Question

Identifyassumptions you need to make to prepare financial forecasts.

Discuss the risk of leasing hotel rooms to investors.

Answer 1

Key assumptions in relation to the financial forecasts are related to balance sheets, cash flow, income statements, business plans made and also reasonable forecast about sales volumes and other sales aspects.

Few of the assumptions are as follow:

-Construct an Income Statement properly- while forecasting about finances, make sure income statement is properly maintained on a monthly basis for each year. Then root the income and expense assumptions on facts and verified information.

-Carefully Balance Sheet presentations: Assumptions for balance sheet presentations should be careful and based on sufficient expectations of asset acquisitions in future years.

-Cash Flow Statement: to take an idea about the cash flow statement for any organization is quite necessary and especially when it's a new small business or company that needs finances on a regular basis.

The following are the risks to lease hotel room to investors:

-so, if the hotel room is a lease to investors, the is less transparency in the working between the hotel management and investors. What and how management takes care of the property, their actions and decisions are known to the investors also.

-there are more chances of interferences. When leasing a hotel room, investors might interfere in the working of management that will increase the risk of being a manipulating investor.