This assessment is aimed at consolidating knowledge from Modules 1-3. By prescribing this assessment, you are able to reflect on the understanding of accounting concepts and be able to apply them to business scenarios like given in this case study.
Instructions: 1. The case study below presents a business scenario. Answer questions in Part 1 and 2 at the end of this case study. 2. Submit two files; Excel Workbook and the Business Report. 3. For calculation questions show all workings through appropriate Excel formulas. Copy pasted numbers without appropriate Excel formulas will not be accepted. 4. Submit your assessment files using the following naming convention: First Name_Last Name_BIZ201_Case_Study A_Assessment3_Workbook.xlsx First Name_Last Name_BIZ201_Case_Study A_Assessment3_Report.doc
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Crystal Hotel Pty Ltd is a privately owned 3.5 stars hotel located in Sydney. 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 $150.
While the hotel is located in a very popular location, close proximity to a river and in 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 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 an Excel workbook and then use your findings in creating a business report to be submitted to the client.
Crystal Hotel Case Study
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Part 1 – Excel Workbook Calculations
This Excel Workbook is available on learning portal under assessment section. You will find 6 worksheets within the file. The first 3 contain financial information about the hotel. The final 3 worksheets are for you to complete calculations. All answers to be rounded to 2 decimal places. You must submit the completed Excel Workbook, Business Report and presentation materials.
1. Vertical Analysis:
a. Conduct a Vertical Analysis of Crystal Hotel’s Statement of Profit and Loss for the year ended 30 June 2018 using Vertical Analysis P&L worksheet.
b. Conduct a Vertical Analysis of Crystal Hotel’s Statement of Financial Position as at 30 June 2018 using the Vertical Analysis SOFP worksheet.
2. Ratio Analysis: Conduct a Ratio Analysis using Ratio Analysis worksheet.
Part 2 – Business Report
3. Using the Income Statement Vertical Analysis prepared in Excel workbook, conduct Income Statement comparative analysis to the industry benchmarks included in Table 1 and Table 2 of the Appendix.
Comment on:
• How the business is performing compared to industry • Revenue • Cost of sales • Personnel costs • Unallocated Operating costs and • Total costs proportions
Make recommendations on areas that need improvements or further investigation, based on the results of your comparative analysis.
4. Using the results of the Ratio Analysis in Excel workbook, comment on Profitability, Efficiency, Liquidity and Solvency of the business. With reference to the industry data provided, make recommendations where appropriate.
5. 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 formula where appropriate.
See the Report Format section for guidance on the report structure.
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Part 3 – Presentation
In this section you must communicate by presenting your findings to the owners. Prepare a short 5-10 minute summary of the main findings of your report. It should specifically focus on:
• Your analysis of the current financial status of the hotel • Your recommendations for the hotel based on your financial analysis
As the future of the hotel is at stake, the owners are likely to ask questions about your analysis and recommendations. Ensure that you are prepared to defend your arguments and address any concerns.
Although the financial calculations and business report are individual items, if you have reached similar conclusions, you may undertake this section of the assessment in pairs.
Face to Face On-campus Students This section of the assessment will take place in class in Week 10 of the trimester. Failure to attend will result in ‘0’ grade for this section of the assessment.
Online Students This section of the assessment will take place during Week 10 of the trimester via a synchronous online session with your Facilitator. You may also submit this section via a pre-recorded video. Failure to attend will result in ‘0’ grade for this section of the assessment.
Submission Instructions
All students must submit via the learning portal the following:
• Completed Excel Workbook containing calculations • Business Report • Presentation materials e.g. PowerPoint Slides