CONSTRUCT AND ANALYZE A FINANCIAL PLAN BASED ON MANAGEMENT'S STRATEGIC INTENT Name Institution Outline 1.0 Executive summary 2.0 Annual Budgeted income statement 3.0 Annual Budgeted Balance sheet 4.0 Annual Budget Cash flow Statement 5.0 Selected Financial Ratio’s 6.0 CVP analysis for the full year 7.0 Appendices 1.0 EXECUTIVE SUMMARY This financial statement and balance sheet explains why and how managers project financial statements into the future…
Thus, one purpose of strategic intent is to forecast a firm's financial statements under some specific conditions. Since total assets must equal the sum of total liabilities and owner's equity, any imbalance will require management action. Having forecasted the amount and timing of the imbalance, a financial manager can arrange for financing (such as bank loans or stock offerings) or investment (such as marketable securities) long before the need becomes critical. Strategic intent statements help general managers in overall planning (employment and inventory levels, for example) and problem solving. As forecasts are developed, a manager can analyze the results to identify potential trouble spots and plan accordingly. Finding problems and trying out solutions on paper, months in advance, is much preferred to learning about the problem first hand in real time. Similarly, by “seeing” into the future with strategic intent statements, a manager can anticipate opportunities and prepare to exploit them long before the window of opportunity begins to close. In addition to being a planning tool, strategic intent statements, in tandem with actual results, can be used to evaluate performance and make midstream corrections. Variance analysis, a comparison of the plan with actual performance, helps a manager analyze firm performance during the budget period, gauge strengths and weaknesses, and make interim adjustments to the plan. The accuracy of strategic intent statements is limited by the validity of the assumptions used in creating them. Often a series of statements is developed by making different assumptions about sales and about the relationship between sales and the balance sheet accounts. This is called a sensitivity analysis. The resulting set of statements suggests the most likely outcomes for the firm and a range of financing needs. After building a balance sheet statement based on expected sales, a manager can then use sensitivity analyses to answer questions such as how the company's financial needs will change if sales are 10 percent below their expected level, etc. Since the hotel industry is a fairly competitive one, the hotel managers need to be excellent. With the income and financial statements at their disposal, the managers will make strategic decisions that will be founded on fact since Proforma balance sheets are created by forecasting the individual account balances at a future date and then aggregating them into a financial statement format. Account balances are forecasted by identifying the forces that influence them and projecting how the accounts will be influenced in the future by such forces. Sales, company policy, and restrictive debt covenants are often significant forces. An annual data has been provided which has to be focused for 36 months and monthly income statements and balance sheets and a strategic intent provided as well. With such information at their disposal, the managers will make a firm strategic decision on their new acquisition. 2.0 ANNUAL BUDGETED INCOME STATEMENT INCOME STATEMENT Total revenues $ Annual room revenues 209,523 Annual food and beverages 113668 Other revenue 328433 Total 14792023 Variable cost annual 8,531,040 Fixed cost annual 8,728,500 Total 9,582,604 Operating ...
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