ASSESSMENT BRIEF
Subject Code and Title BIZ201 Accounting for Decision Making
Assessment Case Study Part A
Individual/Group Individual
Length 1,500 words
Learning Outcomes b) Apply relevant accounting concepts to simple business scenarios.
c) Interpret and analyse the information contained in general purpose financial statements, to evaluate the overall financial position and performance of a business.
Submission By 11:55 pm AEST/AEDT Sunday of Module 4 (Week 8)
Weighting 30%
Total Marks 100 marks
Context:
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
Crystal Hotel Pty Ltd is a privately owned 3.5 stars hotel located in Parramatta CBD 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 and close proximity to a 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 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 workbook and then use your findings in creating a business report to be submitted to the client.
Required:
Part 1 – to be done in Excel Workbook
This Excel Workbook is available on Blackboard under assessment section. Download it, perform calculations on it and submit it.
1. Vertical analysis of financial statements:
a. Conduct Vertical Analysis of Crystal Hotel’s Statement of Financial Position as at 30 June 2015 using the Vertical Analysis SOFP worksheet. Round your numerical answers to two decimal places.
b. Conduct Vertical Analysis of Crystal Hotel’s Statement of Profit and Loss for the year ended 30 June 2015 using Vertical Analysis P&L worksheet. Round your numerical answers to two decimal places.
2. Conduct Ratio Analysis using Ratio Analysis worksheet. Round your numerical answers to two decimal places.
Part 2 – to be included in the 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 comparing to the industry.
Include comments on Revenue, Cost of sales (excluding personnel costs), Personnel costs, unallocated Operating costs and Total costs proportions.
Make recommendations on areas which 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.
Appendix – Industry Data
Table 1 Vertical Analysis of Statement of Profit and Loss based on Number of Rooms
Table 2 Vertical Analysis of Statement of Profit and Loss based on Average Room Price Range
Learning Rubric: Assessment 3
Assessment Attributes Fail
(Unacceptable) Pass (Functional) Credit (Proficient) Distinction (Advanced) High Distinction (Exceptional)
Grade
Description
(Grading Scheme)
Fail grade will be awarded if a student is unable to demonstrate satisfactory academic performance in the subject or has failed to complete required assessment points in accordance with the subject’s required assessment points. Pass is awarded for work showing a satisfactory achievement of all learning outcomes and an adequate understanding of theory and application of skills. A consistent academic referencing system is used and sources are appropriately acknowledged. Credit is awarded for work showing a more than satisfactory achievement of all learning outcomes and a more than adequate understanding of theory and application of skills. A consistent academic referencing system is used and sources are appropriately acknowledged. Distinction is awarded for work of superior quality in achieving all learning outcomes and a superior integration and understanding of theory and application of skills. Evidence of in-depth research, reading, analysis and evaluation is
demonstrated. A consistent academic referencing system is used and sources are appropriately acknowledged. High Distinction is awarded for work of outstanding quality in achieving all learning outcomes together with outstanding integration and understanding of theory and application of
skills. Evidence of in-depth research, reading, analysis, original and creative thought is demonstrated. A consistent academic referencing system is used and sources are appropriately acknowledged.
Application of Vertical
analysis of financial statements
SLO Addressed:
c) Interpret and analyse the information contained in general
purpose financial Demonstrates no
application of vertical analysis of Balance Sheet and Income Statement. Excel formulas are not used for calculation. Demonstrates limited application of vertical analysis of Balance Sheet and Income Statement. Few correct Excel formulas are used for calculation. Demonstrates consistent application of vertical analysis of Balance Sheet and Income Statement. Not all Excel formulas used for calculation are correct. Demonstrates an advanced application of vertical analysis of Balance Sheet and Income Statement. Most Excel formulas used for calculation are correct. Consistently demonstrates an advanced application of vertical analysis of Balance
Sheet and Income Statement. All Excel formulas used for calculation are correct.
statements, to evaluate the overall financial position and performance of a business.
22%
Calculation of appropriate financial
ratios
SLO Addressed:
c) Interpret and analyse the information contained in general purpose financial statements, to evaluate the overall financial position and performance of a business.
16% Demonstrates no evidence of use excel formulas and relevant worksheets to calculate appropriate ratios. Demonstrates limited evidence of use excel formulas and relevant worksheets to calculate appropriate ratios. Demonstrates consistent evidence of use excel formulas and relevant worksheets to calculate appropriate ratios. Demonstrates an advanced evidence of use excel formulas and relevant worksheets to calculate appropriate ratios. Consistently demonstrates an advanced evidence of use excel formulas and relevant worksheets to calculate appropriate ratios.
Comparison of Vertical analysis of financial statements calculations with industry values including comments on
various types of costs
No understanding of use Vertical Analysis of financial statements calculations prepared in Excel for comparison to industry values provided in the Appendix. Limited understanding of use Vertical Analysis of financial statements calculations prepared in Excel for comparison to industry values provided in the Appendix. Demonstrates consistent understanding of use Vertical Analysis of financial statements calculations prepared in Excel for comparison to industry values provided in the Appendix. Well demonstrated understanding of use
Vertical Analysis of financial statements calculations prepared in Excel for comparison to industry values provided in the Excellent demonstrated understanding of use
Vertical Analysis of financial statements calculations prepared in Excel for comparison to industry values provided in the
SLO addressed:
b) Apply relevant accounting concepts to simple business scenarios.
c) Interpret and analyse the information contained in general purpose financial statements, to evaluate the overall financial position and performance of a business.
23% No comments on Revenue,
Cost of Sales, Personnel
Costs, Unallocated
Operating Costs and Total Costs proportions. Limited comments on
Revenue, Cost of Sales,
Personnel Costs,
Unallocated Operating Costs and Total Costs proportions. Some comments on Revenue,
Cost of Sales, Personnel Costs, Unallocated Operating Costs and Total Costs proportions. Appendix.
Good comments on
Revenue, Cost of Sales,
Personnel Costs,
Unallocated Operating Costs and Total Costs proportions. Appendix.
Well commented on
Revenue, Cost of Sales,
Personnel Costs,
Unallocated Operating Costs and Total Costs proportions.
Understanding of
Profitability, Efficiency, Liquidity and Solvency of the business using ratio analysis with reference to industry data
SLO addressed:
b) Apply relevant accounting concepts to simple business scenarios.
c) Interpret and No use of ratio analysis to
demonstrate the understanding of
Profitability, Efficiency, Liquidity and Solvency of the business. No reference
to industry data is provided. Limited use of ratio analysis
to demonstrate the understanding of
Profitability, Efficiency, Liquidity and Solvency of the business. Limited comments were made with reference to industry data provided. Well-developed use of ratio analysis to demonstrate the understanding of Profitability, Efficiency, Liquidity and Solvency of the business. Some comments are made with reference to industry data provided. Thoroughly developed understanding of
Profitability, Efficiency, Liquidity and Solvency of the business by using ratio analysis. Good comments were made with reference to industry data provided. Highly developed understanding of
Profitability, Efficiency, Liquidity and Solvency of the business by using ratio analysis. Recommendations are clearly justified based on reference to industry data provided.
analyse the information contained in general purpose financial statements, to evaluate the overall financial position and performance of a business.
23%
Application of own research to further develop comparative
analysis of hotel
SLO addressed:
b) Apply relevant accounting concepts to simple business scenarios.
c) Interpret and analyse the information contained in general
purpose financial statements, to evaluate the overall financial position and No evidence of own research to provide examples of three industry specific benchmarks the hotel could use for further comparative analysis. No explanation of any benchmark including formulas is provided. Limited evidence of own research to provide examples of three industry specific benchmarks the hotel could use for further comparative analysis. Limited explanation of any benchmark including formulas is provided. Consistent evidence of own research to provide examples of three industry specific benchmarks the hotel could use for further comparative analysis. Consistent explanation of each benchmark including formulas is provided. Demonstrates an advanced evidence of own research to provide examples of three industry specific benchmarks the hotel could use for further comparative analysis. Well-developed explanation of each benchmark including formulas is provided. Highly sophisticated evidence of own research to provide examples of three industry specific benchmarks the hotel could use for further comparative analysis. Thoroughly developed explanation of each benchmark including formulas is provided.
performance of a business.
10%
Correct citation of key
resources and evidence
Overall structure, appearance and referencing of the
report are assessed
6% Demonstrates inconsistent use of good quality, credible and relevant resources to support and develop ideas. Demonstrates use of credible and relevant resources to support and develop ideas, but these are not always explicit or well developed. Demonstrates use of high quality, credible and relevant resources to support and develop ideas. Demonstrates use of good quality, credible and relevant resources to support and develop arguments and statements. Shows evidence of wide scope within the organisation for sourcing evidence. Demonstrates use of highquality, credible and relevant resources to support and develop arguments and position statements. Shows evidence of wide scope within and without the organisation for sourcing evidence.
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