit €1.25
Question 3:
Explain the concept of net present value, payback period and internal rate of return. Using the data below, provide calculations for these three items. Please present your data on a spreadsheet using formulas whenever possible.
Initial investment is €280,000 Project life is 5 years
Cost of capital is 8% Cash flows are as follows:
Year
|
Cashflows
|
0
|
-260,000
|
1
|
55,500
|
2
|
65,780
|
3
|
75,900
|
4
|
88,630
|
5
|
95,450
|
Should the project be invested in based upon the data above? What other factors should we consider when making an investment decision?
Question 4:
Discuss the usefulness of the concepts of break-even point and margin of safety to a business. Provide spreadsheet calculations for both breakeven point and margin of safety from the following data:
Planned level of activity is
|
140,000 units
|
Total planned sales revenue is €
|
€1,680,000
|
Direct material
|
€700,000
|
Direct labour
|
€2 per unit
|
Total fixed costs
|
€250,000
|
Question 5:
Discuss the role of budgeting within a business.
You have the following information available to you
|
10,000 units of production
|
20,000 units of production
|
Sales revenue
|
€325,000
|
€650,000
|
Direct materials
|
€50,000
|
€100,000
|
Direct labour
|
€30,000
|
€60,000
|
Production overhead *
|
€35,000
|
€55,000
|
Administration overhead
|
€80,000
|
€80,000
|
Profit
|
€130,000
|
€355,000
|
*Production overhead includes both fixed and variable cost elements
Prepare a budget for the planned level of production of 27,000 units.
Attachment:- Business Decision Making for the Hospitality Industry.rar