Accounting for Decision Making Report 2022

Running head: ACCOUNTING FOR DECISION MAKING
Accounting for Decision Making
Name of the Student
Name of the University
Author’s Note

1ACCOUNTING FOR DECISION MAKING
Executive Summary
The report involves in the analysis of the financial statements of Crystal Hotel Pty Ltd for the
assessment of its current financial standing for facilitating its management to take decision
regarding the expansion plan. This financial statements analysis is done through vertical analysis
of the statements of profit or loss and statements of financial position and analysis of four
categories of ratios. Outcome of the financial statements analysis demonstrates that Crystal Hotel
Pty Ltd has not been able to generate adequate amount of revenues from selling rooms and foods
and beverages in the recent years when compared to the other hotels in the same industry. At the
same time, the costs associated with the rooms and foods and beverages are also higher than the
other hotels. This indicates towards an inferior performance and position of Crystal Hotel Pty
Ltd in the industry. Outcome of the analysis of ratios demonstrate that the profitability position
of Crystal Hotel Pty Ltd has been affected with the less efficient use of assets and equity
investors for generating profit. Slow clearance of inventory as well as slow collection of the dues
from the debtors is affecting its overall efficiency. Moreover, the liquidity position has been
affected by the lack of adequate current and quick assets. Even in the presence of all these
negatives, Crystal Hotel Pty Ltd has been able in maintaining its less reliance on debt capital for
financing the business because of the large use of equity capital. These are the key aspects
associated with the present financial standing of Crystal Hotel Pty Ltd highlighted from the
analysis of financial statements.

2ACCOUNTING FOR DECISION MAKING
Table of Contents
Part 1................................................................................................................................................3
1. Vertical Analysis.....................................................................................................................3
a. Vertical Analysis of Statement of Profit or Loss.................................................................3
b. Vertical Analysis of Statement of Financial Position..........................................................4
2. Ratio Analysis..........................................................................................................................5
Part 2................................................................................................................................................6
1. Introduction..............................................................................................................................6
2. Comparative Analysis of Income Statement...........................................................................6
3. Analysis of Ratios....................................................................................................................8
4. Additional Industry Specific Benchmarks.............................................................................10
5. Conclusion.............................................................................................................................11
References..................................................................................................................................12

3ACCOUNTING FOR DECISION MAKING
Part 1
1. Vertical Analysis
a. Vertical Analysis of Statement of Profit or Loss