3.3 Financial Analysis Assignment Example | Topics and Well Written Essays - 1000 words

3.3 Financial outline - Assignment physical exertionould likely result in liabilities hence previous trends and records of the organization can be used to prize the profitability of an organization as an investment prospect (Ou & Penman 2009, pp.295329). To understand the significance of the financial eudaimonia of an organization, this paper will conduct a financial analysis of Chateau hotel redoubtable as an investment opportunity for the Smithsons.The core objective of investing in a business is to get a return for the monetary value invested. Inferring to the statement of the financial impersonate of the hotel basing on the analysis of two years (year stop December 30 2013 and 2014), the hotel made an improvement in the value of the total assets from 3,263, 000 to 3,881, 000. Additionally, the companion made an improvement in the beauteousness shares from 800 shares to 1000 shares with each of the share selling at 100. However, the company has an outstanding long-term lo ans and current liabilities with inclusion body of the bank overdraft, payable dividend, taxation owing deposit by customers and payable-trade creditors cumulatively summing to 3,263, 000 for the financial year ended 2013 and 3,881, 000 for the financial year ended 2014. This implies that a liquidation of the assets of the company would be sufficient to settle the liabilities of the company without outstanding profit.However, inferring to the income statement of the company, it is evident that the rental income of the hotel had declined from 505, 000 in the year 2013 to 448, 000 in the year ended 2014. Analysis of the financial figures of the hotel indicates that the hotel is currently running at diminishing returns, which makes the chances for solvency and the resale of the company to be difficult. Equally, owing to the declining financial position of Chateau hotel redoubtable, the hotel is not profitable thus investment in the hotel would demand a change in the schema in the man ner with which it is operated to realize profit.