Financial Reporting: Analysis of Hotel Grand Central Ltd and Hotel Properties Ltd

Running Head: Financial Reporting
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Project Report: Financial Reporting

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Contents
Introduction......................................................................................................................................3
Report introduction......................................................................................................................3
Company overview......................................................................................................................3
Ratio analysis...................................................................................................................................3
Profitability analysis....................................................................................................................3
Liquidity analysis.........................................................................................................................5
Asset efficiency analysis..............................................................................................................7
Gearing analysis...........................................................................................................................8
Findings and analysis.......................................................................................................................9
Conclusion.......................................................................................................................................9
References......................................................................................................................................11
Appendix........................................................................................................................................12

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Introduction
Report introduction:
Financial analysis is a process in which the financial statement of a particular
organization is studied and various tools are applied on the financial data to measure the overall
performance of the company. This process evaluates all the related factors to measure the
changes into the financial performance as well as it is a good base to make the changes into the
financial strategy and the policies of the company. The report has been prepared to identify and
measure the financial performance of HOTEL GRAND CENTRAL LTD and HOTEL
PROPERTIES LTD. In this report, ratio analysis tool has been used on both the companies to
identify their performance and the best company for the purpose of the investment. The main
objective of the report is to evaluate the best investment company so that the return of the
investor could be higher and the risk level could be lower.
Company overview:
HOTEL GRAND CENTRAL LTD operates, owns and manages the hotels. The
organization operates in five countries which are Malaysia, Singapore, Australia, New Zealand
and china. The company manages all the hotels in a perfect manner. The chain of the hotels has
been started in 1883. The current financial and non financial performance of the company is
quite attractive and brief about better position of the company in the industry (Reuters, 2018.)
HOTEL PROPERTIES LTD is an investment holding company that operates, owns and
manages the hotels. The organization operates through hotel and properties. It owns and operates
around 32 hotels. The entire hotels of the company are managed in a perfect manner. The current
financial and non financial performance of the company is quite attractive and brief about better
position of the company in the industry (Bloomberg, 2018).
Ratio analysis
Ratio analysis is a financial quantitative method which evaluates the financial statement
of an organization. This analysis method is used to identify the operating and financial

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performance such as the profitability, liquidity, gearing level of the company. It involves in
measuring the financial health and performance of an organization by using the data from the
current and historical financial statement. The ratio analysis study on both the companies is as
follows:
Profitability analysis:
Each firm focuses on the profitability position to measure the performance of the
company. Profitability ratio analysis is one of the most common ways to measure the
performance and the profitability level of the company. The main ratios to measure the
profitability performance of an organization are operating profit margin, gross profit margin and
return on capital employed. The profitability analysis of both the companies is as follows:
Return on capital employed:
Return on capital employed is a profitability ratio which measures the total return of the
organization in context with the capital employed of the company. The better the return on
capital employed of an organization would be the better the profitability position would be.
Return on capital employed of HOTEL GRAND CENTRAL LTD has been measured
and it has been found that the return of the company has been improved from last year. The
operating profit has been improved from last year and due to it, the profitability level has also
been improved. The current ROCE of the company is 2.69% which is lower in the industry.
However, the trend explains about better position of the company.
Return on Capital employed 2016 2017
Operating profit / 31,615,000 41,072,000
Capital employed (total assets
- current liabilities)
1,580,232,00
0
1,527,880,00
0
Answer: % 2.00% 2.69%
Further, ROCE of HOTEL PROPERTIES LTD has been measured and it has been found
that the ROCE has been lowered from last year. The operating profit has been reduced from last

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year and due to it, the profitability level has also been decreased. The current ROCE of the
company is 3.50% which is better in the industry. However, the trend explains about lower
position of the company.
Return on Capital employed 2016 2017
Operating profit / 133,520,000 105,044,000
Capital employed (total assets -
current liabilities)
2,753,644,00
0
3,002,513,00
0
Answer: % 4.85% 3.50%
Gross profit margin:
Gross profit margin is a profitability ratio which measures the total gross profit of the
organization in context with the sales revenue of the company. The better the gross profit margin
of an organization would be the better the profitability level would be.
Gross profit margin of HOTEL GRAND CENTRAL LTD has been measured and it has
been found that the margin of the company has been improved from last year. Gross profit level
of the company has been improved more than the sales revenue from last year and due to it, the
profitability level has also been improved. The current gross profit margin of the company is
56.1% which is highest in the industry. It explains that the company is required to maintain the
same level to manage the performance.
Gross Profit Margin 2016 2017
Gross profit / 72,964,000 91,471,000
Sales Revenue (note used
operating revenue) 151,374,000 163,037,000
Answer: % 48.2% 56.1%
Further, Gross profit margin of HOTEL PROPERTIES LTD has been measured and it
has been found that the margin of the company has been improved from last year. Gross profit
level of the company has been improved more than the sales revenue from last year and due to it,

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the profitability level has also been improved. The current gross profit margin of the company is
25.7% which is lower in the industry. However, the increment rate is better.
Gross Profit Margin 2016 2017
Gross profit / 141,481,000 169,560,000
Sales Revenue (note used
operating revenue) 577,616,000 659,160,000
Answer: 24.5% 25.7%
Liquidity analysis:
The financial manager focuses on the liquidity position to measure the short term debt
obligation of the company. Liquidity ratio analysis is one of the most common ways to measure
the capability of the company to repay all the short term debts of the company. The main ratios
to measure the liquidity performance of an organization are current ratio and quick ratio. The
liquidity analysis of both the companies is as follows:
Current ratio:
Current ratio is a liquidity ratio which measures the total current liabilities and current
assets of the organization in order to identity the short term debt obligation of the company. The
level of current ratio must be set by the business on the basis of industry and th requirement of
working capital for the company.
Current Ratio of HOTEL GRAND CENTRAL LTD has been measured and it has been
found that the company has reduced the current assets in order to manage the liquidity position.
The current liquidity position of the company has been reduced but in terms of industry and the
cost position, the current level is better. The current liquidity ratio of the company is 3.42 which
must be reduced by the company.
Current Ratio 2016 2017
Current Assets / 355,238,000 274,388,000
Current liabilities 60,011,000 80,122,000
Answer: 5.92 3.42