B Constructing cashflow

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Assignments

Name of assignment

Constructing the cash flow.
The cash flow is the net amount of cash and cash-equivalents (such as money on the current account at a bank) being transferred into and out of a business. A positive cash flow indicates that a company is adding to its cash reserves, allowing it to reinvest in the company, pay out money to owners, or settle future debt payments. Cash flow refers to generating or producing cash (cash inflows) and using or consuming cash (cash outflows). The cash flow is the lifeblood of your hotel, and you must keep that blood circulating at all times in order avoid failure. Managing cash flows is essential to the successful operation of your hotel.

Situation

Being a family hotel, the Bergmans did not care too much about financial statements. Of course, a number of key metrics have been looked at, over the years but an overview of the cash flow has never been made. In hospitality industry, obviously, having a clear and thorough insight in finances, from a business perspective, is very important. So, there is some information gathered. It seems, though, the hotel has never used the available data to its full potential.

Goal

Diving deeper into the available numbers might bring new insights that could help in analyzing the results and so make better decisions for the years to come. Especially a cash flow statement could be helpful in this.

Task, deliverable

Analyse the available data on the operating review, and create a cash flow statement for the Emerald Forest Hotel.
Draw your conclusions and give concrete information to Jill Jandal about the cash flow statement you have made.

Assessed elements

• Is the cash flow statement complete, does it contain all elements?
• Are the indicated amounts explainable and logical for a hotel of this size?
• What are your conclusions from the cash flow statement and why?
• Are the conclusions, drawn from the cash flow statement, correct and concrete?
• Are all the sources accounted for?

Additional information

• Operating review
• What is cash flow?
• Key concepts in cash flows
• Basic cash flow statement (video)
• Beware of Cash Flow Traps!

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