An analysis and Comparative Study of Financial Statements”, a case of Breeze Beach Hotel and Veraclub(Z) Ltd

Mohammed , Salum Mansour (2013) An analysis and Comparative Study of Financial Statements”, a case of Breeze Beach Hotel and Veraclub(Z) Ltd. Masters thesis, The Open University of Tanzania.

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Abstract

Financial statements are admittedly a storehouse of valuable information of the past performance and present position of business entities. They give an accurate picture of a company’s condition and operating results in a condensed form. Accounting professional has been a major force over the years in shaping up financial statements. These financial statements prepared by accountants are normally prepared for general purpose. Any economic decision based on general purpose financial statements prepared by entities will not give appropriate results unless the financial statements should be analysed. Analysis, comparability and interpretation of financial statements are necessary so that the difficulties behind these technical documents may be well understood and the real picture brought to light for the benefit of all concerned. Financial statements analyses help in determining the liquidity position, long term solvency, efficiency of using assets productively and profitability of a firm. Ratio analysis shows whether the company is improving or deteriorating in past years. Analysis of statements helps to determine the significance of the financial data. The object of this study is to examine financial statements of the two hotels, Breeze Beach Club which is Non package hotel type and Veraclub Zanzibar which is Package hotel type. In this way it is possible to comment and comparing their financial performance and conditions by using financial ratios. Specifically, this study focuses on financial ratios to analyse profitability, liquidity, solvency, and efficiency of using assets productively among the type of hotels. The financial statements of the two hotels for year 2008 to 2010 were the core source of data. Based on these financial statements, the financial ratios were computed, interpreted, compared and thereafter results drawn. The results reveal that liquidity, efficiency and solvency ratios are favourable in Package hotel (Veraclub Zanzibar) compared with Non-package hotel (Breeze Beach Club). In terms of profitability both hotels are not well performed during the period of analysis. The paper concludes by identify limitation on such analysis and provide suggestions for further analysis.

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