FINANCE
FINANCIAL SATEMENTS
This
section covers financial management of which it will be focusing on aspects
such as the financial statements at Cresta Marakanelo Hotels. Financial statements are meaningful,
written records which allow the business owner to identify the business’s
financial strengths and weaknesses and increase the life and profitability of
the business. Financial statements are prepared annually but the income Statement should be developed on a
monthly or, at least, a quarterly basis (Small business development centre
2010). The financial statement shows the balance sheet, ratios and income
statements.
FINANCIAL SUSTAINABILITY
The
company has managed to have a sustainable finance from 2010 to 2013. This was
due to the consistent working capital management. The group banks with Barclays
Bank of Botswana Limited, Barclays Bank Zambia, African Banking Corporation of
Botswana Limited, African Banking Corporation Zambia Limited, BancABC (Botswana
& Zambia), First National Bank of Botswana Limited, STANLIB Investment
Management Services (Pty) Ltd and Stanbic Bank Botswana Limited. The employees
of Cresta are focused, dedicated and committed to produce positive results.
This makes the group to always make more revenue each year. According to Sainsbury (2013) says that at Cresta
Marakanelo, the company expects to regain market share at its hotels in
Gaborone, which will in turn drive revenue and profitability growth in 2014. In
addition, the group opened two hotels in 2013 which are expected to continue to
grow their contribution to overall profitability. Discussions are at an
advanced stage for the company to lease a new hotel and conference centre in
Botswana. Construction is expected to start in the third quarter of 2014. All
of this shows that the company has been doing well in the market and it is
continuing to grow yearly.
Why do companies provide
financial statements?
REFERENCES
Karunarathne.
W.V.A.D. Hubei. W. Rajapaske. R.M.D.A.P.(2013) The value relevance of financial
statements’ information: with special reference to the listed companies in
colombo stock exchange. Usefulness of accounting information. Sri Lanka.
Pride
W.M., Hughes J.R., and Kapoor J.R. (2012) Introduction to business. The balance
sheet 11th Edition. China Translation and printing services. China.
Riley
J. (2012) Introduction to Accounting. [Online]. Available at: hppt: //www.tutor.net/blog/index.php/site/author/11/.
(Accessed: 10 July 2014).
TA
Holdings (2012). Cresta Annual Report. Harare. Zimbabwe.
Zager. K and
Zager. L (2006).The
role of financial information in decision making process. Finacial statements.
According to Karunarathne, Hubei and Rajapaske (2013 P.4) financial statements provide information about the company’s growth opportunities. The cash flow statements they also provide information about the financial activities. It also provides information about the flow of cash in to and out of the business which will help the business to see if the business is making profit or loss. Financial Statements include the balance sheet, Income statements, Cash flow statement and changes in owners, they come packaged inside annual reports (Zager and Zager 2006. P.2).
ReplyDeleteCresta group of hotels has continued on its recovery path to delivering steady earnings and cash flow growth to shareholders underpinned by solid business models in all its investee companies. The use of the cash flow has helped the company to predict its maturity in the next coming years. The Group generated P65 million of cash from operations during the period. Cresta hotels depended on large corporate, business clientele and government business. This was archived by a consistent working capital management (TA Holdings 2012). Financial statements also help to recognise good characteristics of the company and also to recognise the company’s weaknesses so that corrective measures can be taken.
Financial statements play an important role in organisations. The results for the year 2011 to December 2012 in the income statement which are covered in greater detail in the CEO’s report (Review of Investments on the annual report) shows that during the year operating profits grew by 238% whilst cash generated from operations increased by 111% compared to last year. In addition, 2012 was the first year in which all insurance companies within the Group achieved underwriting profits. In the year 2013 The Group achieved a profit after tax of P22.4mn representing an increase of 10% over past year. Profit before tax of P29.4mn represents a 20% increase on the past year. The Group utilised its cash resources to finance the refurbishment programme.
ReplyDeleteThe income statement shows the predicted movement of cash for an individual or an organisation (Bendry, Hussey and West 2004). Riley (2012) explains that cash flow is the amount of cash coming into the business. If the cash coming into the business is greater than the cash going out of the business it will allow the business to build cash reserves and it will also help the business to expand. The other financial statements are the balance sheet and the trading profit and loss accounts (Riley 2012). The income statement gives an overview the business is going. It shows whether the company has made profit or loss from the operations. Looking at Cresta Group Hotels’ income statements for the year 2010 to 2013 the company has been doing well and the profit has been increasing yearly.
ReplyDeleteThe Balance sheet is also the financial statement. It is a report or a summary of the amounts of a firm’s asset, liabilities and owner’s capital (Pride et al 2012, p 209). The balance sheet shows the current assets, fixed assets and current liabilities of an organisation. This financial statement must show that liabilities and assets are equal and it shows what resources are owned by a business and what it owes to other parties and it also shows how much has been invested in the business (Riley 2012). It can also refer to what the company owns, what it owes, and what is left over (Small business development centre 2010). The balance sheet shows the net value of the business and how much loan debt is current and how much is long term. The Group total assets rose to P165 million from a base of P133 million in the previous reporting period. This showed a growth of 24% on total assets. This really shows the importance of financial statements they help an organisation to predict for the future whether it will make loss or profit.
ReplyDelete