Financial Management for the Hotel Industry

Financial Management
for the Hotel Industry

TABLE OF CONTENTS
 Introduction
 Ratio analysis
 Relevance of ratio analysis for hotel management
 Benefits and limitations of ratio analysis in decision making
 Conclusion
 References

INTRODUCTION
 The ratio analysis is a tool which is used by the businesses for
purpose of evaluating their financial performance and position in
the market.
 This report provides a deep understanding of importance of ratio
analysis for a business entity along with its advantages and
disadvantages.
 It covers the ratio analysis of Gatsby Grange along with
interpretation.

Calculation Absolute difference Relative performance
2018 2019
Profitability
Return to capital
employed(ROCE) 64.38 % 64.92 % 0.54 % 0.84 %
Asset turnover 0.88 pence 0.96 0.07 8.27 %
Gross profit turnover 91.82 % 85.83 % -5.98 % -6.52 %
Net operating profit
turnover 72.87 % 67.88 % -4.99 % -6.85 %
Liquidity
Current ratio 2.29 pence 2.01 pence -0.28 pence -12.41 %
Acid test 0.52 pence 0.5 pence -0.02 pence -4.28 %
Creditor days(money
owing) 648.9 days 373.6 days -275.3 days -42.43 %
Debtor days(money
owed) 106.18 days 109.5 days 3.32 days 3.13 %
Gearing
Gearing 1(Leverage) 8.69 % 8.93 % 0.24 % 2.74 %
Gearing 2(Dept to
capital) 8 % 7.75 % -0.25 % -3.13 %
Interest cover 200.4 times 226.3 times 25.88 times 12.91 %
Efficiency
Inventory turnover 1176.11 days 1152 days -24.33 days -2.07 %
Non-current asset
turnover 1.22 pence 1.29 pence 0.07 pence 5.57 %