Finance in the Hospitality Industry

Finance in the Hospitality
Industry

TASK 4
Grimes theme park
Ratios 2015 2016
Profitability Analysis
Gross profit ratio = (Gross
Profit/Revenue from Operations) x 100 60.00% 60.00%
Net Profit Margin = (Net Profit after
tax/ Sales Income) x 100 25.00% 27.50%
Sales Growth = (Current period sales
– Previous period sales)/ Previous
period sales) x 100
NA 10.00%
Efficiency Ratios
Stock turnover = (Cost of goods sold/
Average Inventory ) 2.13 1.21
Liquidity Ratios
Acid Test Ratio = (Current Assets –
Inventory)/Current Liabilities 0.50 0.62
Current Assets Ratio = Current Assets/
Current Liabilities 1.15 1.38
AC 4.1 Ratio

Interpretation –
In case of Grimes theme park, as per the profitability aspect the company is performing in
effective manner with increase in its net profit margin from 25% to 27.50% in the year
2016. Also, its sales has been increased by 10%.
As per the profitability ratio, it can be assessed that Grimes is capable enough of
converting its sales into profit margin effectively.