This report aims to describe and evaluate the financial statements in food and beverage operations, the process of cost and pricing and its specifications and to analyse the steps in purchasing process.
2.1. Demonstrate the use of financial statements in food and beverage operations
Various food and beverage establishments publish their financial reports and statements like balance sheets or cash flow in the end of each tax year, simply for the aim of evaluating their progress in comparison with the previous tax years. Financial statements are counted for productive in any company’s financial history. Their aim is to assess the performance of the company when compared to ...view middle of the document...
By creating ratios from the numbers included in the statements one could find the database that investors and managers need.
As we have seen how crucial financial statements are, we are able to imagine their place in the life of an organisation especially when it is a food and beverage one. Food and beverage operations suggest lots of manual labour; time and funding, so it is very important for an establishment to monitor their financial course and gauge their financial statements so that investments are made in a right way. The issuing of financial statement makes it clear to investors, suppliers and managers what the financial performance of the company is. It also gives awareness about the profit a company generates after the deduction of all expenses and what investments they should make during the following year. The diagram below shows the financial performance of Hilton hotel by years:
Year Operating Profit (in millions £)
Source: Hilton Annual report, 2012
This clearly shows the fact that Hilton’s operating profit has been increased over the years which is a noteworthy advance. It is an eloquent indication for the management of Hilton to keep on spending more funds on food and beverage operations and continue being a brilliant experience for their guests.
Financial statements are a significant part of a company’s development. They always give adequate and important information about the financial progress of the company, forthcoming investments and this is why they are a must for each food and beverage organisation.
2.2 Demonstrate the use of cost and pricing processes:
Cost and pricing processes are helpful for an organisation when determining their products’ prices so that they are appropriate but profitable at the same time. It is a very difficult process, because it is hard to find out the actual cost of the product. Normally the cost of a product consists of direct cost, indirect cost and fixed cost. Their separate calculation is one of the roughest jobs for financial directors.
The term cost means the expenses a contractor will suffer in performing contract work. It is vital to undoubtedly realise this meaning from the beginning to avoid the term cost being substituted for the term price. It is factual that “cost” is frequently applied, even in government publications, when the word “price” is really intended. The term price, according to many, is financial expense, made to pay for goods or service. But according to the below formula, a realistic price means the sum of reasonable costs and a reasonable profit. (Murphy, 2009)
Price = Cost + Profit
It is imperative to launch clearly at the beginning the price for the work to be completed. It is conceivable to establish the price in many types of contract arrangements. Sometimes, in circumstances involving much research and development work, it is not...