Company’s Accounting
Posted: September 9th, 2013
Company’s Accounting
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Company’s Accounting
The Hotel Grand Central Limited is located in the heart of the capital city of Singapore. It is located in one of the prime parts of the city that is a prime shopping belt within the city. In addition, its location is enhanced by the proximity of the hotel to the airport given that the airport is 25 kilometers from the Changi Airport and only 3 kilometers from a Convention Center, that is a main attraction for the tourists into the city. In addition, the entity is also close to the renowned Orchard Road that is essentially a prime shopping street for the elite in the society. The location to the shopping center is one of its greatest advantages given that it accrues a sense of style and elegance in the hotel industry. Furthermore, the hotel is classified as a three star hotel making it affordable for a sizeable part of the population.
The selection of this hotel was due to my experiences on vacation in Singapore. The hotel is essentially accessible from the airport and has among the best accommodation facilities in the country. During my previous stay at the hotel, I was marveled by the high quality services offered by the hotel staff and management. They made the stay memorable making me yearn for another visit. I was deeply interested in the functionalities involved in such a large hotel, given the level of efficiency maintained by the hotel in ensuring that the clients were adequately satisfied by the services offered.
Balance sheet
(Bloomberg Business Week, 2012).
| Currency in Millions of Singapore Dollars |
As of: |
Dec 31 2008 SGD |
Dec 31 2009 SGD |
Dec 31 2010 Restated SGD |
Dec 31 2011 SGD |
4 Year Trend |
| Assets | ||||||
| Cash And Equivalents | 142.1 | 70.9 | 87.5 | 161.7 | ||
| Short-Term Investments | 0.0 | 0.1 | 0.2 | 0.2 | ||
| TOTAL CASH AND SHORT TERM INVESTMENTS | 142.1 | 71.0 | 87.7 | 162.0 | ||
| Accounts Receivable | 6.3 | 7.1 | 12.9 | 10.6 | ||
| Other Receivables | 0.5 | 1.3 | 0.7 | 1.0 | ||
| TOTAL RECEIVABLES | 6.8 | 8.4 | 13.6 | 11.5 | ||
| Inventory | 0.8 | 1.2 | 1.2 | 1.2 | ||
| Prepaid Expenses | 1.0 | 1.2 | 1.6 | 1.5 | ||
| Restricted Cash | — | 59.5 | 29.9 | 26.4 | ||
| TOTAL CURRENT ASSETS | 150.6 | 141.2 | 134.1 | 202.6 | ||
| Gross Property Plant And Equipment | 531.4 | 727.5 | 827.3 | 812.7 | ||
| Accumulated Depreciation | -51.9 | -49.4 | -72.2 | -101.6 | ||
| NET PROPERTY PLANT AND EQUIPMENT | 479.5 | 678.0 | 755.1 | 711.1 | ||
| Goodwill | 1.3 | 1.5 | 6.4 | 3.2 | ||
| Long-Term Investments | 29.9 | 31.2 | 32.2 | 32.0 | ||
| Deferred Tax Assets, Long Term | 0.6 | 0.8 | 1.8 | 1.9 | ||
| Other Intangibles | 1.6 | 1.6 | 1.5 | 1.5 | ||
| Other Long-Term Assets | 22.1 | 25.5 | 24.8 | 24.7 | ||
| TOTAL ASSETS | 685.7 | 879.8 | 955.9 | 976.9 | ||
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| LIABILITIES & EQUITY | ||||||
| Accounts Payable | 7.1 | 5.9 | 8.8 | 13.4 | ||
| Accrued Expenses | 1.6 | 6.9 | 6.1 | 12.7 | ||
| Short-Term Borrowings | 13.5 | 35.0 | 38.0 | 26.0 | ||
| Current Portion Of Long-Term Debt/Capital Lease | 1.7 | 2.1 | 4.0 | 88.1 | ||
| Current Portion Of Capital Lease Obligations | 0.1 | 0.1 | 0.0 | 0.0 | ||
| Current Income Taxes Payable | 5.4 | 2.9 | 3.4 | 3.6 | ||
| Other Current Liabilities, Total | 3.2 | 5.2 | 6.9 | 7.3 | ||
| Unearned Revenue, Current | 0.7 | 0.5 | 0.6 | 0.5 | ||
| TOTAL CURRENT LIABILITIES | 33.3 | 58.4 | 67.8 | 151.5 | ||
| Long-Term Debt | 72.9 | 75.0 | 109.7 | 22.4 | ||
| Capital Leases | 0.1 | 0.0 | 0.0 | 0.0 | ||
| Minority Interest | 5.9 | — | — | — | ||
| Deferred Tax Liability Non-Current | 64.1 | 81.5 | 99.1 | 97.0 | ||
| TOTAL LIABILITIES | 170.4 | 214.9 | 276.6 | 271.0 | ||
| Common Stock | 247.9 | 260.7 | 278.4 | 295.1 | ||
| Retained Earnings | 167.6 | 187.1 | 176.5 | 198.3 | ||
| Comprehensive Income And Other | 93.8 | 217.0 | 224.3 | 212.5 | ||
| TOTAL COMMON EQUITY | 509.4 | 664.9 | 679.2 | 705.9 | ||
| TOTAL EQUITY | 515.3 | 664.9 | 679.2 | 705.9 | ||
| TOTAL LIABILITIES AND EQUITY | 685.7 | 879.8 | 955.9 | 976.9 | ||
(Bloomberg Business Week, 2012).
The financial statements available are from the years 2008 to the recent financial period, which ended in December for evaluation of the changes in terms of the movement of funds within the organization. In addition, this is adequate information for evaluating the growth of the organization in the periods described. From the financial year ended 31 December 2008 to the period concluding in December 31 2009, the assets of the organization were as explained. The balance of the total assets at the conclusion of the year 2008 amounted to $685.7 million. These are the entire belongings of the organization. The difference for this item is an amount of $194.1 comparison to the year 2009, which was $879.8 million, is an indication of a great increase in the worth of the entire possessions of the organization for that financial period (Bloomberg Business Week., 2012).
The values of the assets for the preceding period, which is the financial year concluded on the last day of December in 2010, were at $955.9. The difference from the previous period and the amount identified is a value of $ 76.1 million. This is a lower level of growth in the worth of the possessions of the organization, which could be attributable to both organizational and market forces. For the preceding financial period which ended in December 2011, the value of the assets was at $976.9. The differences in terms of the values with the previous period are at $ 21 million. The increase in the value of assets is an indication of a trend in the decline of the values of the property of the organization (Bloomberg Business Week, 2012).
In addition, the growth of the assets is because of increased capitalization by the shareholders or investors with the aim of enabling the entity to make purchases of new items, which would enhance the efficiency in operations by the organization. In addition, the new assets would improve the standing of the organization given the importance of image for entities within the hospitality industry.
The values of liabilities of the organization were at $170.4 for the phase concluding on the last day of December 2008, $214.9 for the phase concluding on the last day of December 2009, $276.6 the phase concluding on the last day of December 2010, $ 271.0 the phase concluding on the last day of December 2011. The differences in terms of the values of the liabilities for the three periods are $44.5, $61.7, $-5 million respectively. The values of the liabilities increased in the first two financial periods. However, they decreased slightly in the recent financial period. Liabilities might be because of the new investments undertaken by the organization with the aim of ensuring it maintains its relevance in the market by enhancing its competitiveness through new products and services.
The owners’ equity is set out as common stock in the financial statements of the organization. In addition, other elements also constitute the equity of the entity such as retained earnings, comprehensive incomes and other incomes accrued, as well. The value of equity for the fiscal stage ended on the last day of December 2008 was at $ 685.7, $879.8 for the fiscal stage ended on the last day of December 2009, $955.9 for the fiscal stage ended on the last day of December 2010 and $ 976.9 for the fiscal stage ended on the last day of December 2011.
There is a gradual increase in the worth of the equity of the entity. The owners’ equity changes were identified as follows, $247.9 for the fiscal stage ended on the last day of December 2008, $ 260.7 for the fiscal stage ended on the last day of December 2009, $ 278.4 for the fiscal stage ended on the last day of December 2010, $ 295.1 for the fiscal stage ended on the last day of December 2011. There is an increase in the worth of the common stock or shareholder’s equity. This could be due to the increase in the worth of the shares of the organization attributable to increased profitability of the organization (CNBC, 2012).
Increase in the value of assets could be, because of the amounts receivable by the organization, which translates to higher sales or services on credit to the clients. In addition, an increase in the level of liabilities is attributable to the increase in the costs of operations such as the amounts payable to the creditors of the organizations for services or delivery of goods on credit. In addition, the increase in the worth of the common stock or shareholders’ equity is because of more capitalization in the organization through issue of more shares to fund projects for increasing revenues within the organization.
Income statement
(Bloomberg Business Week, 2012).
| Currency in Millions of Singapore Dollars |
As of: |
Dec 31 2008 SGD |
Dec 31 2009 SGD |
Dec 31 2010 Restated SGD |
Dec 31 2011 SGD |
4 Year Trend |
| Revenues | 126.1 | 109.9 | 144.9 | 168.0 | ||
| TOTAL REVENUES | 126.1 | 109.9 | 144.9 | 168.0 | ||
| Cost Of Goods Sold | 46.4 | 44.0 | 77.7 | 92.3 | ||
| GROSS PROFIT | 79.7 | 65.9 | 67.1 | 75.7 | ||
| Selling General & Admin Expenses, Total | 1.0 | 0.7 | 0.8 | 0.8 | ||
| Depreciation & Amortization, Total | 14.2 | 14.3 | 20.0 | 23.7 | ||
| Other Operating Expenses | 31.2 | 30.2 | 16.9 | 16.2 | ||
| OTHER OPERATING EXPENSES, TOTAL | 46.4 | 45.2 | 37.6 | 40.8 | ||
| OPERATING INCOME | 33.2 | 20.7 | 29.5 | 34.9 | ||
| Interest Expense | -0.7 | -0.6 | -1.7 | -3.6 | ||
| Interest And Investment Income | 9.2 | 4.1 | 4.1 | 5.3 | ||
| NET INTEREST EXPENSE | 8.5 | 3.5 | 2.4 | 1.7 | ||
| Income (Loss) On Equity Investments | 1.9 | 1.1 | 0.7 | 1.1 | ||
| Currency Exchange Gains (Loss) | -16.9 | 16.4 | 1.2 | 1.7 | ||
| Other Non-Operating Income (Expenses) | — | — | -0.9 | 0.4 | ||
| EBT, EXCLUDING UNUSUAL ITEMS | 26.7 | 41.7 | 32.8 | 39.9 | ||
| Merger & Restructuring Charges | — | — | -3.2 | — | ||
| Impairment Of Goodwill | — | — | — | -3.3 | ||
| Gain (Loss) On Sale Of Investments | — | 0.2 | — | — | ||
| Gain (Loss) On Sale Of Assets | — | 0.1 | — | -1.5 | ||
| Other Unusual Items, Total | -2.2 | -1.5 | 0.0 | 5.4 | ||
| Insurance Settlements | — | — | 1.2 | 54.0 | ||
| Other Unusual Items | — | — | — | -12.2 | ||
| EBT, INCLUDING UNUSUAL ITEMS | 24.6 | 40.4 | 29.7 | 40.6 | ||
| Income Tax Expense | 9.4 | 4.7 | 20.6 | 13.0 | ||
| Minority Interest In Earnings | 0.0 | 0.0 | — | — | ||
| Earnings From Continuing Operations | 15.2 | 35.8 | 9.1 | 27.6 | ||
| NET INCOME | 15.2 | 35.8 | 9.1 | 27.6 | ||
| NET INCOME TO COMMON INCLUDING EXTRA ITEMS | 15.2 | 35.8 | 9.1 | 27.6 | ||
| NET INCOME TO COMMON EXCLUDING EXTRA ITEMS | 15.2 | 35.8 | 9.1 | 27.6 | ||
Retrieved from http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=GRAN:SP&dataset=incomeStatement&period=A¤cy=native (Bloomberg Business Week, 2012).
The revenues form the financial statements were as follows for the three financial period identified, that is 2008-2009, 2009-2010, and 2010-2011. The revenues for the fiscal stage ended on the last day of 2008 were $ 126.1, $109.9 for the fiscal stage ended on the last day of 2009, $ 144.9 million for the period ended 2010, $ 168 million. The revenues were fluctuating given the presence of market difficulties after the financial crisis of the year 2008. The results of the revenues could be simply termed as unpredictable given the varied market conditions that cannot be controlled by the organization (Bloomberg Business Week, 2012).
The increase in revenues in the recent two financial periods has an effect on the costs of operation of the organization. Increase in the revenues results, in a corresponding increase in the operating expenses of the entity. In addition, a decrease in the revenues of the entity results in a subsequent decrease, in the costs of operation of the entity. This is attributable to the increase in the operations with an aim of increasing the revenues (Ross, 2008).
Main expenses accrued by the entity in its operations include the selling general and administration of expenses. Depreciation and amortization costs were also factored as costs due to the reduced value of the possessions of the organization. In addition, the interest and investment costs were also factored due to the new projects that were undertaken because of the available funds as evidenced in the increased value of the common stock of the organization. Increase in expenses as a result of gradual increase in expenses is normal in that the new level of production requires additional resources for achievement of the organizational goals and objectives
An entity’s increase in the expenses is attributable to inefficiencies in the production process or, in this case, the issue of service to customers. Hence this could be improved by reducing the inefficiencies and unwarranted costs of operation of the entity. The sales and marketing department had a prominent role in accruing the revenues of the organization for the identified periods. In addition, the department was tasked with the responsibility of promotion of the services offered by the entity given that the entity operates in the service industry. Marketing is a vital tool in ensuring that the organization is competitive within the identified market of operation. In addition, it enables the entity to attract more potential clients to purchase the services of the entity.
Hence the sales and marketing department could be termed as having the responsibility of ensuring the promotion of the products and services offered by the organization. Moreover, it is also tasked with initiation of marketing strategies for the organization which ensures that the organization gains competitive advantage over other entities in the services industry and with reference to the hospitality industry (Lee, 2009). The sales and marketing department had the greatest expenses given the need for a presentable organizational image to the public. In the hospitality industry, the image of an entity is essentially the competitive advantage of an entity within its market of operation. In conclusion, the entity has achieved tremendous growth given the presence of financial strain around the world all of which is attributable to the financial crisis which resulted in an economic slowdown.
References
Bloomberg Business Week. (2012). “Hotel Grand Central Limited (GRAN: Singapore)” Business Week. Retrieved from http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=GRAN:SP&dataset=incomeStatement&period=A¤cy=native on August 12, 2012.
CNBC. (2012). “Hotel Grand Central Ltd” Companies. Retrieved from http://data.cnbc.com/quotes/HGCS-SG on August 12, 2012
Lee, C. F. (2009). Financial analysis, planning & forecasting: Theory and application. Singapore: World Scientific.
Ross, S. A. (2008). Modern financial management. Boston: McGraw-Hill/Irwin.
Scott, W. R. (2009). Financial accounting theory. Toronto, Ont: Pearson Prentice Hall.
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