Economic variables and indicators are the support of the company's accounting and are the basis of the valuation criteria, so they must be perfectly defined and in some countries they are backed by legal provisions.
Hotel beautiful palm trees
Comparative balance sheet
Year 2003 AND 2004
|
Current Assets |
2003 |
2004 |
|
Cash |
37,000.00 |
54,000.00 |
|
Accounts receivable |
26,000.00 |
68,000.00 |
|
Expenses paid in advance |
6,000.00 |
4,000.00 |
|
Inventories |
----- |
54,000.00 |
|
Total Current Assets |
$ 69,000.00 |
$ 180,000.00 |
|
Fixed Assets |
2003 |
2004 |
|
Ground |
70,000.00 |
45,000.00 |
|
Building |
200,000.00 |
200,000.00 |
|
Accumulated Building Depreciation |
11,000.00 |
21,000.00 |
|
Teams |
68,000.00 |
193,000.00 |
|
Accumulated Depreciation of Equipment |
10,000.00 |
28,000.00 |
|
Total Fixed Assets |
$ 317,000.00 |
389,000.00 |
|
Total Assets |
$ 386,000.00 |
569,000.00 |
|
Liabilities and capital Current Liabilities |
2003 |
2004 |
|
Debts to pay |
$ 40,000.00 |
33,000.00 |
|
Total Current Liabilities |
$ 40,000.00 |
33,000.00 |
|
|
|
Long-term liabilities |
||
|
Mortgage Bonds Payable |
$ 150,000.00 |
110,000.00 |
|
Total Long-Term Liabilities |
150,000.00 |
10,000.00 |
|
Total Liability |
$ 190,000.00 |
$ 143,000.00 |
|
Capital or Equity |
||
|
Issued and Outstanding Capital |
60,000.00 |
220,000.00 |
|
Retained earnings |
136,000.00 |
206,000.00 |
|
Total Equity or Capital |
$ 196,000.00 |
$ 426,000.00 |
|
Total Taxable Liabilities and Equity or Capital |
$ 386,000.00 |
569,000.00 |
At the Hotel Bellas Palmeras, we will analyze the Income Statement, year ended December 31, 2003.
|
Net sales |
$ 810,000.00 |
|
Cost of merchandise sold |
$ 465,000.00 |
|
Gross profit |
$ 425,000.00 |
|
Operating costs |
221,000.00 |
|
Income from operations |
$ 204,000.00 |
|
Extraordinary expenses |
|
|
Interest expense |
2002 2004 $ 12,000.00 |
|
Loss on Equipment Sales |
2,000.00 14,000.00 |
Operating include Depreciation for $ 33,000.00., The Hotel declared and paid in cash the dividends corresponding to the year 2004, there was an investment of $ 166,000.00 in the purchase of equipment for the Fixed Assets, Equipment that had limited use in production was sold for $ 34,000.00, the Hotel purchased bonds payable that decreased the Long-Term Debt contracted with the Bond Holders, this Hotel issued and subscribed in Capital Stock Cash according to Comparative Balance Sheet.
Summary graphics:
Liabilities and Capital 2003
Liabilities and Capital 2004
Within the economic analyzes to measure the economic effectiveness of the hotel we have:
Liquidity Ratios:
These reasons measure the Company's ability to meet its obligations. Through the results offered by these Reasons, they will allow the Company to diagnose the possibility of being able to meet its short-term obligations.
For which I calculated the following:
1 / General Liquidity = Current Assets
Current Liabilities
If its value is between 1.5 to 1.9, it is correct.
If its value is less than 1.5, there is danger of Suspension of Payments.
If its value is greater than 2, there is the possibility of having idle means.
In 2002 In 2004
= 69,000.00 = 180,000.00
40,000.00 33,000.00
= 1.7 times = 5.45 times
In 2002 my current assets exceed 1.7 times my current liabilities and in 2004 my current assets exceed 5.45 times my current liabilities.
2 / Immediate Liquidity = Achievable + Available
(Acid Test) Short Term Callable (PC)
Workable: collectible, advances to suppliers
Available: cash and bank, short-term negotiable values
Equal to 1: correct
Less than 1: danger of suspension of payments
Greater than 1: danger of having idle cash.
In 2002 In 2004
= 60,000.00 = 126,000.00
40,000.00 33,000.00
= 1.7 times = 3.82 times
3 / Availability = Available
PC
With a low availability you can have problems meeting payments, if it is very high there may be idle availability.
In 2002 In 2004
= 37,000.00 = 54,000.00
40,000.00 33,000.00
= 92.5% = 163.64%
The correct ratio is 0.30 0 30%) optimal mean value)
Taking into account the changes that occur in the environment and the need to enter a competitive market, it is necessary to deepen and consequently apply Financial Analysis as the essential basis for the decision-making process, since there is a need to sharpen to the maximum strategies and extreme controls.
The analysis of the reasons is the most defined, but the calculation of the reasons helps the interpretation, but it does not replace a good analytical judgment, hence the need to deepen this content.
Efficiency is doing things right, it is the relationship that exists between the results obtained and the consumption (expenses) related, it is chained with discipline and knowledge without discipline will not be good results.
Professionalism is one of the direct causes of efficiency and effectiveness, the latter being the one that expresses, doing what is necessary at all times, linked to the decision-making process, to achieve a certain effect. Both actions presuppose quality in the performance of processes, the managers of the business system are those directly linked to efficiency, hence, knowing how to do things is essential to be effective.
The Cuban business system must work for effectiveness and efficiency in its actions, and it is necessary to combine both in order to reach its goal. We have to achieve efficiency by putting ourselves in cost and finances, spending only what is necessary and multiplying the responsibility for spending the resources that are incurred in the process.
The economic analysis is the decomposition of an economic phenomenon into parts, the study of each one of them contributes to carry out said analysis, since it allows to deeply study the economic processes, the integral analysis allows to objectively evaluate the progress of the behavior of the projected tasks, enables the improvement of work in the organization, determines the possibilities of development and improvement of services and methods and management styles.) Vladimir Ilich Lenin pointed out the need to study economics…
"The economy is not necessary in the sense of compiling, verifying and studying the facts in detail…"
The analysis, the instrument, and the procedure used to understand the behavior of the economy.
The analysis objectives lie in showing the behavior of the projection made, in detecting deviations and their causes, as well as unlocking internal reserves so that they can be used for the subsequent improvement of the organization's management.
It is necessary to point out that in order for the Economic Analysis to meet the stated objectives, it must be operational, systematic, real, concrete and objective.
There are different methods of economic analysis, but taking into account the objective of our research, it will be a reference only to Financial Analysis Methods.
Financial reporting methods consist of simplifying financial figures to facilitate the interpretation of their meanings and relationships. Its use in an appropriate way, with judgment and caution, combined with information from other sources about business, makes it possible to improve projections and regulate administrative policy on the technical and informed basis.
The analysis of financial statements refers to the art of analyzing and interpreting financial statements, to apply them effectively it is necessary to establish a systematic and logical procedure that serves as the basis for making informed decisions. Decision-making is the essential objective of the analysis of the reasons for the actions that contribute to raising economic efficiency.
Almost all decisions motivated by finances require the application of reasonable judgments, there is no single classification of financial reasons, below I present what in my opinion is considered essential for their knowledge and application in hotel management>
- Solvency ratios or ability to pay Liquidity ratios Leverage ratios Activity ratios Collection and payment ratios Availability Profitability ratios
The tables described above capture the results of the calculations made according to information obtained in the General Balance Sheets and Income Statements, respectively, for the periods of 2003 and 2004.
Conclusions
With this work the study that I carried out in a hotel in our territory is completed and after having developed the different accounting and finance courses, the increase in the economic culture of both managers and workers of the economic department is notable.
The fundamental causes that cause deterioration in the financial economic indices are the excessive increase in accounts payable, the number of suppliers and the reduction in income.
There is deterioration in the economic management of the entity, which has been evidenced in the decrease in the Solvency index, the Working Capital and Economic Profitability as well as in the increase in indebtedness, obtaining a loss as a final result.
The methods of Economic Analysis that base a scientific process in decision making are not used.
There are no elements to determine the Equilibrium Point that allows knowing the number of clients to serve so that the hotel has net profits.
Streamline the collection process which allows a decrease in accounts payable.
Continue counseling in the workplace to raise the level of knowledge in measuring the entity's Economic and Financial Efficiency, which will improve the decision-making process.
Encourage initiatives and creativity to achieve an increase in Income and Profitability.
Use the website made up as an Economic Directory Dictionary that will provide them with the essential elements for carrying out the corresponding Economic Analysis.
Give the rest of the facilities access to the website through the Internet and emails.
The work allowed me to delve deep into the economic world for the first time, study it and draw conclusions.
|
Current Assets |
2003 |
2004 |
|
Cash |
37,000.00 |
54,000.00 |
|
Accounts receivable |
26,000.00 |
68,000.00 |
|
Expenses paid in advance |
6,000.00 |
4,000.00 |
|
Inventories |
----- |
54,000.00 |
|
Total Current Assets |
$ 69,000.00 |
$ 180,000.00 |
