Analyzing Financial Resources Management in Hospitality Industry

This report provides a comprehensive analysis of financial resource management within the hospitality industry, focusing on the application of Generally Accepted Accounting Principles (GAAP) and the interpretation of financial statements. It identifies key users of financial statements and their specific needs for decision-making, elaborates on the financial statements most relevant to loan creditors and trade creditors, and discusses the components of an annual report supplement along with the concept of financial reporting. The report also evaluates the financial performance of Smart Resort Ltd. by comparing its financial ratios over two years, highlighting areas of strength and weakness in its liquidity and profitability. The analysis concludes that while Smart Resort Ltd. demonstrates overall growth, there are areas, such as liquidity management, that require focused attention to improve long-term financial health. The report emphasizes the critical role of financial statements in assessing organizational performance and guiding strategic decision-making.

Managing financial
resources in
Hospitality industry

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
Question 1: Describe GAAP principles and identify the users of financial statements along
with their needs for taking decisions...........................................................................................3
Question 2: Elaborate which financial statement is of most interest to the following persons.. 4
Question 3: Discuss the components of supplement of annual report. Also discuss financial
reporting concept.........................................................................................................................5
Question 4: Evaluate the performance of Smart Resort Ltd.......................................................6
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Management of monetary resources determined as a monitoring and controlling issues
related to finance and also evaluating the specific performance of company with a motive of
increasing its profitability. It is very critical concept as it is impossible to correctly interpret the
environmental situations and also impactfull to generalize its impact on the internal operations
and activities of the organization. It is determined that there are various species measures that
can useful in order to manage the money factor for the organization like framing budget,
analyzing and evaluating the recent position of organisation and preparing a well proof policy for
the recovery and payment of debts. There are few specific rules and regulations which can useful
to maintain the performance of the company and also enhance the documentation in order to
prepare the records. The main concern of this assessment is to utilize the specific parameter in
order to identify the impact of financial resources in the hospitality industry (Lee, Hwang and
Kang, 2020). The primary motive of this assessment is to focus on Smart Resort Ltd. This report
will discuss about accounting principles & specific needs of the users in context of financial
statements. Moreover, this report evaluates the various creditors through specific components of
the financial statements. Lastly, this assessment will analyze the performance of the selected
organization through comparison with the rations of the last two years.
MAIN BODY
Question 1: GAAP principles and users of financial statements
Generally accepted accounting principles are popularly known as the GAAP. It is determined
that GAAP can helpful to provide the details and appropriate information about the structure or
the transaction in the accounting books. GAAP can helpful to set few standard and also
procedure which are mandatory followed by the organizations on a specific time period. In
United Kingdom , all the specific companies which are listed in a structured manner can adopt
and implement these principles of the IFRSs.
Companies have the option of using GAAP or IFRS codes. It gives a thorough description of the
financial company. These standards contain all of the rules pertaining to assets, liabilities, and

their valuation. There is also specific information about the company's management of intangible
and fake resources. It is analyzed that the importance of the GAAP principles are more which
can useful to maintain the effectiveness of the business. The GAAP principles can helpful to
provide information on how to adjust specific and certain expenditures and incomes. It also
informs of the things that are liable to tax reductions (Weygandt and et. al., 2019).
The GAAP codes, too deals with the behaviour of sincerity, regularity, consistency,
prudence and continuity. It expects that the company must apply all these attributes while
regulating and maintaining its accounts. All these reports are used by various stakeholders for
checking out the position of the company.
There are number of users of financial statements which demands various things for taking their
decisions. These are as follows:
 Company Management- They wants to collect information about the liquidity and
profitability of business. So they are interested in complete financial statement
(Clikeman, 2019).
 Competitors- It is determined that manager need to enhance their interest in the records
of company for framing strategy for their own organization framework. By looking at
statements of competitor organizations, some specific organisations collect information
about the financial structure of company and tries to find out the manner through which
the organization can excelled in its performance.
 Employees- These workers are mostly concerned with getting bonuses. They also want
to know that the company will be able to pay employees regular salary and offer them
with suitable workplace conditions.
 Government - The government is interested in corporate accounts because it wants to
know how much tax it will have to pay.
 Investors—anyone who invests money in a company is interested in learning about the
company's dividend declaration. They want to know if it is profitable enough to provide a
return on investment.

 Lenders- These persons have to provide supply on credit to the company. They also give
loans to them. So, before providing them with this facility, the lenders are interested in
knowing that whether the company is able to repay its debt or not. They look at the cash
flows statement & accounts payable ratio of the company for taking their decision (Lev,
2019).
From the above discussion, it can be determined that stakeholders are considered as fgw
prominent part of the company. It is necessary for the business to pay more attention on their
financial statements and gather financial information in order to prepare a financial records.
Question 2: financial statement
There are three kind of financial reports that are crucial for the organization. It is
necessary for the financial manager to collect financial information in an appropriate manner.
There are various segments are included in financial statements like income statement, cash flow
statement, trading account, Profit and loss account and balance sheet. Financial statements can
provides detailed data and information about the summarized transactions mentioned in above
three reports.
(a) Loan Creditor – It is curious as to whether or not the company will be able to repay its debt
on time. It wishes to verify their reputation risk analysis profitability, cash flows, & liquidity
position for this purpose. It is indeed curious about the company's ongoing operations. The cash
flow statement can provide all of this information. Creditors might gather all information about
the money accessible to the firm from customers. This will help them figure out just how much
cash the company has on hand as well as how the money is being spent (Palacios-Manzano,
Gras-Gil and Santos-Jaen, 2021).
(b) Trade Creditor – These are individuals that provide things to businesses on a faith basis
without expecting money right away. For this, creditors must mean that the organization can
repay the loans in a short period of time and that there is no business default. Accountants do this
by examining at the balance sheet as well as the receivable turnover ratio, which contain all of
the pertinent data.

Question 3: components of supplement of annual report
The annual reports of the business are the picture of their position and performance on
the whole accounting year. There are five components of this report that provide complete
financial knowledge of organisation.
 The balance sheet is made up of the commodities, obligations, & capital balances. By
making a comparison to those of the previous year, the company was able to assess its
success (Retolaza and San-Jose, 2020).
 The profit and loss statement is a summary of all the current year's expenses and incomes.
This aids in determining the profitability ratios.
 The cash flow statement is considered as a summary of all monetary inflows and
outflows. It aids in determining where and how much money is spent.
 Changes in Equity is considered as the comprehensive summary as to how much money
investors have put into the company and how the capital structure is changing.
 Notes to financial statements is work like a section provides information on all of the
points mentioned in the financial report.
Financial reporting can be described as the procedure of compiling an annual financial
performance. This is used to disclose all of the company's information to numerous external
parties who really are concerned in the financial statement. These are created periodically and
annually to assess results and identify tax liability for a certain time period. These aid managers
in making various selections as well. These reports are also used by investors and banks to
evaluate to choose whether or not participate (Ho, 2018).
It is necessary for businesses to keep their records in accordance with GAAP or IFRS
requirements. All of these codes provide guidance to businesses on how to prepare reports and
the veracity of the statements they make. In complement to complete disclosure, organisations
must ensure that they disclose all relevant data in their reports. There must be no instances of
content change or concealment in them.

Question 4: Evaluate the performance of Smart Resort Ltd.
Accounting ratios helps in creating relation among various value of balance sheet and
income statement (Kieso and et. al., 2019). Through this, the stakeholders of business, analyse
the performance and take their decisions.

(b) Report on the Performance of Smart Resort Ltd.
Viewing at the overall condition, the company is performing well. But when compared
to its position in previous year, it can be stated that firm is not performing up to the mark. The
profits of the company have increased but when comparing them with sales, they are following a
reducing trend. Even when the interest to be paid on long term debt has been decreased, the net

gain margin has decreased. Return on Assets and equity has also decreased. The performance
was good in year 2018 with 6 % and 15% respectively, but is diminished in 2019.
Smart's liquidity situation is poor, and it has gotten worse over time. The ratio reflects
that the corporation can pay off all of its short-term debts and still have some assets after doing
so. However, it is evident from the quick ratio that inventory makes up the majority of current
assets, but if that factor is removed, the smart resort would only be able to service its creditors to
the tune of 50 to 60%. This demonstrates the company's bad liquidity status. On the other hand,
the business earnings are expanding. Its operating profit is sufficient to cover the interest
payments. It's possible that the increase from 12 to 18% is related to a reduction in debt. The
business's inventory turnover ratio is likewise increasing, indicating that resort sales are
increasing.
Thus, as a whole the performance of company is not bad. There are some points on which
it requires to give some attention like focussing more on recovering from assets.
CONCLUSION
According to this report it is concluded that, the importance of financial statement is more
because it can be useful to generalize the entire financial performance of the organization and
also maintained the effectiveness of the company in an appropriate way. There are various
statement are involved in the financial statements ventures income statement, profit and loss
statement, balance sheet. Importance of each and every statement is more in order to maintain
the financial position of the organization at the marketplace. This report discuss about the Paris
principles related with the GAAP which is considered as the most specific concept which can
useful to maintain the financial performance of the organization.

REFERENCES
Books and Journals
Clikeman, P.M., 2019. Called to Account: Financial frauds that shaped the accounting
profession. Routledge.
Ho, A.T.K., 2018. From performance budgeting to performance budget management: theory and
practice. Public Administration Review. 78(5). pp.748-758.
Kieso, D.E. and et. al., 2019. Intermediate Accounting, Volume 1. John Wiley & Sons.
Lee, M.J., Hwang, I.T. and Kang, S.M., 2020. The Effect of Forward‐looking Criteria and IFRS
on the Informativeness of Banks’ Loan Loss Allowances: Evidence from
Korea. Australian Accounting Review. 30(2). pp.85-104.
Lev, B., 2019. Ending the accounting-for-intangibles status quo. European Accounting
Review. 28(4). pp.713-736.
Palacios-Manzano, M., Gras-Gil, E. and Santos-Jaen, J.M., 2021. Corporate social responsibility
and its effect on earnings management: an empirical research on Spanish firms. Total
Quality Management & Business Excellence. 32(7-8). pp.921-937.
Retolaza, J.L. and San-Jose, L., 2020. Stakeholder Accounting for Sustainability Applied to
Nonfinancial Information in Banking. Handbook on Ethics in Finance, pp.1-22.
Weygandt, J.J. and et. al., 2019. Accounting Principles, Volume 2. John Wiley & Sons.