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  • Why Prepare Budgets?

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    Erica Lenn Villagracia
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    The document discusses different types of budgets including operating, capital, and cash budgets. It explains that budgets guide business plans for the year and consist of both financial information and required actions. The budgeting process involves preliminary processes like analyzing market trends, expenses, and prior results. It also considers limiting factors such as capacity, labor, equipment, and systems. Forecasting is completing budgets on a shorter term basis and with less detail for revenue management. Forecasts are made for rooms sold, average rates, food and beverage covers and spends, other revenue, cost of sales, payroll, and expenses to enable more effective planning and financial control.

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    The document discusses different types of budgets including operating, capital, and cash budgets. It explains that budgets guide business plans for the year and consist of both financial information and required actions. The budgeting process involves preliminary processes like analyzing market trends, expenses, and prior results. It also considers limiting factors such as capacity, labor, equipment, and systems. Forecasting is completing budgets on a shorter term basis and with less detail for revenue management. Forecasts are made for rooms sold, average rates, food and beverage covers and spends, other revenue, cost of sales, payroll, and expenses to enable more effective planning and financial control.

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    © All Rights Reserved
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    7 views2 pages

    Why Prepare Budgets?

    Uploaded by

    Erica Lenn Villagracia
    The document discusses different types of budgets including operating, capital, and cash budgets. It explains that budgets guide business plans for the year and consist of both financial information and required actions. The budgeting process involves preliminary processes like analyzing market trends, expenses, and prior results. It also considers limiting factors such as capacity, labor, equipment, and systems. Forecasting is completing budgets on a shorter term basis and with less detail for revenue management. Forecasts are made for rooms sold, average rates, food and beverage covers and spends, other revenue, cost of sales, payroll, and expenses to enable more effective planning and financial control.

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    © All Rights Reserved
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    of 2

    Budget

    BUDGETS
    AND FORECASTING

    Formal plans for the level of business or trading to be


    achieved. They are usually detailed, and are generally
    prepared for the next full financial year, by month.

    Why prepare budgets?


    A BUDGET GUIDES OUR STEPS FOR THE
    YEAR. IT CONSISTS NOT ONLY OF
    FINANCIAL INFORMATION, BUT ALSO OF
    THE ACTIONS REQUIRED OF US IN
    ORDER TO ACHIEVE MONETARY
    TARGETS. A BUDGET IS NOT JUST
    NUMBERS, BUT ALSO CONTAINS

    TYPES OF BUDGET
    VARIOUS REPORTS AND CHARTS.

    O P E R A T I N G B U D G E T

    CAPITAL BUDGET

    CASH BUDGET

    THE BUDGETING PROCESS


    The budget team
    THE MANAGER THE RULE BOOK
    THE COACH THE GOVERNING BODY
    THE CAPTAIN
    AND PLAYERS

    PRELIMINARY PROCESSES
    MARKET TRENDS
    EXPENSE TRENDS
    PRIOR RESULTS

    Limiting factors
    CAPACITY MANAGEMENT
    LABOUR CAPITAL
    EQUIPMENT SYSTEMS

    ERICA LENN S.VILLAGRACIA


    Budget
    AND FORECASTING

    BUDGET
    PREPARATION
    PROCESS

    HEAD OFFICE

    SALES AND
    MARKETING
    PLAN

    ROOM REVENUE,
    OCCUPANCY AND
    AVERAGE ROOM
    RATE
    Forecasting
    IS A TYPE OF BUDGET, BUT IS USUALLY COMPLETED
    ON A SHORTTERM BASIS AND IS GENERALLY MUCH
    LESS DETAILED, UNLESS FOR REVENUE MANAGEMENT
    USAGE.

    WE NEED TO FORECAST
    DAILY
    WEEKLY
    MONTHLY
    SEASONALLY
    WHAT DO WE FORECAST?

    We forecast:
    ROOMS SOLD AND AVERAGE RATE
    FOOD AND BEVERAGE COVERS AND SPENDS
    OTHER REVENUE
    COST OF SALES
    PAYROLL
    EXPENSES

    WHY DO WE FORECAST?

    We forecast to enable managers to


    plan more effectively
    & to enable financial control to
    manage more effectively

    ERICA LENN S.VILLAGRACIA

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