StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Managing Financial Resources Cafe Restaurant - Essay Example

Comments (0) Cite this document
Summary
The capital expenditure connected with acquiring fixed assets amounts to an estimated 1,000,000 to 1, 5000,000 CZK for furniture, fixtures and fittings. If Jana and Jiri decide to buy the premises, the 6,000,000 CZK price of the property is also considered capital expenditure.
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER98.3% of users find it useful
Managing Financial Resources Cafe Restaurant
Read TextPreview

Extract of sample "Managing Financial Resources Cafe Restaurant"

Managing Financial Resources Tasks A. The capital expenditure connected with acquiring fixed assets amounts to an estimated 000,000 to 5000,000 CZK for furniture, fixtures and fittings. If Jana and Jiri decide to buy the premises, the 6,000,000 CZK price of the property is also considered capital expenditure.
The revenue expenditures connected with running the business include the lease of 50,000 CZK monthly or 6000,000 CZK for the one year advance payments for the lease required by the owner and the 1000,000 CZK inventories which are the initial stock of food and drinks.
B.
The following should be included in the capital expenditures: equipment for accounting purposes such as calculator or computer , cash register , and credit card machine; utensils for the use by customers such as forks, spoons, and knives; other furnishing and appliances such as a CD player for background music, trash baskets, flower pots and decorations, toilet fixtures, special lighting, and display shelves (refrigerated and non-refrigerated);safety equipment such as intrusion and smoke detectors; and of course , a sign that says "Jana's Caf" or something similar.

Capital expenditures like these are durable goods used over a long period of time by the business and their costs are depreciated or amortised over their useful lives which can last more than one year. Some restaurants businesses consider utensils as revenue expenditure if these get lost frequently and need to be replaced.

Revenue expenditures are the costs of running the business and should include government permits and fees, taxes, utilities such as power/light and water; building dues and fees; repair and maintenance of equipment and furnishings; office supplies such as paper, pens, and receipts; salaries of staff, and uniforms of serving staff, if any. If they borrow from a bank, they also have to pay bank interest.
C.
They have identified a total of 1,000,000 CZK from personal savings (500, 000 CZK), non-interest-bearing loan from their parents (300, 000 CZK), and securities
(2000, 000 CZK). This last source will depend on whether they sell the securities now to get the cash, or if they hope to borrow using it as collateral (they would get lass than 200, 000 CZK because banks do not lend an equal amount since securities can go down in value over time, although it would depend on the kind of securities they have). They need an estimated total 1, 7000,000 to 2, 2000,000 CZK, so if they only have 1,000,000 CZK, they need an additional 7000,000 to 1, 2000,000 CZK from bank loan or other sources as in Task D.
D.
In today's fast changing economic environment, competitiveness, in terms of cost and productivity, has become the key to success for any enterprise. The task of managing finance used to be entrusted to financial executives, but in the changed scenario, such a responsibility has become very relevant at all the key decision making points in an organization. At times, for a start-up venture, which is yet to establish its creditability, finding easy finances proves to be an arduous task in itself. Therefore, possibilities are explored to get hold of finances from some other sources as well. Some such sources could be;
Loans from family and Friends: Generally such loans are goodwill loans and depending upon the paying capacity, are available without any interest obligations. Parents, friends, siblings and other near and dear one's can help in this process.
Own savings: The entrepreneurs can also make good use of their savings in banks, equities and other financial institutions.
Inviting Partners in the Venture: Jana Nov and Ji Hork can also invite some of their friends and other well-wishers, with good paying capacity to join in the enterprise. Of course, for this to happen they need to be ready with a comprehensive business plan and feasibility report, for convincing the friends.
Suppliers Credit: One of the main costs in a start-up business is the cost of supplies. If a way can be found out to convince the supplier/s that Jana Nov and Ji Hork mean business and they're about to write a grand-success story, the suppliers too can wait for their payments, and this money can be taken as supplier's credit to be paid once the business flourishes. There are other ways of negotiating a business deal with suppliers. Jana Nov and Ji Hork can offer the equipment suppliers to use their caf as a display shop, in return for a 30 days credit from suppliers of drinks and pastries. This would allow them to use the cash from sales for thirty days (or the agreed term) and make it grow, using the cash generated by the business to pay for their expenditures. This assumes, though, that the business will do well and generate cash revenues during its first month of operation.
Start-up business loan from a business-related or Government Sponsored organization: There are some industry confederations or governmental organizations promoting economic development in general. Such organizations often provide financial assistance to serious and sincere entrepreneurs. Such assistance generally comes as a soft loan (with nominal interest rates). Therefore, Jana Nov and Ji Hork can also explore such organization within their easy reach.
E.
The most reliable and tension-free source of start-up money comes out of the pockets of the entrepreneur, as the ready cash is the most liquid asset. Such finance from personal savings and the interest-free loans are very important because these carry no obligations for repayment. At times people mortgage their homes, or sell-off their property or possessions with a determination that they'd succeed in their venture. Yes indeed, the business is risky, but if does well, all such obligations can be met easily. All those who provided such financial assistance can be paid back quickly.
The finance from equities depends upon the volatility of the share market. The stock market behaves most unpredictably. Therefore securities cannot be termed as a very reliable source of funds until they are sold in a booming market.
Bank loans (in our case, as much as half of the starting-up cost needed) are indeed a costly loan as compared to other sources as they'd keep adding interest expenditures, besides the regular payment of the principal. Banks can extend the period of payback, depending upon the credit worthiness of clients, so that the interest burden becomes more manageable for its clients.
Getting other investors would be most suitable to minimise bank loans.
Suppliers credit can also help ease up the cash flow of the business.
If some governmental agencies can be convinced to assist in the business venture, then it becomes the most reliable and easy finance for the business venture.
Letter to Jana Nova and Jiri Horak from the bank
Dear Ms. Jana Nova and Mr. Jiri Horak,

We have reviewed your business plan and would like to thank you for trusting us to help in making your business dream come true.

After reviewing your plan, we estimated that you would like a bank loan amounting to 7000,000 to 1,500,000 CZK to be fund of 1,000,000 CZK that you already have. We also estimated that the 2,2000,000 CZK needed to start your business will consist of 1,500,000 CZK in capital expenditures for furniture and equipment and 7000,000 CZK for the one-year lease and the initial stock of food and drinks. This would mean that you are requesting for a loan of 1, 2000,000 CZK from the bank.

However, we noted that your business plan does not include revenue expenditure items (salaries, taxes and fees, bank loans, and others) that need to be considered to come up with a better estimate of the projected income from the business. These added expenditures may increase your starting-up funding requirements considerably.

Ideally, the bank can fund only portion of capital expenditures that are estimated at 1, 5000,000 CZK. However, we have identified other options that we would like to discuss with you to help you raise additional funds from sources other than a bank loan, such as getting other equity investors for the revenue expenditures and availing of supplier credits for the initial stock of food and drinks and for some of the equipment and fixtures that you would need for your business. These alternative sources of funding can be more convenient for you and help in making you business grow faster and make you profitable.

As you can see, we can help you start your business with the cash flow projections so you can have a better estimate of the financial requirement of your business, the monthly net profits you can earn, the other possible sources of business financing, and the plan of repayment of your loan officers who can guide you through the financial planning.
We look forward to yours continued trust and we hope that we can begin a long-lasting banking relationship.
Very truly yours,
Bank Manager.


Works cited:
Case study: Jana and Jiri Caf Business Plan.
Schultz, H. and Yang, D.J. (1997). Pour your heart into it: How Starbucks built a company one cup a time. New York: Hyperion
Zemke,R. and Schaaf, D. (1990). The service edge: 101 companies that profit from customer care. Middlesex: Penguin Books. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Managing Financial Resources Cafe Restaurant Essay”, n.d.)
Managing Financial Resources Cafe Restaurant Essay. Retrieved from https://studentshare.org/miscellaneous/1522161-managing-financial-resources-cafe-restaurant
(Managing Financial Resources Cafe Restaurant Essay)
Managing Financial Resources Cafe Restaurant Essay. https://studentshare.org/miscellaneous/1522161-managing-financial-resources-cafe-restaurant.
“Managing Financial Resources Cafe Restaurant Essay”, n.d. https://studentshare.org/miscellaneous/1522161-managing-financial-resources-cafe-restaurant.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Managing Financial Resources Cafe Restaurant

MANAGING FINANCIAL RESOURCES & DECISIONS

..., the management of the company in a position to clearly understand its current financial position in comparison with the previous year’s financial performance. If the current year’s financial performance suggests that the company has outshined the past year’s financial performance and has shown more strong financial strength than the past year’s financial strength, this would be clearly authenticating that the company’s existing financial policies are going well and they are generating the required level of financial performance. In contrast, if the company’s current financial ratios suggest that the company has underperform this year and it has shown less financial performance, it has increased its, short term and long term liabilities...
11 Pages(2750 words)Essay

Managing Financial Resources

...Managing Financial Resources Registration Number Module Number and of Assignment WHAT IS ACCOUNTING Accounting is a method of keeping financial records of business transactions and for the preparation of statements concerning the business' assets, liabilities, and operating results. Accounting consists of several aspects; one of which is bookkeeping. A bookkeeper keeps tracks of all the company's transactions and keeps the ledgers of the company balanced. Other aspects include auditing by external firms, which ensures that accounting fraud is prevented by examining the ledgers of a company with other records to ensure that the ledgers provide a true and fair view of the company's financial dealings. Accounting is used for drawing...
8 Pages(2000 words)Essay

Managing Financial Resources

...Managing Financial Resources Abstract This paper reports on the current performance of “Must Have Furnishers LTD.” The end of year financial position will be examined and compared to last year’s performance report. New policies were followed this year and it will be interesting to see what effect (if any) that the new policies have had on this company. This report will give recommendations for pricing strategies and will forecast next year’s performance. This paper will also report the results of analysis performed on two projects and make appropriate recommendations. Finally, this report will examine the feasibility of a merger or acquisition of another business already in the furnishings related market. Must Have Furnisher’s current...
5 Pages(1250 words)Case Study

Managing Financial Resources

... Managing Financial Resources Finance as a resource: Finance is considered as one of the precious resources from the organizations’ point of view. But the procurement of funds and effective utilization of funds are the major functions of finance department. The term cost refers to monetary values of all sacrifice made to achieve an objective. Types or techniques of costing means the manner of ascertaining costs. Opportunity cost refers to the value of an advantage relinquished in accordance with another option. It is the cost of the best alternative foregone. It is the value of benefits foregone when one decision alternative is selected over another. But usually the concept of opportunity cost is not recorded in the books of accounts...
6 Pages(1500 words)Assignment

Accounting & Financial Management

AWB’s operations can be categorized into areas ranging from ‘pool management services’ to ‘harvest financing’, and ‘International commodity management’. Only a company with such a big range of activities and financial outlays can become the benchmark for an equally big company like ‘Woolworth Limited’.

The performance of an entity can be better analyzed through its profitability analyses. The profitability ratios like Gross Profit ratio, Net Profit Margins, Return on assets (ROA), and Return on Equity (ROE). The calculations of such ratios are shown in the attached annexure. The Gross Profit ratio measures the percentage of each pound or dollar of sales remaining aft...
10 Pages(2500 words)Assignment

Financial Management Analysis of Rio Tinto Plc

Taking into consideration that Harmony is the sixth-largest in the world in the gold mining industry, the choice of Harmony God Mining Co. as a benchmark company is the most suitable and justifiable. Moreover, Harmony has also some investment stake in Rio Tinto, and this situation makes the company more suitable for the choice. At places, the benchmark company’s performances have been better than Rio Tinto, and thus Harmony has a competitive edge as well over Rio Tinto.

Profitability ratios like Operating Margin Ratio, Net Margin Ratio, Return on Assets (ROA), and Return on Equity (ROE) are the performance analyzer of any company. Profit Margin ratios show the relationship between profit and sales. Since profit ca...
8 Pages(2000 words)Case Study

The Concept of a Mongolian Restaurant Business

The fact that it gives customers a variety of fresh food ingredients to choose from made the business very attractive to customers.
For this study, a brief overview with regards to a Mongolian restaurant business will be provided followed by discussing the concept and the primary purpose of a business plan. Eventually, the importance of using a business plan in starting a new Mongolian restaurant will be discussed.
In the process of discussing the importance of a business plan, the role of a business plan with regards to the success of a restaurant will be highlighted. Aiming to project the student’s understanding of the subject matter, the point of discussion will include: (1) selecting a good location and the ren...
9 Pages(2250 words)Term Paper

Managing Emerging Technologies: The World Bank Group

information Technology helps the businesses in cutting costs and creating value to the organization as a whole, by minimizing the digital divide. This helps in developing new and effective business processes as well as in making value propositions especially in the new and modern corporate world whose business network is spread far and wide, such as the World Bank for instance. Information technology plays a vital role in integrating systems and strengthening the strategic ties between service providers and customers, thereby rendering effective services.
The World Bank is involved in various activities providing a wide range of services to several developing and in transition countries across the globe. The bank, owned, fina...
11 Pages(2750 words)Case Study

Law of Financial Services

For instance, the European Commission’s Regulation No. 1049/2001 which very specifically details rules and regulations governing the public access to European Parliament, Council and Commission documents. Article 8 of the regulation states that “personal data shall only be transferred to recipients … (b) if the recipient establishes the necessity of having the data transferred …” (Regulation 1049/2001). Although this law is not at all related to the data protection of banks and their customers, it does give us an impression of how serious the EC is in protecting the integrity of data.
In saying that the laws that we have on data protection have adequately addressed the needs of banks and custom...
6 Pages(1500 words)Article

The Managing Change and Innovation

In line with the proposition as to whether these operational managers discern ways of enacting responses from the relevant quarters when it comes to products, services, and their related operations, we see that their role is immense and they have to bring about activities right from scratch.
The change factor has to be studied in the light of a consistent basis since as the maxim goes change is the only constant, thus we have to understand the basis of change from that very point of view nonetheless. Managers have to see that the new products and/or services mark the very basis for an organization and it is because of these products/services that the company is moving in a swift manner in a forward direction. Thus all their e...
6 Pages(1500 words)Assignment

Guide to Managing Innovation

It is a universal fact that engineering design must be cautiously planned and meticulously executed; if the design is being aimed to overcome a shortcoming or adding a new feature to the existing product, then the design process gets classified as an innovation. So, under certain conditions, engineering design and innovation are inter-related. In other words, innovation is a key process in a product’s development. I have always been intrigued by innovations, primarily because an innovation challenges conventional thinking, it goes beyond technology. Above all it is imperative for organizations, it is linked to survival and at times it is mentioned as the only sustainable strategy for growth. Hence, I preferred to choose the...
6 Pages(1500 words)Assignment

Emergency Economic Stabilization Act of 2008 and How It Has Impacted the Financial Markets

Though there were objections from various quarters about the huge amounts of tax payer’s money being used in the bailout of huge corporates, the Act has been successful in moving the downturn towards a flat point and now has started slowly moving towards a recovery stage. The various programs under the EESA 2008 have played a significant role in the financial sector, housing mortgage, and banking institutions to save the institutions from complete disaster.

The Emergency Economic Stabilization Act is a huge taxpayer bailout designed to rescue the financial sector. The amount of money to be used is around $700 billion or $2000 per American citizen (Public mark up). Emergency Economic Stabilization Act of 2008 is al...
10 Pages(2500 words)Research Paper

The Effects of Financial Crisis on Supplier Selection Criteria of the Oil and Gas Industry Equipment Market

It is a difficult task to find those vendors who not only have the adequate quality and quantity of the needed raw materials but who also have an attitude of efficiency and display commitment to customer service (Sonmat, 2006). Further, organizations also strive to locate and select vendors who can be depended upon for long term relationship.

The number of factors or attributes desired from the vendor is vast, and different organizations and different industries place different importance on the attributes (Sonmat, 2006). Some of the vendor attributes may gain importance owing to the nature of the industry, for example, in the case of consumer perishables suppliers, like fresh vegetables or fruits, the buying firm would...
20 Pages(5000 words)Literature review

Issues Connected to Human Resources Management

Notably, management professionals would agree, HRM system is an integration of various management practices with ‘people’ at its prime focus (Jackson, Schuler & Werner, 2008); and, the common factor between business organisations and educational institutions is ‘people,’ although their goals differ. This could be one main reason for attempting to implement HRM in educational institutions, although it is customized to organisational benefit.

Halachmi’s (2002a) extensive analysis on performance measurement clearly indicates the need for performance measurement in order to achieve the goals; and, it, in turn, establishes targets aligned to organisational goals and expectations; makes evalu...
8 Pages(2000 words)Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Managing Financial Resources Cafe Restaurant for FREE!

Contact Us