Comparative Financial Comparative Financial Analysis of THE PARK Analysis of THE PARK HotelsHotels

OBJECTIVESTo know the financial position of the organization.To know the management decision making policy.To get the information about earning potential of this enterprise.To know the capability of payment of interest or dividend analysis.To know the trends of business, which helps us in as ascertaining whether the business is progressive or not.To find out the shortcoming of business.The important objective is comparative financial analysis.

RESEARCH METHODOLOGYRESEARCH METHODOLOGY

METHODS OF DATA COLLECTION Annual reports of THE PARK Some information has been collected through formal as well as informal

discussion with various department heads

LIMITATIONS The data collected by interviewing may not necessary be correct as there

may be managerial secrets and to hide this the personnel may give wrong information.

The hoteliers were found to be reluctant to provide all the information

regarding financial aspects of the hotel. The technical aspect is usually not discussed and may not have been

dealt with. Certain facts and figures are likely to change owning to the time lag

between the collection stage and presentation stage. 

DATA ANALYSISDATA ANALYSISRatio Analysis is an analytical

technique of interpreting financial statements. These are the quantitative relationships between two figures for their comparative analysis.

Ratios simplify and summarize a long array of accounting data to provide useful information regarding the liquidity, solvency, profitability etc.

Classification of Classification of Ratios:-Ratios:-Liquidity RatiosSolvency RatiosTurnover RatiosProfitability Ratios

FINDINGSFINDINGS According to the industry standards current ratio of

the company remains very high every year. It may be due to piling up of inventory, inefficiency in collection of debtors, high balances in cash and bank accounts without proper investment etc.

THE PARK is maintaining a high liquid ratio which is a very good indication of short term financial position of a company.

Assets turnover ratio is increasing which means there is optimum-utilization of fixed assets in THE PARK.

Working capital turnover ratio is increasing which indicates that the working capital has been efficiently utilized.

Proprietary ratio is more than 50% in all the years which means it provides safety to the creditors.

Fixed Asset Ratio shows that the firm has invested their funds properly.

Net margin indicates increase in the overall efficiency and profitability of the business.

Gross margin is increasing which is good for the company.

Operating expense ratio is decreasing which is favorable for the firm as it will leave a enough amount of operating income to meet interests, dividends etc.

Return on equity shows return on shareholders’ fund is increasing year by year.

ROI is increasing year after year which shows the earning power of the net assets of the business is increasing.

SUGGESTIONSSUGGESTIONS THE PARK as it was operating few years back

is now in a different world of competition. There are so many good players which are eating its market share slowly. There is only one way to gain or even retain its current market share is to be more innovative.

It is the right time to cut down the employees force by giving them voluntary retirement or by any other method and give chance to young ones.

In order to increase profits THE PARK should consider cost cutting especially as it spends 1/3rd of its earnings on its employees and 1/5th on the Administration expenses.

 

THE PARK should fasten up its collection from its customers. It has come out with some good schemes like Advance payment of Bill and it is offering 5% interest on the advance deposited with it by the customers.

It needs few more schemes which could motivate the customers to pay early or even in time.

THE PARK should increase the amount of spending on its long term and fixed assets which will help it in providing better services thereby increasing its market share.