LU 5 + LU 8

Question 1

unique characteristics of the hospitality industry

Answer 1

seasonality
short inventory holding period
labour intensive
major investments in F( high operating leverage)

Question 2

debt is provided by

Answer 2

creditors

Question 3

equity is provided

Answer 3

owners

Question 4

branches of accounting

Answer 4

financial
cost
managerial
tax
auditing
accounting systems

Question 5

4 basic forms of business organization

Answer 5

limited liability
proprietorship
partnership
corporation

Question 6

factors that determine owners future value

Answer 6

timing of future dividends
magnitude
riskiness

Question 7

process of value creation

Answer 7

optimize asset structure
increase op. cash-flow= entry barriers
reduce variability of cashflows=
optimize capital structure

Question 8

rate of return tap

Answer 8

usage of debt to help finance the project

Question 9

feasibility study types

Answer 9

demand analysis
lodging study
supply analysis
financial analysis

Question 10

financial markets

Answer 10

money market
capital market
mortgage market

Question 11

money market

Answer 11

treasury bill

commercial paper

Question 12

capital market

Answer 12

stocks

bonds

Question 13

mortgage market

Answer 13

commerical banks

Question 14

financial intermediaries for the hospitality business

Answer 14

mutual funds
brokearge firms
commercial banks

Question 15

foreign exchange risk

Answer 15

can’t get the money into your own currency and your money gets stuck in a different country

Question 16

financial leverage + and -

Answer 16

+: return on investment, tax advantage, shareholders love it

-: high risk of bankruptcy

Question 17

operating risk

Answer 17

variability of operating cash flows

Question 18

financial risk

Answer 18

not being able to cover liabilities

Question 19

7 Steps of a feasibility study

Answer 19

Pre-field work
Field work
Market analysis and conclusions
Financial projections
Report writing
Presentation to client 
Administration