Reference no: EM131556724 , Length: word count:1500

Introduction to Business Accounting Assessment - Case Study

Learning outcomes addressed -

• Identify and apply relevant accounting concepts to simple business scenarios
• Interpret the information contained in general purpose financial statements, its usefulness to various user groups and in business decision making

Rose Garden Hotel Case Study

Rose Garden Hotel Pty Ltd is a privately owned 3.5 stars hotel located in Fortitude Valley in Brisbane. The Hotel consists of 160 rooms with maximum capacity of 350 guests, a Restaurant with capacity of 150 guests, a Function room with maximum capacity of 250 guests and a Conference room with maximum capacity of 200 guests. The average price per room per night is $148.

While the hotel is located in a very popular location and close proximity to the Brisbane River and the city centre, it is becoming quite out-dated. The owners rely heavily on their corporate clientele. Clients usually use the hotel for their expat employees. Due to long term contracts they pay on credit with invoices being issued at the end of each month. The hotel is often faced with outstanding invoices. The owners have so far tolerated it as it usually occurs with their long term clients. Additionally to the accommodation services, they often use hotel facilities for their functions and conferences.

The hotel is constantly having difficulties retaining a good quality staff as they always get junior personnel, which once gaining experience will usually leave for better opportunities in hotels with higher ratings. The biggest issue is to retain a high quality personnel in the hotel restaurant, especially a chef.

The owners would like to increase the hotel star rating by renovating or refurbishing the hotel and improving their services. They are thinking about building a Wellness Centre on the rooftop of the hotel, which would include a massage treatment room, gym, spa, sauna and an outdoor pool.

As new plans will require quite extensive capital investment, the owners would like to know where they stand financially before making any major decisions. You have been appointed to analyse their financial statements and to give them an insight on which areas should be improved and analysed further.

You are expected to conduct the financial statement analysis in Excel and then use your findings in creating a business report to be submitted to the client.

REQUIRED:

PART 1 - to be done in Excel

1. Conduct Vertical Analysis of the Rose Garden Hotel Balance Sheet as at 30 June 2016 using the Case Study Excel Workbook - Vertical Analysis Balance Sheet worksheet.

2. Conduct Vertical Analysis of the Rose Garden Hotel Income Statement for the year ending 30 June 2016 using - Vertical Analysis Income Statement worksheet.

3. Conduct Ratio Analysis using Ratio Analysis worksheet.

PART 2 - to be included in the Business report

4. Using the Income Statement Vertical Analysis prepared in Excel, conduct Income

Statement comparative analysis to the industry benchmarks included in Table 1 and Table 2 of the Appendix. As 2016 figures have not been published yet, conduct the comparison to the industry values from 2015.

Comment on how the business is performing comparing to the industry. Include comments on Revenue, Cost of sales (excluding personnel costs), Personnel costs, unallocated Operating Costs and Total Costs proportions.

Based on the results of your comparative analysis, make recommendations on areas needing an improvement or further investigation.

5. Using the results of the Ratio Analysis in Excel, comment on Profitability,

Efficiency, Liquidity and Solvency of the business. With reference to the industry data provided, make recommendations when appropriate.

6. There are additional industry specific performance indicators and benchmarks that the hotel could use when comparing itself to the industry. Conduct a research and recommend 3 additional industry specific benchmarks the hotel could use in their comparative analysis. Include a brief explanation of each benchmark you are recommending including formulas when appropriate.

Attachment:- Assignment Files.rar