Accounting for Managers ACFI5020 - Analysis of Hotel Chocolat's Financial Achievements

This article provides a detailed analysis of Hotel Chocolat's fiscal achievements in Accounting for Managers ACFI5020. It includes the calculation of ratios, monetary assessment, advancement, and the influence of volatility on accounting ratios. The article also suggests measures that the company can take to improve its accounting ratios.

Accounting for
Managers ACFI5020

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Task 1...........................................................................................................................................1
Task 2...........................................................................................................................................4
Task 3...........................................................................................................................................6
Task 4...........................................................................................................................................7
Task 5...........................................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Firm's monetary assessment can reveal data about a firm’s revenue, stability, operating
excellence, and viability (Alsharari and Abougamos, 2017). Hotel Chocolat plc is a British
chocolates and bean firm with over 100 stores across the country. The current study offers a
detailed analysis of the company's fiscal achievements. An overview of the officer’s
management is included in the latest presentation, and also information on possible threats which
could affect the proportion cost and schedule.
MAIN BODY
Task 1
Calculation of ratios
HOTEL CHOCOLAT
2019 2020 2021
Liquidity
ratio
Current assets 28029 51531 55554
Current
liability 21153 38271 52209
Inventory 12810 13916 32038
Quick Assets 15219 37615 23516
28029/21153 51531/38271 55554/52209
Current ratio
Current assets /
current liabilities 1.33:1 1.35:1 1.06:1
(28029-12810)/21153
(51531–
13916)/38271 (55554-32038)/55029
Quick Ratio
(Current Assets -
Inventory) / Current
Liabilities 0.72 0.98 0.45

Profitability
ratio
Employed
Capital 53040 104267 113806
PBIT 10929 -7541 7824
(10929/53040)*100 (7457/104267)*100 (7824/113806)*100
Return on
capital
employed
PBIT/Employed
Capital 20.61% -7.23% 6.87%
Profit after tax 10929 -7457 5685
Shareholder's
Equity 49330 66990 71688
10929/49330 -7457/66990 5685/71688
Return on
Equity
Profit after tax /
Shareholder's Equity 22.15% -11.13% 7.93%
Cost of Sales 45140 53256 62877
Sales 132480 136290 164551
(132480-
45140)/132480*100
(136290-
53256/136290)*100
(164551-
62877/164551)*100
Gross
Margin COGS/Total Sales 65.93% 60.92% 61.79%
Net Operating
profit 14061 -7541 7824
Sales 132480 136290 164551
(14061/132480)*100 (-7541/136290)*100 (7824/164551)*100
Net
Operating
profit ratio
Operating Income/
Net Sales 10.61% -5.53% 4.75%

Net Profit
Margin Net Profit/Sales (10929/132480)*100 (-7457/136290)*100 (5685/164551)*100
8.24% -5.47% 3.45%
Efficiency
Ratios
Inventory 12810 13916 32038
Trade
Receivables 9360 7492 12421
Net Assets 49330 66990 71688
Cost of Sales 45140 53256 62877
Sales 132480 136290 164551
ATO 132480/53040 136290/104267 164551/113806
Asset
turnover
ratio
Sales / Capital
employed 2.49 2.03 2.30
45140/12810 53256/13916 62877/32038
Inventory
turnover
ratio Sales / Inventory 3.52 3.83 1.96
(3710/132480)*365 (7492/136290)*365 (12421/164551)*365
Account
receivable
turnover
ratio
(Accounts Receivable
/
Sales)*365 14.15 18.19 13.25
(12810/45140)*365 (13916/53256)*365 (32038/62877)*365
Stock Days
Average
(Stock/COGS)*365 104 95 186

Debt
Debt 3710 37277 32118
Equity 49330 66990 71688
3710/49330 37277/66990 32118/71688
Debt equity Debt/ Equity 7.52% 55.65% 40.80%
ratio
Loans and
Borrowing 3710 37277 32118
Capital
Employed 53040 104267 113806
Gearing Ratio (3710/53040)*100 (37277/104267)*100 (32118/113806)*100
6.99% 35.75% 28.22%
Task 2
Monetary assessment: A survey method to determining the viability of several
components of a marketplace, such as mobility, operating efficiency, and competition, is known
as "accounting ratios."
Currently, the firm's capacity to compensate: The present availability position, as per
the concept, assesses whether a company has been doing in regards of settling its present
commitments at the expense of capital assets it has accessibility to. As per assertion of annual
position, Chocolat Hotel's current liquidity ratios are 1.06. It's not appearing so fantastic on the
marketplace. As a consequence, the company's line of business should present a large percentage
of liquid assets (Bühler, Wallenburg and Wieland, 2016).
A quick work rate: This ratio is often employed to examine a financial production
statement whilst taking into account the income statement resources that are reflected by its
stocks. This is because many analysts believe equities must not be considered accessible assets.
The operational profitability increased from 0.45 percentage in 2019 to 0.72 percentage in 2021,
compared to 0.45 percentage in 2019. Considering that the initial percentage is commonly
recognised to be 1.5, it is clear that the business' financial percentage of exchange is grossly
insufficient, and it is form of recreation for the corporation to explore into alternative other than

the planned capital magnitude relation. Somebody who gains income by participating in
companies is referred to as an operator.
Return on capital: This proportion is commonly utilized to evaluate an owner's
performance in regards of effectively employing goods. As per the business's ROCE analysis,
this percentage would drop to 20.61 percentage in 2019, but would increase to 5.48 percentage in
2021. Reducing clients and deflationary economy earnings were cited as among the main reasons
for the drop in ROCE (Eisenberg, 2016).
Proportion of Productivity
Gross Profit margin: It is determined using various resources in the firm to evaluate the
company's performance and development. So when yield on equities for two years is examined,
the yield on capital in 2020 is -11.13 percentage, while the yield on capital in 2021 is 7.93
percentage. Such improvements show that the company has acknowledged previous issues and
changed its operational practises. It also helped the group achieve great results.
Profitable
Proportion of gross margin: Once all of the corporation's owners for the output have
indeed been covered, this percentage decides how much amount of net income left in the
business. The operating income for the sector is predicted to grow to 60.92 percentage in 2020
and 61.79 percentage in 2021, noted a large improvement in GP. As a consequence, the company
could be said to be particularly good in managing operating costs.
Net margin: While looking at this profitability ratio, it is clear that the outbreak had no
impact, hence it is critical to examine the company's revenue income. The company's net income
margins increased, but only slightly. Firm should keep on trying a range of approaches in order
to maintain their current degree of improvement. In form of proportion, 5.47 percentage in 2019
and 3.45 percentage in 2020 were reached (Glushchenko, Yarkova and Kucherova, 2017).
The Productivity Ratio: It is a metric for determining how effectively a procedure is
performed through. Operating margin is critical in the organizational processes. The company's
turnover ratio has dropped from 2.69 in 2018 to 2.30 in 2019. This shows that the company has
been incapable to make full utilization of its assets. It was clear that the firm used its capital
more effectively last year than it would this year. In the corporate sector, stocks are changed onto
a constant schedule; turnover ratio is described as leadership's ability to update merchandise in a
short amount of duration. Stock turnover fell to 1.96 in 2019, down from 3.83 the year before.

Accounts receivables turnover proportion: Whenever a corporation's this proportion is
significant, it shows how much energy it spends on the marketplace seeking to collect loans from
its borrowers. To improve the very same liquidity ratios, a variety of measures should be taken.
Borrowing-to-GDP Ratios: The debt-to-equity proportion is a finance metric which can
be used to assess a firm's fiscal stability and also the level of volatility associated with its
activities. The payout percentage is utilized to show that the debt-to-income percentage is
declining, with a goal of 55.65% in 2020 and 44.80% currently (Kuurila, 2016).
Task 3
Advancement: As a consequence of reviewing all of the various proportions, the company
required to undertake a lot of modifications. Some of the required changes are as follows:
 Efficiency Possibility: According to the research, a company's inventory turnover isn't
quite as good as it appears and disappears. The marketing plan of a corporation might be
strengthened to improve annualized rates.
 Returns on Investing: While ROCE have improved, the company does still have work
to do to improve its ROI. Businesses should utilize all of its assets to the greatest degree
feasible as a preliminary step for development. Furthermore, lowering the firm's non-
productive resources may help to improve this proportion (Roberts and Gnan, 2017).
 The Volatility Factor: By judging by the present stability proportion, it's simple to
understand why the company's business working capital is not at all strong and also too
insufficient in the marketplace. When a firm's revenue circulation statement is poor, it's
more difficult to fulfil monthly repayments that undermine the professional image with
vendors. Increased flexibility over the transfer of cash is essential to improve the image
of the identical company.
 Profitable Proportion: The overall income proportion could only be enhanced by
employing a variety of cost-effective strategies that would ultimately result in reduced
manufacturing expenses and a higher overall income proportion. By verifying that a
company's expenses are handled in a way which adds to the company's corporation
financial performance, the competitiveness proportion percentage can be enhanced.
 Liquidity management proportion: To decrease a firm's financial leverage, resources
or financial money should be utilised to pay down the mortgage. In the big scheme of
things, a lower debt-to-equity proportion would support the business.

Task 4
An examination of the operations assessment:
Promotion of other businesses: The company is alleged to have lent cash to one of its
collaborative relationships in Tokyo. They wanted to help effect current company internal
funds that are raised by any money lent as acquisitions. With this in mind, Hotel Chocolat may
probably achieve its working capital increase while focusing on the beneficial impact on
accounting ratios.
Capability Advancement: If the facility is enlarged to 160,000 square meters, revenues
would increase to $500 million. As a consequence, shareholders' earnings would soar, and
additional territories would start opening. Hotel Chocolat can take use of this chance to expand
its marketplace and improve overall fiscal analyses. As a result, this component would aid in
determining the company's anticipated impact on accounting ratios.
Funding: Investment in technology which assists in the introduction of unique concepts
is an option for businesses. According to the inspectors, new technology or hiring new staff
could have a substantial impact on the company's existing obligations whilst still improving its
business results (Tan, 2016).
Industrial Growth in the Great Britain: To increase manufacturing capability,
corporations must build facilities to accommodate more than 80,000 employees. This would be
ideal for their needs. It enables Hotel Chocolat to extend their company and concentrate on
exterior initiatives, allowing them to assess the value of their assets. It would have a favourable
impact on accounting ratios.
Task 5
The influence of volatility on accounting ratios:
Supplying disruptions: If a firm or organisation is ineffective, it is difficult to provide
things and activities on schedule that has an influence on revenues and, by implication, other
areas of its activities, such as accounts receivable. This component could have both a direct and
indirect effect on accounting ratios.
International vulnerability: Any international vulnerability would have an impact on a
corporation's economic situation and profit generation. It must have been admitted that this
vulnerability had influenced the cash flow in some way. It aids the company's emphasis on

worldwide strategic planning, allowing them to quickly achieve their objectives and assure
profitability ratios.
Development into new markets: As a consequence of global growth, the expense of
establishing new sections increases. As a result, the danger of internationalization strategy rises,
which could have a detrimental effect on the company’s, accounting ratios (Velte, 2019).
Positive appearance: Furthermore, the impression that a corporation has a terrible publicity
might have an adverse effect on corporate productivity. There is a clear link among terrible
photos and a drop in income because they induce customers to depart for an extended amount of
time, resulting in a drop in income. It may result in a reduction of marketing strategy, forcing
Hotel Chocolat to deal with societal failings. It may have a detrimental effect on their accounting
ratios.
CONCLUSION
Based on a comprehensive review of the aforesaid information, it was decided that Hotel
Chocolat is having a particularly tough cost as a consequence of the epidemic, because the
corporation's economic records clearly show that 2020 will be a particularly challenging year for
Hotel Chocolat. Positive reputation, as a result of continuous work, has an impact on the product
repertoire, and the company has had to cope with some undesirable elements as a result.
Businesses have a bad fiscal state that can be improved by incorporating different strategies
within the company.

REFERENCES
Books and journals
Alsharari, N. M. and Abougamos, H., 2017. The processes of accounting changes as emerging
from public and fiscal reforms. Asian Review of Accounting.
Bühler, A., Wallenburg, C. M. and Wieland, A., 2016. Accounting for external turbulence of
logistics organizations via performance measurement systems. Supply Chain
Management: An International Journal.
Eisenberg, P., 2016. The Balanced Scorecard and Beyond–Applying Theories of Performance
Measurement, Employment and Rewards in Management Accounting Education.
International Research Journal of Management Sciences. 4(7). pp.483-491.
Glushchenko, A. V., Yarkova, I. V. and Kucherova, Y. P., 2017, December. The Role of the
Ecologically-Oriented Accounting Systems from the Perspective of Minimizing the
Strategic Risks in Terms of Ecologizing the Production. In Perspectives on the use of
New Information and Communication Technology (ICT) in the Modern Economy (pp.
741-747). Springer, Cham.
Kuurila, J., 2016. The role of big data in Finnish companies and the implications of big data on
management accounting.
Roberts, H. and Gnan, L., 2017. Welcoming family business into the accounting family: an
introduction to the special issue. Qualitative Research in Accounting & Management.
Tan, B. S., 2016. Accounting research for the management accounting profession. Journal of
Applied Management Accounting Research. 14(1). pp.69-77.
Velte, P., 2019. What do we know about meta-analyses in accounting, auditing, and corporate
governance?. Meditari Accountancy Research.