- Discuss the factors that must be taken into account when providing a context for analysing the financial performance of a business. (15 marks)
- The following are extracts from the 2019 published financial statements of City-Hotels Group Plc., an international hotel and leisure company.
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City-Hotel Group Plc.
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Consolidated Income Statement for year ended 31 December 2019
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2019
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2018
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€’000
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€’000
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Revenue
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112,200
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93,400
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Cost of sales
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(51,300)
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(44,700)
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Gross profit
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60,900
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48,700
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Selling and administrative expenses
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(25,400)
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(21,500)
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Depreciation and amortisation
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(6,400)
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(5,600)
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Operating profit
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29,100
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21,600
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Loan interest
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(8,400)
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(5,400)
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Profit before tax
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20,700
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16,200
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Corporation tax
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(2,500)
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(1,800)
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Profit for the year
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18,200
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14,400
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Dividends paid
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(7,600)
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(5,400)
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City-Hotels Group Plc.
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Consolidated Balance Sheet at 31 December 2019
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2019
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2018
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€’000
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€’000
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ASSETS
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Non-current assets
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Property, plant & equipment (net book value)
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301,300
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240,600
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Intangible assets
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17,500
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10,400
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318,800
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251,000
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Current assets
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Inventories
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2,900
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2,400
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Accounts receivable
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5,600
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4,900
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Prepayments
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4,400
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4,100
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Cash and Bank
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9,800
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7,800
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22,700
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19,200
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Total assets
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341,500
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270,200
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EQUITY
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Issued share capital (note 1)
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7,200
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6,500
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Share premium
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39,100
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17,700
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Revaluation reserve
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84,500
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84,500
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Other reserves
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2,600
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2,200
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Retained earnings
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47,500
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36,900
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180,900
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147,800
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LIABILITIES
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Non-current liabilities
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Loans and borrowings
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130,900
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96,700
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Current liabilities
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Trade payables
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5,700
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4,400
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Accrued expenses
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9,200
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8,900
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Bank overdrafts
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2,700
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2,600
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Short term loans and borrowings
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10,700
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8,700
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Corporation tax liabilities
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1,400
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1,100
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29,700
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25,700
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Total Liabilities
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160,600
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122,400
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Total equity and liabilities
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341,500
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270,200
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Additional Information, note 1:
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Nominal (par) value per share in €cent
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25
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c
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25
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c
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Market price / share, year-end, €cents
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930
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750
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c
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Required:
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- Calculate, for each year, 18 ratios under the headings of profitability, Use of assets, capitalstructure, liquidity and investment(60 marks)
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(b)Based on (a), comment on the company’s performance and position over the two years
(70 marks)
c Apply the Taffler & Tisshaw model of business failure prediction and calculate a z-score for the business for both 2019 and 2018 (20 marks
d Comment on your answers to (c)(10 marks)
e Accounting statements are often accused of presenting a limited picture of a business. In the context of this statement discuss the limitations of ratio analysis.(25 marks)
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