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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 1,500...

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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 1,500 words
Learning Outcomes b) Apply relevant accounting concepts to simple
usiness 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 your understanding of accounting concepts and be
able to apply them to business scenarios like given in this case study.
Instructions:
1. This assignment must be prepared and submitted individually, the work you submit
must be your own.
2. Two files have to be submitted, Excel Worksheet together with the Business Report.
3. You should include a reference list for any textbooks, websites or other references you
use to prepare your answers. Apart from the reference list at the end of the report, use
in text referencing whenever appropriate.
4. For all questions you are required to show all workings. When calculating in Excel,
appropriate Excel formulas will need to be shown. Copy pasted numbers with no
workings provided are not acceptable.
5. Unless otherwise instructed, round your numerical answers to two decimal places.
6. 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 Pty Ltd is a privately owned 3.5 stars hotel located in Paramatta 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 $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 high quality personnel in the hotel restaurant, especially
a chef.
The owners would like to increase the hotel star rating by renovating or refu
ishing 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.
Crystal Hotel Case Study
BIZ201_Assessment 3 Brief_M3_Case Study Page 3 of 10

REQUIRED:
PART 1 – to be done in Excel
1. Vertical analysis of financial statements:
a. Conduct Vertical Analysis of the Crystal Hotel Balance Sheet using the Case Study
Excel Workbook. The workbook is attached under Assessment Information section
(AU - Crystal Hotel Case Study Workbook Part A student.xlsx). Open the Vertical
Analysis Balance Sheet worksheet.
. Conduct Vertical Analysis of the Crystal Hotel Income Statement for the year ending
30 June 2015 using – Vertical Analysis Income Statement worksheet of the same
workbook (AU - Crystal Hotel Case Study Workbook Part A student.xlsx).
2. Conduct Ratio Analysis using Ratio Analysis worksheet of the same workbook (AU - Crystal
Hotel Case Study Workbook Part A student.xlsx).
PART 2 – to be included in the Business report
3. 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.
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.
4. 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
ecommendations when 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
ief explanation of each benchmark you are recommending including formulas
when appropriate.
BIZ201_Assessment 3 Brief_M3_Case Study Page 4 of 10

Appendix – Industry Data
Table 1 Profit and Loss per Number of Rooms
BIZ201_Assessment 3 Brief_M3_Case Study Page 5 of 10

Table 2 Profit and Loss based on average Room Price Range
BIZ201_Assessment3 Brief_M3_Case Study Page 6 of 10

Learning Ru
ic: 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)
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
eferencing 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
eferencing 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
esearch, reading,
analysis and evaluation is
demonstrated. A
consistent academic
eferencing 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
eferencing 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
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
co
ect 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 co
ect.
Demonstrates an advanced
application of vertical
analysis of Balance Sheet
and Income Statement.
Most Excel formulas used
for calculation are co
ect.
Consistently demonstrates
an advanced application of
vertical analysis of Balance
Sheet and Income
Statement. All Excel
formulas used for
calculation are co
ect.
http:
www.tua.edu.au/media/50742/a240_grading-scheme.pdf

BIZ201_Assessment3 Brief_M3_Case Study Page 7 of 10

financial
statements, to
evaluate the
overall
financial
position and
performance
of a business.


22%
Calculation of
appropriate financial
atios

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
elevant worksheets to
calculate appropriate
atios.
Comparison of Vertical
analysis of financial
statements calculations
No understanding of use
Vertical Analysis of
financial statements
Limited understanding of
use Vertical Analysis of
financial statements
Demonstrates consistent
understanding of use Vertical
Analysis of financial
Well demonstrated
understanding of use
Vertical Analysis of financial
Excellent demonstrated
understanding of use
Vertical Analysis of financial
BIZ201_Assessment3 Brief_M3_Case Study Page 8 of 10

with industry values
including comments on
various types of costs

SLO addressed:
) Apply relevant
accounting
concepts to
simple
usiness
Answered Same Day Apr 12, 2020 BIZ201

Solution

Shakeel answered on Apr 15 2020
146 Votes
Income statement comparative analysis to the industry benchmark
Vertical analysis, each and every component of Income statement is measured in percentage term of total revenue like how much cost of goods sold is as a percentage of revenue or how much General & Administrative expenses are as a percentage of revenue and so on. The vertical analysis of Income statement ended on 30th June 2015 is compared to Industry’s benchmark of the same year so the company’s earnings performance can be compared to Industry’s average performance.
For any kind of hotel, rooms’ engagement and food & beverages are two major sources of income. From the vertical analysis income statement of Crystal Hotel Pty ltd, it is observed that the rooms’ revenue is around 61.88% of total revenue while for industry, this is 57%. Therefore, Cristal Hotel has performed well in generating the revenue from rooms. Food and Beverage revenue is 14.46% for Crystal Hotel while for Industry it is 32%. Therefore, in the case of food & beverage, Crystal hotel is underperforming than Industry.
The cost of sales i.e. expenditures on rooms’ engagement and food & beverages are analyzed and it is found that rooms cost of sales is 13.04% of total revenue against industry’s average of 8% while Food & beverage cost of sales is 12.47% of total revenue against 10% of industry’s total revenue. Thus, Crystal hotel spends more on cost of sales than Industry’s average
Apart from major operational cost, personal costs are also incu
ed in the hotel industry. These costs are supportive costs that support the major functions mainly attributed to revenue. For Crystal hotel, it is 25.38% of total revenue while for Industry, it is 33%. Therefore, Crystal hotel is saving more than Industry on the front of personal costs. If we further
eakdown the component of personal costs, expenditure on rooms and food & beverages both are around 7% for Crystal Hotel while for Industry, it is 7% for rooms and 10% for beverages. Expenditures on administration, sales and marketing and property management and maintenance are almost same for both Crystal hotel and Industry.
Undistributed operating costs are 18.33% of revenue for Crystal hotel while it is 15% for Industry.
As far as profitability position is concerned, the gross profit is 72.41%, operating profit is 28.72% and net income is 19.53% for Crystal hotel. For Industry, gross profit is 81%, operating profit is 33% and net income is 32%. Thus, the profitability position of Crystal hotel is weaker than Industry.
Therefore, two major costs - cost of sales and undistributed operating costs are higher than Industry’s average and thus, Crystal Hotel needs to effectively manage and reduce it. The rest of the costs are well managed.
Ratio Analysis
Following table shows the key ratios of Crystal Hotel in comparison to Industry.
    Profitability Ratios
    2015
    Industry
    Gross Profit Margin
    72.41%
    81%
    Net Profit Margin
    19.53%
    11%
    Return on Assets
    21.23%
    8%
    Return on Equity
    28.84%
    9%
    Efficiency...
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