BIZ201 Accounting for Decision Making

Running head: BIZ201 ACCOUNTING FOR DECISION MAKING
BIZ201 Accounting for decision making
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1BIZ201 ACCOUNTING FOR DECISION MAKING
Table of Contents
Part 1................................................................................................................................................2
Part 2................................................................................................................................................2
3. Comparative analysis of income statement.............................................................................2
4. Ratio analysis...........................................................................................................................3
5. Additional techniques for industry performance benchmark..................................................6
Reference.........................................................................................................................................7

2BIZ201 ACCOUNTING FOR DECISION MAKING
Part 1
Refer to excel sheet
Part 2
3. Comparative analysis of income statement
Income statement is one of the major financial statements used to report the financial
performance of the entity over the specific period of time. It provides summary of the revenue,
costs and profit or loss generated by the company over the period under concern. Based on the
income statement financial performance of the entity is evaluated taking into consideration the
way through which the revenue is generated by it and the amount it expensed to generate the
income. Analysing the income statement of Crystal Hotel Pty Ltd, it can be identified that the
entity generates major portion of the revenue from room revenue and the percentage of revenue
generated from the room revenue is 61.88 (Journal of Bank Cost & Management Accounting
2004). On the other hand, the industrial average for the same is 51% (Business And Economics--
Accounting; Business And Economics--Banking And Finance, 2011). Hence, it can be stated that
Crystal Hotel is more efficient is generating revenues from room charges as compared to the
industry. If COS of the hotel is considered it can be identified that the same for Crystal Hotel is
27.59% of total revenues that will enable to draw gross margin of 72.41%. However, if the
industry average is considered, the COS is 20% of total revenues that will enable to draw gross
margin of 80%. Hence, even if the hotel is efficient in generating more revenues from room
charges as compared to the industry benchmark it was not able to control the cost as per the
industry benchmark. If the personal costs are considered it can be identified that the company