Fundamentals of Business Finance

Case study of the Star hotel

Table of Contents
1.0 Introduction..........................................................................................................................3

2.0 Purpose of financial information..........................................................................................3

2.1 Characteristics of good financial information......................................................................4

3.0 Explanation of financial terminologies................................................................................5

4.0 Analysis and interpretation of financial performance..........................................................6

5.0 Conclusion............................................................................................................................8

References..................................................................................................................................9

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1.0 Introduction
An accounting cycle is mainly recognised as the method of business bookkeeping approach
that is initiated for managing and maintaining the operating formulation including financial
disclosure on a proper basis. The presence of accounting principles and some of the positive
standards are utilised during the presence of accounting statements which mainly initiated the
approach of accounting integrity. The disclosure of this type of processing is also applied to
represent the positive view of accounting development and some of the proper financial
decision-making approach on a fruitful basis (Weetman, 2019). In the case of individual
business importance, the disclosure of Finance is necessary including proper competency and
structural growth support as well that is comprehensive for managing and maintaining the
stability support of business in proper order.

2.0 Purpose of financial information

According to general conceptual engagement the primary identification of “Finance and
Accounting” is applied for detailed support related to financial value and some of the
positive areas of development that are necessary for the managerial and associated growth
purpose. Primary identification and formulation of accounting disclosures are generally
formulated with the approach of some specific purpose which is comprehensive for
maintaining stability value on a proper basis. The primary purpose of financial information
includes:

● It is applied to maintain a proper volume of credit decision support that is initiated in

order to maintain and formulate the borrowing capital approach on a progressive
basis. It is also applied to maintain the standardisation value which is essential for
optimum performance stability support related to business financial engagement.
● It is applied to formulate some of the business decision-making purposes regarding
the finance and investment process depending on which the project formulations and
some of the stability approaches associated with operation competency can be
balanced (Atrill and McLaney, 2018).
● It is also initiated to provide some of the taxation benefits as well as tax formulation
engagement simultaneously that is optimum in order to maintain the progressive value
and some of the stability approach in an effective order.

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 ● Basic performance is applied in order to evaluate the subsidiary performances and
evaluations in the present market condition depending on which the parental
organisation can be formulated and maintained.
● The presence of this type of engagement is also initiated for the financial decisions as
well as some of the standard-size strategic support that is necessary for business
progressive financial formulation purposes (Atrill and McLaney, 2018).
● It is also applied to maintain some of the marketing management and business
competitive performance stability that is optimum for business decisions and progress
purposes.

2.1 Characteristics of good financial information

According to the general processing and maintenance support the primary presentation of the
business financial statement is formulated with the basis of some of the significant
characteristics that can be applied for maintaining and formulating the accounting positively
properly. The presence and maintenance of this type of engagement are also formulated for
development and accounting optimum value maintenance purposes, which is comprehensive
for the standardised growth support. Some of the general characteristics related to supportive
financial information include:

● Financial disclosure is required to be maintained with a proper relevance basis which

indicates a proper volume of decision-making function and formulation is required to
be initiated with the processing of proper disclosure support.
● It also needs to be structured and formulated with a faithful representation basis that is
indicating the primary approach of accounting integrity in proper order in order to
maintain the stability and accounting progress properly (Kwilinski, 2019).
● The presence of this type of engagement needs to be structured with a comparative
basis with the approach of relevant accounting guidance so that a proper volume of
financial disclosures as well as the comparative identification support of business
financial performance can be balanced.
● It is also required to be initiated with a verifiable approach which indicates account
information must be required to be audited by an auditor for the primary purpose of
maintaining an accounting accuracy approach on a systematic and progressive basis.
● It is also required to be formulated with a proper timeline basis which mainly
indicates the stability and continuation of business accounting for the particular time

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 period and with the approach of historical cost processing basis (Kokina and
Blanchette, 2019).
● A positive volume of financial disclosure and understanding approaches that bring the
ultimate recognitions including the accounting formulated development and financial
growth approach in a systematic basis so that stability can be identified.

3.0 Explanation of financial terminologies

Depending on the basic accounting identification and associated with the general recognition
support some of the basic terminology related to accounting disclosure includes:

i) Income statement (Profit and loss account): Primary identification and processing of
“income statement" is recognised as the disclosure of business profit and loss processing
along with the inclusion of business revenue, purchase and other expenditure that is generally
required for performance reasons. The presence and processing of this particular statement
are also initiated to represent a particular financial initiative with maintaining such a proper
identification of the accounting competition and progress level can be determined (Moll and
Yigitbasioglu, 2019). Primary engagement of this type of disclosure also represents a
particular form of statement which is basically used to represent accounting concepts
according to basic identification. It is also applied to provide proper details about the business
taxation as well as earning value that can be utilised for dividend payment as well as
maintaining the retained earning structure properly. Primary identification and processing of
this approach are also necessary for the formulation of business competitive advantage in a
specific order”.

ii) Assets: In the general approach, “it is basically used to represent a particular volume of
resources, which is owned by an organisation in order to conduct the operating formulations
as well as some of the basic performance initiatives in smooth order. The presence of this
type of disclosure is also used to represent the competency and consistency support that is
necessary for managing the business development and some of the optimum processing on a
proper basis. It is basically provided in the business balance during the processing of such it
is applied in order to maintain the accounting equation systematic order (Leitner-Hanetseder
et al. 2021). The presence of assets is generally categorised into two different aspects
regarding Current assets and noncurrent assets and both are basically structured on the basis
of time processing. The presence of non-current assets is also categorised under the level of
tangible and intangible which is basically formulated on behalf of the physical existence”.

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iii) Liabilities: For the primary reason of presenting “business assets formulation support,
some of the specific obligations are also required to be maintained in a business with the
presence of such a proper volume of accounting progress and performance efficiency is
managed. The presence and processing of this type of disclosure are also necessary for the
primary progress including some of the standardisation value that is comprehensive for
financial stability. The presence of business liability is basically category is into the current
and non-current basis and both are also structured on behalf of time processing. The
identification of a proper liability level is also needed to pay back the business at the time of
winding up along with initiating a proper volume of financial stability support (Kimmel et
al., 2020). The primary processing of business liability is also used to disclose the process of
business accounting equation approach that is comprehensive for the maintenance and
managing business standardisation value”.

iv) Capital: Identification of “business equity is recognised as one type of source of finance
or capital that is formulated for the maintenance and processing of business internal capital
development and operating purpose. The identification of equity is basically used to
recognise the voting capability of the shareholders which is basically initiated through the
issue and share capital in the market. The presence of primary engagement and basic equity
presence is also necessary for maintaining the accounting stability approach and some of the
positivity value which is comprehensive for business financial growth purposes (Du et al.,
2020). According to the general identification, the basic presence of accounting is also
necessary for the standardisation value and some of the positivity approach about accounting
fundamentals which is also necessary for developing the shared value enhancing support
mainly. Primary presence of business equity is also initiated to represent the approach of beta
that can be utilised for initiating the business valuation mainly”.

4.0 Analysis and interpretation of financial performance

In accordance with the general processing support the application of basic accounting
measurements and some of the financial analysis has been provided that can be utilised for
recognising business competency. Such details are:

i) Food profitability:

“Formula; (Gross profit from food / Revenue from food) x 100”

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“In 2021; (1044,000 / 1800,000) x 100 = 58%”

“In 2020; 66%”

Interpretation: Depending on the general measurement basically a declining or reduction

approach is initiated related to this particular business performance which indicates the
present marketing demand is basically impacted negatively over the production performance
and under the present circumstances a proper development initiative is necessary for future
progress.

ii) Drinks profitability:

“Formula; (Gross profit from drinks / Revenue from drinks) x 100”

“In 2021; (294,000 / 600,000) x 100 = 49%”

“In 2020; 55%”

“Interpretation: Primary volume related to the particular product has basically declined in
the market due to the presence in audio which impacted over the business profit formulation
performances. A proper volume of revenue development along with supply chain progress is
required for future expansions and the development of business compatibility and capability
initiatives.

iii) Gross profit:

“Formula; (Gross profit / Revenue) x 100”

“In 2021; (1788,000 / 2850,000) x 100 = 62.73%”

“In 2020; 68%”

Interpretation: The identified measurement regarding the entire gross profit margin is
basically indicating the declining approach like the above product which indicates at the
present situation the overall demanding position is basically declined that impacted
negatively the business revenue and profit value. Under the present situation, proper
progressive standardised growth is required for revenue progress in future.

iv) Return on capital employed:

“Formula; [Operating profit / (Total assets - Current liability)] x 100”

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“In 2021; [1133,000 / (4584,000 - 130,000)] x 100 = 25.43%”

“In 2020; 27%”

Interpretation: Depending on the current computer approach the overall returning capability
of the business associated with the current capital employed value is indicating a declining
level due to the reason of insufficient volume of profit-earning capability. In the present
situation due to the lockdown, the overall marketing demand basically declined, which
impacted negatively on the profit-enhancing support and as a result, instead of a development
approach, it impacted the entire business.

v) Asset turnover ratio:

“Formula; (Revenue / Total assets)”

“In 2021; (2850,000 / 4584,000) = 0.621”

“In 2020; 0.825”

Interpretation: The present identification support related to this particular measurement is

indicating the volume of business turnover associated with the total assets level has basically
declined at the present situation which basically indicates the non-sufficient growth of
business revenue position at present. Under the present situation, a proper volume of revenue
growth with a standardised value of financial progress is required for future stability.

vi) Accounts receivables turnover ratio

“Formula; (Credit Revenue / Total accounting receivable)”

“In 2021; (600,000 / 200,000) = 3.0”

“In 2020; 2.50”

Interpretation: According to the present measurement this particular computed result is

basically indicating a proper volume of increasing approach which is basically impacted
negatively over the business performance. The increasing approach of this particular state is
basically indicating the level of credit sales of the business is expanding and compared to
this the overall volume of business financial growth has not been initiated in a systematic
order.

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5.0 Conclusion
The general presentation and formulation of accounting are necessary for every business
including a positive volume of financial standardisation value that brings the ultimate
recognition and support to the organisation and competency. Primary identification of
accounting disclosure and the processing of accounting is also used to manage a proper
performance identification support that is comprehensive in order to realise the positivity and
accountability approach. The general processing of accounting disclosure is also initiated in
order to identify some of the specific requisition support as well as performance development
initiative that is optimum for developing the standard value. It is applied to maintain some of
the strategic progress that is sustainable for initiating the goal completion approach.

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References
Atrill, Peter and McLaney, E. J. (2018) Financial accounting for decision makers. 9th ed.
Harlow: Pearson

Atrill, Peter and McLaney, E.J. (2018) Accounting and Finance for Non-Specialists. 11th ed.
Pearson.

Du, M., Chen, Q., Xiao, J., Yang, H. and Ma, X., 2020. Supply chain finance innovation
using blockchain. IEEE Transactions on Engineering Management, 67(4), pp.1045-1058.

Kimmel, P.D., Weygandt, J.J. and Kieso, D.E., 2020. Financial accounting: tools for
business decision-making. John Wiley & Sons.

Kokina, J. and Blanchette, S., 2019. Early evidence of digital labor in accounting: Innovation
with Robotic Process Automation. International Journal of Accounting Information
Systems, 35, p.100431.

Kwilinski, A., 2019. Implementation of blockchain technology in accounting

sphere. Academy of Accounting and Financial Studies Journal, 23, pp.1-6.

Leitner-Hanetseder, S., Lehner, O.M., Eisl, C. and Forstenlechner, C., 2021. A profession in
transition: Actors, tasks and roles in AI-based accounting. Journal of Applied Accounting
Research.

Moll, J. and Yigitbasioglu, O., 2019. The role of internet-related technologies in shaping the
work of accountants: New directions for accounting research. The British accounting
review, 51(6), p.100833.

Weetman, P. (2019) Financial accounting. 8th ed. Harlow: Pearson