Accounting for Decision Making - Financial Position of Crystal Palace

Running head: ACCOUNTING FOR DECISION MAKING
Accounting for Decision Making
Name of the Student
Name of the University
Author’s Note

1ACCOUNTING FOR DECISION MAKING
Executive Summary
This report aims at analyzing the income statement and statement of financial position of Crystal
Palace Pty Ltd with the intention to assess their current financial standing before proceeding with
the decision to increase the hotel star by renovating the hotel while improving the services. The
main techniques used for this analysis purpose are vertical analysis of income statement and
statement of financial position and the analysis of four types of financial ratios which are
profitability ratios, efficiency ratios, liquidity ratios and solvency ratios. Findings of the vertical
analysis shows that Crystal Palace Pty Ltd has not been able in registering increase in revenue in
2018, but the expenses have been increased as compared to the industry standards. This
demonstrates that the financial performance of the hotel has not been as effective as per the
industry standard. On the other hand, findings of the ratio analysis point towards the weakness of
Crystal Palace Pty Ltd in profitability, efficiency and liquidity position which demonstrates the
ineffective financial position of the hotel as compared to the industry standards. The positive is
that Crystal Palace Pty Ltd has less reliance on debt capital which has strengthened its solvency
position. In case the management of Crystal Palace Pty Ltd wants to take a major decision about
the plan to renovate the hotels, the above-mentioned areas need to be considered as this may
affect the decision to implement the plan.

2ACCOUNTING FOR DECISION MAKING
Table of Contents
Part 1: Excel Workbook Calculations..............................................................................................3
1. Vertical Analysis.....................................................................................................................3
Requirement (a).......................................................................................................................3
Requirement (b).......................................................................................................................4
2. Ratio Analysis..........................................................................................................................5
Part 2: Business Report....................................................................................................................6
Introduction..................................................................................................................................6
Income Statement Comparative Analysis....................................................................................6
Ratio Analysis..............................................................................................................................8
Recommendation on Three Additional Industry Specific Benchmarks......................................9
Conclusion.................................................................................................................................11
References......................................................................................................................................12

3ACCOUNTING FOR DECISION MAKING
Part 1: Excel Workbook Calculations
1. Vertical Analysis
Requirement (a)