Ratio Analysis for Event Hospitality and Entertainment Limited

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This document provides an analysis of financial ratios for Event Hospitality and Entertainment Limited, including Return on Equity, Return on Assets, Equity Multiplier, Total Assets Turnover Ratio, and Net Profit Margin. It also includes a cash budget and recommendations for managing surplus.

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Running head: RATIO ANALYSIS
Ratio Analysis

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RATIO ANALYSIS 2
Contents
Introduction......................................................................................................................................3
Task1................................................................................................................................................3
Analysis of Ratios........................................................................................................................3
Conclusion.......................................................................................................................................5
Task 2...............................................................................................................................................6
Part 1............................................................................................................................................6
Part 2: Cash Budget......................................................................................................................6
Part 3............................................................................................................................................8
References......................................................................................................................................10
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RATIO ANALYSIS 3
Introduction
Event Hospitality and Entertainment Limited is one of the leading companies in Australia that
cover entertainment, hospitality as well as leisure aspects in the industry of hospitality. The
company is managing more than 100 cinemas and more than 50 hotels in Australia, Germany as
well as New Zealand. The company also employed over 8000 employees that make them earn
revenue of one billion each year. Therefore, most of the individuals have invested their huge
amount in such company.
In the following part there will be detailed analysis of financial position of company as well as
its impact on shareholders effectively as well as efficiently.
Task1
Analysis of Ratios
Return on equity play a vital role in analyzing the financial performance of the company. With
the help of analyzing the ROE of the company, the individual can able to understand how
efficiently company manages their resources to earn maximum profit. Therefore, while analyzing
the ROE of Event Hospitality and Entertainment Limited it can be evaluated that in the year
2016, the ROE of the company was 6.81% which was increased to 11.33% in the year 2017
(Kim & Tucker, 2016). It represents that in the year 2016 the company lag in managing the
investors’ money that created impact on the profit margin of the company at greater level
(Manouchehrinia,Tanasescu, Tench, & Constantinescu, 2016). However, in the year 2017, it
increased by almost double that represent that, the company has started in focusing over its
investment to get great return from their resources that help them to earn maximum level of
profit in an effective as well as in efficient level. It represents positive sign for the shareholders
as with the growth of the company, shareholders did able to reach great return from their
investment. In the year 2016, the investors might face certain issue while in the year 2017; they
did able to earn better return that made them satisfied efficiently (Boo & Park, 2019).
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RATIO ANALYSIS 4
Return on Assets help the individual in analyzing how efficiently company uses its own assets in
generating income or revenue. ROA gives idea to an investor that the company runs their
business efficiently or not. It will protect them from investing their huge amount in loss faced
companies. Therefore, while analyzing the ROA of Event Hospitality and Entertainment
Limited, t can be depicted that in the year 2016, the company receive only 5.83% of return from
the assents that they manage. It represent that the company failed in managing their own assets
that generated low revenue to the company. However, the condition improves better in the year
2017, as in such year the company received return of 9.62% of the total assets that they have
invested. It has affected on the overall revenue of shareholders at greater level. In the year 2017,
the company did able to receive better return from the company as comparison in the year of
2016 (Brooker, & Joppe, 2016).
Equity Multiplier is one of the effective methods to analyze financial leverage of the company in
an effective manner. It measures the financial leverage of the company by using the ratio of the
total assets of the company to its stockholders equity. In general, the low equity multiplier
indicates a company has lower financial leverage. Therefore while analyzing the equity
multiplier of Event Hospitality and Entertainment Limited, it represent that the company has
taken huge amount of debt to finance its assets purchases. The multipliers in both years are
almost similar (Crowell, Baral, Schwartz, Nowak, Kokogho, Adebajo, & Charurat, 2019).
Therefore, its n huge difference in the multipliers that showcase that the company did not able to
pay its debt that was taken from purchasing assets rather it has raised their debt in the year 2017
that affected overall profitability of shareholders due to the main reason the company required to
pay interest on the debt that has been raise from the market that affected overall earning of the
shareholders. The multiplier of the company should be low however, in the situation of Event
Hospitality and Entertainment Limited, the multiplier is high that decreases the earning power of
its shareholders. Owing money from the market also created great risk for the shareholders, if
company did not able to pay debt, then he investment of the shareholders might come in risk at
greater level. The shareholders may also face loss that increases the level of uncertainty for them
at greater level (sLi, Nie, Chang, & Yang, 2017).
Total assets turnover ratio is one of the tools that are used to measure the effectiveness of using
the assets to generate the revenue from sales efficiently. The more efficiently a company to use

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RATIO ANALYSIS 5
its assets to generate the revenue, it will show enhancement in the profit to be received. It
compares the sales of the company to its assets base. Ideally, a company with high total assets
turnover ratio can operate with few assets than less efficient competitors, and so required less
debt as well as equity to operate (Hendrickson, 2016). The result should be a comparatively
greater return to its shareholders. While analyzing the total assets turnover of Event Hospitality
and Entertainment Limited of h year 2016, it represent that the company receive 65% of the
revenue from the sales of assets in the market. While in the year 2017, it was increased to 75%
that represent the company has enhanced their overall turnover by 10% that can help the
shareholders to receive great income from such revenue. It is one of the positive sign for the
shareholders through which they can invest more amounts in such company in an effective
manner (Vickers, 2016).
Net Profit margin plays an essential role in analyzing the overall performance of the company. It
can help the investors to understand the actual finical position of the company and its growth in
the future. New profit is the actual revenue of the company that earn from selling its product.
Therefore, while analyzing the net profit of Event Hospitality and Entertainment Limited in the
year 2016, it represent that the company has earned sufficient amount of profit however, such
profit does not generated low of satisfaction among the shareholders due to the reason it is quite
low in the market. it show the financial performance of the company that it is average or below
average that is required to be focused by the management team of the company. However, in the
year 2017, the company has achieved growth in the market. The company has earned overall all
13.815 profit margins from its sales that represent that the company is going at the right direction
and will earn and grow in the market more efficiently. It benefited to the shareholders in an
effective manner. The shareholders can earn great amount of revenue from the company and t ill
will give new big profit in the future (Ankrah, Darko, Sabblah, Mantel-Teeuwisse, & Leufkens,
2018).
Conclusion
From the above analysis it can be concluded that managing business play a crucial role for the
internal as well as external shareholders of the company. While analyzing the financial position
of the company Event Hospitality and Entertainment Limited, it represent that the overall
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RATIO ANALYSIS 6
performance of the company is going well. The amount invested by the shareholders can give
good return to them that does not only satisfy them but also will motive to invest more the
company grew from the year 2016 to 2017 that represent that it will further grow in the market
and can achieve great success that will give new and more benefit to the shareholders in an
effective and efficient manner.
Task 2
Part 1
The main purpose of evaluating the operational budget is to analyze the income earn and expense
occur from the operational activities. The company can able to understand its source of revenue
as well as expenses that make the company for efficient to compete in the market.
It plays a vital role in the tourism and hospitality industry as the tourism companies can able to
track the actual income and expenses that occurred from operational activities. Such budget help
in keeping a track of the income as well as expenses, it control the expenses. It also encourages
for hard work as well as achieving the ambitious target of sales.
It also helps in enhancing the efficiency of the company. It helps in guiding the staff to have
better as well as efficient panning in performing the functions of business apart from making
them accountable. Therefore, it creates help in creating key success for a business in the tourism
and hospitality industry (Espinosa, 2018).
Part 2: Cash Budget
Consolidated Statement of Cash flow
Fiscal year ends in June. USD in
millions except per share data. January February March
Operating Activities
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RATIO ANALYSIS 7
Cash was provided from
Amount Received from
Accommodation
$
165,400.00
$
132,320.00
$
119,088.0
0
Amount Received from food
$
65,200.00
$
32,600.00
$
29,340.00
Amount Received from Beverages
$
25,250.00
$
10,100.00
$
11,110.00
Cash was Applied to
Cash Paid to Suppliers
$
(29,534.00)
$
(14,206.00)
$
(13,234.0
0)
Salaries, Wages & employee benefits
$
(51,170.00)
$
(35,004.00)
$
(31,908.0
0)
Direct operating Expenses
$
(64,474.00)
$
(44,106.00)
$
(40,204.0
0)
Insurance
$
(500.00)
$
(500.00)
$
(500.00)

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RATIO ANALYSIS 8
Marketing Expenses
$
(12,792.00)
$
(8,752.00)
$
(7,976.00
)
Administrative and maintenance
$
(53,216.00)
$
(36,404.00)
$
(33,184.0
0)
Interest Paid
$
(15,351.00)
$
(10,501.00)
$
(9,572.00
)
Tax Paid
$
(21,362.00)
$
(16,218.00)
$
(14,694.0
0)
Net cash outflow from operating
activities
$
7,451.00
$
9,329.00
$
8,266.00
Cash and cash equivalents at
beginning of period
$
4,904,973.00
$
4,912,424.00
$
4,921,753
.00
Cash and cash equivalents at period
end
$
4,912,424.00
$
4,921,753.00
$
4,930,019
.00
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RATIO ANALYSIS 9
Part 3
While analyzing the first quarter of the hotel, it represent that the hotel have surplus during such
represent. The hotel has sufficient inflow and outflow of the cash that represent that it has
effective work performance in the competitive market. The hotel is in surplus due to the reason,
its inflow in higher than outflow that’s mean the company sell huge amount of product and spend
less amount of operating activities that represent huge level of inflow in the hotel.
For managing surplus in the business, the hotel can adopt Balanced Liquidity Management
Strategy. It is one of the strategy in which the hotel can invest its amount in purchasing assets. It
will not only block the excess cash inflow but also will provide good return to the hotel in an
effective as well as in efficient manner (Jobst, 2016)
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RATIO ANALYSIS 10
References
Ankrah, D. N., Darko, D. M., Sabblah, G., Mantel-Teeuwisse, A., & Leufkens, H. M. (2018).
Reporting of adverse events following immunizations in Ghana–Using disproportionality
analysis reporting ratios. Human vaccines & immunotherapeutics, 14(1), 172-178.
Boo, S., & Park, E. (2019). LOCALS’EXPERIENCES OF HOTEL SPECIAL EVENT
PACKAGES AND THEIR PURCHASE INTENTION OF HOTEL ROOM
NIGHTS. Event Management.
Brooker, E., & Joppe, M. (2016). Is Imitation the Best Form of Flattery? Innovation Challenges
in Festivals and Events. Journal of Hospitality Marketing & Management, 25(3), 259-
269.
Clark, H., Dimanche, F., Cotter, R., & Lee-Rosen, D. (2017). Human capital challenges in the
events industry of Canada: finding innovative solutions. Worldwide Hospitality and
Tourism Themes, 9(4), 424-432.
Crowell, T. A., Baral, S. D., Schwartz, S., Nowak, R. G., Kokogho, A., Adebajo, S., & Charurat,
M. E. (2019). Time to change the paradigm: limited condom and lubricant use among
Nigerian men who have sex with men and transgender women despite availability and
counseling. Annals of epidemiology, 31, 11-19.
Espinosa, E. T. (2018). Bureaucracy and politics in Mexico: The case of the secretariat of
programming and budget. London: Routledge.
Hendrickson, B. M. (2016). U.S. Patent No. 9,390,424. Washington, DC: U.S. Patent and
Trademark Office.
Jobst, A. A. (2016). Systemic risk in the insurance sector: A review of current assessment
approaches. In The Geneva Papers (pp. 34-73). London : Palgrave Macmillan.

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RATIO ANALYSIS 11
Kim, K., & Tucker, E. D. (2016) Assessing and segmenting entertainment quality variables and
satisfaction of live event attendees: A cluster analysis examination. In Journal of
Convention & Event Tourism (Vol. 17, No. 2, pp. 112-128). Routledge.
Li, Z., Nie, F., Chang, X., & Yang, Y. (2017). Beyond trace ratio: weighted harmonic mean of
trace ratios for multiclass discriminant analysis. IEEE Transactions on Knowledge and
Data Engineering, 29(10), 2100-2110.
Manouchehrinia, A., Tanasescu, R., Tench, C. R., & Constantinescu, C. S. (2016). Mortality in
multiple sclerosis: meta-analysis of standardised mortality ratios. J Neurol Neurosurg
Psychiatry, 87(3), 324-331.
Vickers, A. (2016). Survival Network Meta-analysis: Hazard Ratios Versus Reconstructed
Survival Data. Value in Health, 19(3), A90.
Wedley, W. C., Choo, E. U., & Wijnmalen, D. J. (2016). Efficacy Analysis of Ratios from
Pairwise Comparisons. Fundamenta Informaticae, 146(3), 321-338.
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