Managing Financial Resources in the Hospitality Industry

Managing Financial Resources in the Hospitality Industry

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Explaining the meaning of generally accepted accounting principles (GAAP).........................3
1.Identifying various users of financial statements.....................................................................3
2.Discussing different statements of companies.........................................................................4
3.Describing the components that supplement the financial statements.....................................4
4. Interpreting financial statements using financial ratio Smart Resort Ltd...............................6
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Financial management is the systematic process used by company to plan, direct and
control the business and financial activities such as proper utilization of funds and procurement.
The company apply general management principles to its financial resources. The present report
will provide detailed information about financial statements and various users of them. The case
study will discuss about components of financial statements and also calculate ratio analysis in
order to compare performance of the smart resort ltd.
1.Explaining the meaning of generally accepted accounting principles (GAAP)
GAAP means the rules, standards, principles and regulations of accounting issued by the
financial accounting standards board. It is mandatory for accountants in public companies in the
U.S need to follow these principles in order to maintain financial statements (Tikhomirova,
2021). The main objective of GAAP is to improve the comparability, clarification of the
communication of financial information and business statements. The major goal is to ensure a
firm’s financial statement are clear, complete and consistent in nature. These principles cover all
the topics such as balance sheet, materiality and classification. There are various principles of
GAAP such as principle of consistency, regularity, sincerity, prudence, periodicity, continuity,
materiality. With GAAP, the company helps maintain trust in the financial business.
Identifying various users of financial statements
Financial statements are essential to all the users because they can provide detailed
information about company’s profit, sales, revenue and debts and also the profitability of the
firm. The users can understand the ability of the firm to meet short- and long-term financial
obligations. The users of financial accounting reports include the owners, suppliers, lenders and
customers and general public and others.
Company management- In order to make operational and financial decision about the
business operations and related transactions the management team of the company needs to
understand the liquidity, cash flows and profitability.
Customers and employees- In order to judge the financial ability of a vendors the customers
need to review financial statements (Wu, 2021). A firm may elect its financial statement to
employees in order to provide detailed information about accounting and transactions.