Case study
BIZ201_Assessment 3 Brief_M3_Case Study Page 1 of 10 ASSESSMENT BRIEF Subject Code and Title BIZ201 Accounting for Decision Making Assessment Case Study Part A Individual/Group Individual Length 1500 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 BIZ201_Assessment 3 Brief_M3_Case Study Page 2 of 10 Crystal Hotel Case Study 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hotel is located in a very popular location and close proximity to a river and the city centre, it is becoming quite outdated. 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. BIZ201_Assessment 3 Brief_M3_Case Study Page 3 of 10 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 2018 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 2018 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 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. BIZ201_Assessment 3 Brief_M3_Case Study Page 4 of 10 Appendix – Industry Data Table 1 Vertical Analysis of Statement of Profit and Loss based on Number of Rooms BIZ201_Assessment 3 Brief_M3_Case Study Page 5 of 10 Appendix – Industry Data Table 2 Vertical Analysis of Statement of Profit and Loss based on Average Room Price Range BIZ201_Assessment3 Brief_M3_Case Study 20190626 Page 6 of 10 Learning Rubric: Assessment 3 Assessment Attributes Fail (Unacceptable) 0 - 49 Pass (Functional) 50 - 64 Credit (Proficient) 65 - 74 Distinction (Advanced) 75 - 84 High Distinction (Exceptional) 85 - 100 Grade Description (Grading Scheme) High Distinction is 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. 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. http://www.tua.edu.au/media/50742/a240_grading-scheme.pdf BIZ201_Assessment3 Brief_M3_Case Study 20190626 Page 7 of 10 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