Ratio Analysis for Gatsby Grange

GATSBY GRANGE

INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
TASK 1............................................................................................................................................1
1. Calculate ratio for the period of 2018 to 2019.........................................................................1
2. Discuss that why ratios is essential for hotel management......................................................4
3. Discuss the advantages and disadvantages of using ratio analysis which helps in decision
making process in hotel and tourism sector.................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
The evaluation of the financial statements is the method of reviewing the financial accounts
of a business for the objectives of making decision (Forbes and Szakal, 2019). It is used by
stakeholder groups to recognize a company's core health and to compare financial performance
and operational value. With the help of ratio analysis, organizations evaluate their performance
on the basis of liquidity, profitability gearing and financial leverage. This assessment based on
Gatsby Grange which is a small chain of Boutique in the UK and Northern Ireland. This report
covers the calculation of ratios for the period of 2018 to 2019. Also provide understanding that
why ratio analysis is essential for hotel management and also discuss the benefits and limitations
of ratio analysis in hotel and tourism industry.
MAIN BODY
TASK 1
1. Calculate ratio for the period of 2018 to 2019
Liquidity ratio:
It provides information to the group of stakeholders regarding the ability of a firm to
fulfil its short-term monetary obligations. The hospitality sector requires a substantial amount of
operating capital and also has a variety of short-term financial commitments to meet, keeping
liquidity ratios important findings of the company to evaluate overall performance.
Current ratio: The current ratio is a financial metric demonstrating how a corporation
with the short-term assets on hand will meet their short-term liabilities (Khodadoust and Hodtani,
2019). Short-term assets are more like inventory, which do not include long-term investments
such as land, plant, which machinery.
Formula:
Current ratio = Current Asserts / Current Liabilities
Ratio 2018 (£’000) 2019 (£’000)
Current Asserts 3065 3240
Current Liabilities 1339 1616
Current Ratio 2.28 Times 2 Times
1