BIZ201 Assessment: Financial Performance Analysis of Crystal Hotel

This case study examines the financial performance of Crystal Hotel, focusing on accounting principles and financial analysis techniques. The analysis includes vertical analysis of key financial statement items, assessing revenue, cost of sales, personnel costs, and operating costs. The report then delves into financial ratio analysis, evaluating liquidity, profitability, efficiency, and solvency. The study compares the hotel's performance against industry benchmarks and provides recommendations for improvement in areas such as service quality, pricing, and brand value. The conclusion summarizes the hotel's strengths and weaknesses, offering a comprehensive overview of its financial health and potential for growth. The provided analysis and recommendations are aimed at aiding decision-making processes within the hotel management.

Running head: Accounting for Decision Making
Accounting for Decision Making
Name of the Student
Name of the University
Author Note

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Accounting for Decision Making
Table of Contents
Introduction................................................................................................................................3
Vertical Analysis of Company...................................................................................................3
Financial Ratio of Company......................................................................................................4
Recommendation to Hotel..........................................................................................................6
Conclusion..................................................................................................................................6
Reference and Bibliography.......................................................................................................8

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Accounting for Decision Making
Introduction
Financial accounting helps the company to record all the transaction in company
financial statement. It is the analysis and summary of company financial transaction so that
the company will able to make a proper financial statement (Agrawal & Cooper 2017). It
involves many processes as this help the company to prepare the financial statement of
company easily and effectively. Company have to give the financial statement to the financial
user so that it can able to know how the company is able to perform in the market as well as
how it able to carry its business operation in the market. The report shows about Crystal
hotel, as it shows about the different aspects of company which will help the user to know
how the company is performing in the market (Atanasov & Black 2016). The analysis is
based on vertical analysis as well as financial ratio so that the company financial user can
able to know how the company is performing as well as how it able to grow in the market.
Vertical Analysis of Company
It is kind of analysis which is used by the company to analysis it performance over
years as in this company match each item from the base item so that it can able to know how
much the company is able to have an increase on the same (Grant 2016). As per the company
the analysis is shown below:
Revenue – It show about the total income which the company is able to earn by carrying its
business activities, as it show how much the company is able to earn by selling its product.
As per the company financial statement is concern it can be said that company is earning goo
din overall performance as it is having more than the industry norms so this show that the
company is able to earn a good amount of business as well as it able to hold more amount of
customers in regards of business.

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Cost of Sale – This show how much the company is able to spend upon its product to make it
as useful product for consumers, as per the vertical analysis of company is can said that the
company is able to hold 31.95% of total sale so this signify that the company is able to have a
proper control over the cost of sale as well it show that the company is as per the industry
norms it can said that the company is able to manage to reach the required number of rooms
as well as it able to have proper amount of sale in the company.
Personnel Cost – As this cost are the expenses which the company have to spend in order to
carry different business activities. So as per the calculation it can see that the company total
personnel cost is 27% of total revenue so it signifies that the company is able to have a
normal amount of cost which show that the company is able to have a proper control over the
cost of company. The company is able control the cost more effectively and easily which will
help the company to gain more profit in the business.
Unallocated Operating Cost - This show about the company operation cost which is not
allocated to any particular cost centre as it is directly transfer to the income statement. The
calculation show that it cover 19.8% of the total revenue which is a good sign as the company
is able to have a proper amount of control upon the business selling cost so it will help them
to reduce the cost as well as help them to increase the revenue of the company.
Total Cost - This show about the cost which is been spend by the company in carrying its
business activities, as the company is concern is having the net profit of 11% of the company
is having 89% of cost which is not good, as the company is able to earn more than 11% so
that it can able to expand the business operation easily and effectively.
Financial Ratio of Company
Financial ratio shows the company performance in different aspects, as it help the
company user to judge the performance of company easily and effectively.

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Liquidity Ratio – This ratio shows how the company is able to pay its short-term liability in
regards of its current asset. As if the company is able to have a proper amount of liquidity
that will show that company is financially strong. As per the company is concern it is not
having an proper amount of liquidity ratio which show that the company is not able to have
proper of current asset which will help the company to pay its debt easily and effectively. As
per the industry company should have 3.20 but as per the company financial statement it is
having 1.96 so it is not having a proper liquidity in the company.
Profitability Ratio - This ratio show about the company profit as how much the company is
able to earn by carrying its business operation. So if the company is able to have a high
amount of profit so that it will able to carry it business activities as well it will help the
company to expand the business more easily and effectively. As per industry norms Gross
profit should be 81% but as per company financial statement it is 68.05% so this signify that
the company is able to have proper amount of sale and this the reason it does not able to meet
the industry norms easily and effectively.
Efficiency Ratio – This show how easily company is able to utilize its asset to generate cash
in the company. As if the company is able to have high amount of ratio this show that the
company is able to have proper and fuller utilization of asset in carrying business activities.
As per the company industry norms it should be 8.60 but as per company it is 7.14 which is
not appropriate as the company is not able to meet the requirement which is that it should
able to make a proper utilization of company asset as a result it does not able to have a proper
amount of efficiency ratio.
Solvency Ratio – This ratio show about how the company is able to manage the company
debt and equity as the company is able to maintain as each company should able to have a
proper combination of debt and equity so that it will able to manage the business activities

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more easily and effectively. As per the company is having 35.43%, so this signify that the
company is able to have an high amount of debt and even this show that the company is able
to have a proper loss as if the company is not able to manage the finance cost which is
happening due to increase amount of debt of in the company so it should be managed by the
company easily and effectively.
Recommendation to Hotel
As per the company financial statement is concern the recommendation or the
benchmark which should be selected by company are:
1. Quality of the Service – Company is able to meet the benchmark of the services
which are been provided by the company as if the company is able to make a proper
amount of service in regards of quality so it will be able to have an increase in the
revenue as well as it will help the company to expand its business.
2. Price of the Hotel – As per the company it should able to meet the price as per the
industry norms so that it can able to meet the customer as well as it will help them
to gain a proper amount of goodwill in the market. So company should able to
charge the price as per the industry norms which will help them to sustain in the
market.
3. Brand Value – Company should able to meet the brand value as if the company is
having a proper amount of brand value so that it able to meet the customer easily
and effectively. So it should able to meet the brand value as if the company having
proper value it will get more amount of customers.
Conclusion
The report concludes about the different aspects of hotel as how the company is able
to perform its activity properly and effectively in the business. It show about the aspects

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which will help the user to know the performance of the company easily and effectively. The
report show company vertical analysis as well as the ratio of the company. It show the
different position which the company is able to meet in regards of its performance.

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Reference and Bibliography
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scandals: Evidence from top management, CFO and auditor turnover. Quarterly
Journal of Finance, 7(01), 1650014.
Atanasov, V. A., & Black, B. S. (2016). Shock-based causal inference in corporate finance
and accounting research. Critical Finance Review, 5, 207-304.
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
Kraft, P. (2014). Rating agency adjustments to GAAP financial statements and their effect on
ratings and credit spreads. The Accounting Review, 90(2), 641-674.
Maas, K., Schaltegger, S., & Crutzen, N. (2016). Integrating corporate sustainability
assessment, management accounting, control, and reporting. Journal of Cleaner
Production, 136, 237-248.
Mak, S. C. L. (2014). U.S. Patent Application No. 14/356,060.
Omar, N., Koya, R. K., Sanusi, Z. M., & Shafie, N. A. (2014). Financial statement fraud: A
case examination using Beneish model and ratio analysis. International Journal of
Trade, Economics and Finance, 5(2), 184.
Robinson, T. R., Henry, E., Pirie, W. L., & Broihahn, M. A. (2015). International financial
statement analysis. John Wiley & Sons.
Vogel, H. L. (2014). Entertainment industry economics: A guide for financial analysis.
Cambridge University Press.

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Wahlen, J. M., Baginski, S. P., & Bradshaw, M. (2014). Financial reporting, financial
statement analysis and valuation. Nelson Education.
Watson, L. (2015). Corporate social responsibility research in accounting. Journal of
Accounting Literature, 34, 1-16.
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Book Chapters, 109-169.