Comprehensive Financial Analysis of Pyrenees Ski Resort: BCO123

This report analyzes the financial statements of the Pyrenees Ski Resort cafeteria for a six-month period. The analysis includes an income statement, revealing total income of $343,350 and total expenses of $108,982, resulting in a gross profit of $234,367.50. The report highlights a net profit of $41,102 after tax, indicating smooth operations and the ability to cater to stakeholders' needs. The cash flow statement and balance sheet are also reviewed, assessing liquidity and investment potential. The report concludes with an assessment from a potential investor's perspective, considering the seasonal nature of the business and emphasizing the importance of monitoring financial performance. The financial statements are analyzed to provide insights for potential investors and stakeholders.

Running Head: ACCOUNTING 1
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Results
From the income statement of Pyrenees ski resort, it can be ascertained that, total income
is $343350 and the total expenses are $108982. The gross margins of the company have been
68.26% and this indicates that the even after organizing two events, the company managed to
cater the primary costs and keep aside the gross profit of $264367.50. The earnings before tax
have been $90662.50 and due to sales made through credit card, the financial cost associated has
also been covered fully. Thereafter the net profit margin that has been left for the shareholders
and investors are $41102 after tax, which accounts for 12% of the sales. Hence, the company is
running its operations smoothly and is able to cater the needs of the management as well
shareholders and customers. Over the analysis it is also evident that the company is able to
secure the margins well. Since the users of the financial statements are always interested in
knowing the reports, one cannot be behind and keeps a regular check on the performance of the
business. The balance sheet statement also reflects how fixed assets that have been purchased
have been sold out to gather cash (Rodriguez-Fernandez, 2016).
Pyrenees Ski Resort
Income Statement
for the year ending 30th April 2022
Expected sales Units Price Months Total
Breakfasts 25 € 10.00
€
180.00 € 45,000.00
Lunch 50 € 20.00
€
180.00 € 180,000.00
Coffee 3000
€
2.00
€
6.00 € 36,000.00
Sandwiches 1000
€
4.00
€
6.00 € 24,000.00
Soups 375
€
6.00
€
6.00 € 13,500.00
Total sales € 298,500.00

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Additional income through souvenirs € 29,850.00
Sales through dinner party 100
€
100.00 € 10,000.00
Sales through Easter’s special lunch 100 € 50.00 € 5,000.00
Total income € 343,350.00
Less: Cost of goods sold Total
Breakfasts € 13,500.00
Lunch € 63,000.00
Coffee € 7,200.00
Sandwiches € 12,000.00
Soups € 3,375.00
Total costs € 99,075.00
Add: Cost of souvenir € 9,907.50
Total costs € 108,982.50
Gross Profit € 234,367.50
Less: Expenses
Cost of dinner party € 6,000.00
Cost of Easter’s special lunch € 3,500.00
Salary expenses:
Waiters € 12,600.00
Cooks € 16,800.00
Business manager € 42,000.00
Heat water and power € 24,000.00
Royalty € 29,850.00
Sales and general administrative expenses € 8,955.00
Earnings before interest and tax € 90,662.50
Less: Financial costs € 22,387.50
Less: Interest costs € 13,472.19
Earnigs after interest and before tax € 54,802.81
Less: Provision for tax € 13,700.70
Less: Social security tax
Net profit € 41,102.10
The cash and capital have been invested at equal level and hence, the company must
increase the cash in hand. The liquidity position of the company is also smooth, but can be
improved. The cash flow statement is the statement that derives the difference between the

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inflows and the outflows of the cash to get an insight of how well; the company is managing the
cash. The cash flow statement depicts how well the company is able to cover the cash expenses
and maintain a balance of $10000. Each of the activity has been analyzed in detail and thereafter
the net cash flow is of $10000. This also implies that the cash and cash equivalents plays a vital
role in the enhancement of the overall performance of the enterprise (Ozkan, Cakan & Kayacan,
2017).
Potential investor
While analyzing the situation from the point of view of the potential investor, the fact of
being a seasonal business cannot affect the decision of investment. Few of the reasons for the
same have been listed below. The profitability as well as liquidity position of the company is
smooth and satisfactory. An investor is more attentive towards the income statement as they are
in a view of how much return they are going to get for the investment made by them in the
business. Further, in order to vouch the long term stability of the business, it is important to
understand the short term variations at the initial level; this is because if any mistake is
understood in advance, the same would not be repeated in future (Stice, Stice, Cottrell & Stice,
2018).
The investors also get an idea of each element through balance sheet, income statement
as well as cash flow statement. In case the tenure changes from 6 months to 12 months and the
situation and the margins are intact, the cafeteria will experience profits only, but the same is
risky as the profit comes at the cost of contemplating the operating costs, hence, there is a high
chance that the company has to face the reducing profits. Therefore from the overall analysis it

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can be stated that, overall the cafeteria is doing well, the investors can invest in the business but
must be aware and keep a regular check on the performance.

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References
Stice, J. D., Stice, E. K., Cottrell, D. M., & Stice, D. (2018). Teaching Operating Cash Flow: One
Matrix for Analysis–Two Methods for Presentation. Advances in Accounting Education:
Teaching and Curriculum Innovations, 22, 199-215.
Ozkan, N., Cakan, S., & Kayacan, M. (2017). Intellectual capital and financial performance: A
study of the Turkish Banking Sector. Borsa Istanbul Review, 17(3), 190-198.
Rodriguez-Fernandez, M. (2016). Social responsibility and financial performance: The role of
good corporate governance. BRQ Business Research Quarterly, 19(2), 137-151.