Case Study Of Dinner Bell Hotel

Introduction:
Dinner Bell Hotel is a Michigan resort, with large meals, farm animals, petting zoo, lake for swimming and much more. As suggested by the name, the hotel holds the tradition of ringing the bell to announce mealtime. July through early November is the busiest time for the hotel as all summer and fall guest enjoy the atmosphere of an old-fashioned resort with a comfortable environment. The weather gets too cold by early November for most outdoor activities thus in order to attract customers, the hotel has also built an indoor pool and developed long theme weekends like classic movies.
Sarah, the manager, has made a cash budget but in early march she is having second thoughts about the forecast she had made due to several concerns.

However the cash surplus generated during peak period that is July to November is typically enough to meet the short fall. But this year the hotel requires major renovations in order to be continually be able to attract guests. They estimated that the renovations will cost $250000 but now it appears that $300000 of work is necessary. Also their long term group also manager has also left unexpectedly and her replacement is not as effective in obtaining business from the regional business and organization. Furthermore their revenues have also declined by 15% for January and February and advance booking are also down. Thus a cash flow forecast is made to estimate the

Line of credit: They are a specified amount of money accessible for a specified time period, usually for a year. They can be drawn as needed during seasonal shortages of cash and this is the problem which is face by Dinner Bell hotel. They are of two types; committed and uncommitted. Committed is guaranteed when he company meet all of the conditions and Sarah does not approve of the conditions imposed by the bank thus she could go for uncommitted line of credit. However it has its flaws which are that in uncommitted the bank does not guarantee that it will give loan when the company needs it thus Dinner Bell could not rely upon it. Another flaw is that

2. Asset based financing : There are two options in asset based financing which are factoring and inventory financing. Factoring is when the lender collects the receivables of Dinner Bell Hotel directly from its borrowers. In this the borrowers of Dinner Bell will be instructed to pay the receivables to a specified address controlled by the lender.
Inventory financing: Dinner Bell can use this as they have expensive equipment with them and medium length sales cycle. In this the lender will use their equipment as collateral and the loan is paid as sales are made to the customers. Dinner Bell can use many things as collateral such as; tennis courts nine Golf-hole course,