Foundation Degree Hospitality Management - Essay Example

Summary

The assessment of financial and operational performance of an organization can be accomplished through the use of ratio analysis. This is achieved by evaluating the relationship of different figures generated from the company’s financial statements…

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Foundation Degree Hospitality Management

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Subject: Finance & Accounting
Type: Essay
Level: Masters
Pages: 3 (750 words)
Downloads: 3
Author: demarioauer

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In simple definition, ration analysis refers to the process by which the figures are quantified in order to understand business performance in terms of financial and operational management. Ratios analysis can be conducted to compare trends in the inter year performance of the organization. It can also be done to compare financial performance of several companies in the same industry. Similarly, the result of the analysis is comparable with that of the industry to which the company belongs. There are five main ratios that are applicable in this scenario.

These include Profitability ratios, sales ratios, liquidity ratios, efficiency ratios, and financial ratios. Based on this brief introduction, ratio analysis of the Brown Sugar Cafe will follow in the next part. Identify appropriate techniques used to assess business performance, analysing data by applying selected techniques. Internal verifier: ……………………………………………..date:……………….. RATIO ANALYSIS Case of the Brown Sugar Cafe The assessment of financial and operational performance of an organization can be accomplished through the use of ratio analysis.

This is achieved by evaluating the relationship of different figures generated from the company’s financial statements. A number of performance indicators are derived from these figures. In simple definition, ration analysis refers to the process by which the figures are quantified in order to understand business performance in terms of financial and operational management. Ratios analysis can be conducted to compare trends in the inter year performance of the organization. It can also be done to compare financial performance of several companies in the same industry.

Similarly, the result of the analysis is comparable with that of the industry to which the company belongs. There are five main ratios that are applicable in this scenario. These include Profitability ratios, sales ratios, liquidity ratios, efficiency ratios, and financial ratios. Based on this brief introduction, ratio analysis of the Brown Sugar Cafe will follow in the next part The Brown Sugar Cafe Ratio Analysis 1. Gross Profit Margin (%) Gross profit margin is a profitability ratio that helps in examining the ability of the company to control costs associated with the acquisition of raw materials (Ratios Workbook, 2013).

It is calculated using the formula below: Gross Profit % = (Gross Profit/ Sales) x 100 Using Brown Sugar Cafe

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