Essays on Financial Statement for Oaks Hotel & Resort Limited Case Study

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The paper 'Financial Statement for Oaks Hotel & Resort Limited " is a good example of a finance and accounting case study. Oaks Hotel & Resort Limited which performs in the hospitality sector had witnessed a difficult year in 2009 due to economic recession. The economic conditions engulfed the working style of Oaks Hotel & Resort Limited and resulted in the company using its reserves to carry out their normal operations. The economic condition worsened to such an extent that despite growth in revenue from $116,652,000 in 2008 to $126,994,000 in 2009 the company witnessed a decrease in profits from $14,650,000 in 2008 to $9,753,000 in 2009 which is a cause of worry and highlights the manner the external environment was influencing the working of the company.

The inability of the company to generate revenues from its normal operations made business difficult and resulted in a company having negative reserves of $737,000 and a decrease in retained earnings to $10,635,000. This was a cause of worry and requires changes in the manner the hotel works and will have to rethink towards devising the pricing strategies and look towards selling off some of their assets to be able to have sufficient liquidity and to ensure long term profitability from the business.

This essay thereby embarks upon and presents the different pricing and selling of strategies that Oaks Hotel & Resort Limited has to use to be able to generate sufficient liquidity and revenues to be able to finance their daily business activities. The financial statement for Oaks Hotel & Resort Limited highlights that the company had a difficult time in 2009 and had to look towards formulating strategy through which they could finance their different operational requirements and ensure maximum leverage for the company.

Oaks Hotel & Resort Limited looked towards selling off some of its properties so that they could finance the business and had the required liquidity which ensured that operations were carried out effectively. In addition to it, Oaks Hotel & Resort Limited also slowed down the pace of the inventory that was in their pipeline and just opened three new properties in Dubai, Townsville & Adelaide (Annual Report, 2009).

This showed that the company had a conservative approach where they looked towards preserving funds so that they could finance their daily expenses. Despite the steps taken by Oaks Hotel & Resort Limited Company having negative reserves of $737,000 and decrease in retained earnings to $10,635,000 which raises concern and requires that some strategies are developed which will embark upon the better business opportunity and will help to generate the required liquidity within the system. One of the major areas which Oaks Hotel & Resort Limited has to look towards is promotional offers so that more and more rooms at their different resorts and properties get occupied.

This will help to ensure that Oaks Hotel & Resort Limited is able to generate revenues from its operational activities which will help them to finance their daily expenses. This will also provide the required directives through which the management will be able to forecast their revenues and expenses and will be in a better position to ensure that they don’ t get into a liquidity trap and use all their reserves which have been created to finance future projects (Filbeck & Krueger, 2005).

References

Annual Report. 2009. Oaks Hotel & Resort Limited. Retrieved on December 15, 2012 from http://www.oakshotelsresorts.com/DocumentLibrary.aspx?pid=362&cdlcid=7

Filbeck, G., & Krueger, T. M. 2005. An analysis of working capital management results across industries. Mid-American Journal of Business, 20(2), 10-17.

Lyroudi, K., & Lazaridis, Y. 2000. The Cash Conversion Cycle and Liquidity Analysis of the Food Industry in Greece [Electronic Version]. EFMA 2000 Athens

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