Financial Analysis of Crystal Hotel: A Comparative Study

BIZ201 Accounting for Decision Making

Executive Summary
The purpose of this report is to address the financial issues faced by Crystal Hotel and to
make comparison of company performance with industry benchmark through use ratios and
vertical analysis. Vertical comparative analysis of company with industry benchmark shows that
company had been successful in saving must of its cost but it lack behind in reducing the cost of
sales and unallocated operating cost. It might be possible that company provide extra services
free of cost to their customer that adds to operating cost that no other hotel provide.

Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................4
Comparative Analysis of income statement of Crystal Hotel with its industry benchmarks..........4
Ratio Analysis of Crystal Hotel and comparative analysis with the industry values......................6
Use of other industry benchmark to compare company performance with that of industry.........10
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

Introduction
This report has been developed for carrying out an analysis of the case study of ‘Crystal
Hotel’ with the application of the technique of financial statement analysis. In this context, it has
developed and presented vertical analysis of the financial statements for the hotel for the
financial year 2015. This is followed by conducting ratio analysis of the hotel for gaining an
estimate of its present as well as future financial performance. The ratio analysis evaluates the
profitability, efficiency, liquidity and solvency position of the business. The results obtained with
the use of vertical analysis technique are compared with the industry benchmarks for evaluating
the performance of the hotel in comparison to the hotel. This mainly includes comparison of
revenue, cost of sales, personnel costs, unallocated operating costs and total cost of production.
The financial results obtained with the use of ratio analysis are evaluated with respect to the
industry data for analyzing the future performance of the hotel as compared with the overall
industry.
Comparative Analysis of income statement of Crystal Hotel with its industry benchmarks
Crystal Hotel Pty Ltd Vertical
Analysis
Statement of Profit or Loss Company Industry
For the period ended 30/06/2015 Numbers
of Rooms
Average
Room
Price
Range
160 rooms 2015 2015
150$ >150
rooms 80$-150$
Revenue
Rooms Revenue $4,006,920 61.88% 65.00% 50%
Food and Beverage Revenue $936,497 14.46% 25.00% 39%
Functions $960,326 14.83% 6.00% 7%
Other Revenue $571,906 8.83% 4.00% 4%
Total Revenue $6,475,650 100.00% 100.00% 100%
Cost of Sales
Rooms Cost of Sales $844,634 13.04% 8.00% 6%
Food and Beverage Cost of Sales $807,461 12.47% 8.00% 11%
Other Cost of Sales $134,636 2.08% 2.00% 2%
Total Cost of Sales (excluding
personnel cost) $1,786,731 27.59% 18.00% 19%