Marriott Ltd Financial Performance Analysis Case Study Sample

Introduction Of Marriott Ltd Financial Performance Analysis | Ratio Analysis And Insights

The financial information is defined as any information which is relating to financial activity of the business and its performance. It is very necessary for the company that the effectively evaluate the financial information of the companies so that the effective decisions can be taken full stop the current study is based on Marriott in Limited which is a company trading 30 years and good growth and return on capital. The current study will outline the discussion relating to the financial performance of the company with help of the ratio analysis. In addition to this report will also outline the purpose and characteristics of good financial information. The objective of the current study is to improve the financial information of the company and try to use it effectively for taking the decisions.

Main Body

Purpose and characteristic of financial information

In simple language the financial information is referred to as any information with is connected with the financial activity of the business and the performance. For running the business the most essential aspect as the finance and in case finance will not be managed effectively then it will be affecting the efficiency of the whole business (Araci, 2019). The major purpose of undertaking the use of financial information is that it provides a clear description of the company's financial health. This is particularly necessary because this clear picture of the company is helpful in evaluating the performance and taking the correct measures in actions relating to the solving of the problem. There are many different types of characteristics which are attached with the financial information which need to be considered while making and evaluating the financial performance of the company in better manner. The different characteristic of the financial information are as follows-

• The first and foremost characteristic of using the financial information is the relevance. The financial information which is used in the company must be relevant. This is particularly necessary because in case for the current projection the information used is too old then it will not be providing better output (Qualitative Characteristics of Financial Reports, 2021). Thus, for using the appropriate financial information it is necessary that relevant information must be used.
• In addition to this another characteristic of undertaking the use of financial information is faithful representation. This faithful representation means that it is complete and free from all the errors (Jackson and et. al., 2020). Thus, this information is safe for evaluating the performance of the company and it can be used in taking proper decisions so that performance can be improved and better.
• Another characteristic of undertaking the use of financial information is comparability. This is a major characteristic which implies that with help of undertaking the use of financial information is that it provides the benefit of comparability. This comparability will help the company in comparing the performance of the company in better and effective manner.
• Along with this another characteristic is verifiability. This verifiability is defined as the fact that t provides a basis for verifying all the information is correct or not (Ayu and et.al., 2020). This is done in order to ensure that all the information used is correct and appropriate so that proper decision can be taken and the performance can be improved well.
• Timeliness is another characteristic which is possessed by the financial information which is used by the company. This is a good characteristic which is helpful for the company and ensures that all the accounting and financial information is made timely so that all the proper decisions can be taken and working can be improved.
• Understandability is another characteristic which the accounting information possess. This is particularly necessary because when the understandability is present in the information then it will provide a better base to take effective decision (Al-Ahdal and et. al., 2020). It is very necessary that proper understandability is present so that effective decision can be taken so that the performance can be improved well.

Calculating the ratios and comparing it with budgeted performance

With the evaluation of the ratio analysis, it is clear that the current position of the company is not good. This is particularly because of the reason that due to the pandemic the performance of the company as reduced and it has not been improved well. With help of the return on capital employed ratio it is clear that in the current year it is low as compared to 2019 because of the effects of the current pandemic which has been created over the performance of the company (Maturana and Nickerson, 2019). In addition to this, the average turnover ratio has also increased slightly which is good for the company. This is particularly because it implies that the company is in position to effectively use the current assets in order to improve the sales of the company.

Along with this net profit margin of the company has reduced which is not at all good for the company. This is particularly because of the reason that now the company is not in position to avail high profit margin and it will affect the overall performance of the company (Xie and et.al., 2019). Along with the liquidity ratio it was clear that in the current year the liquidity position has became stronger. This is particularly good for the company because a strong liquidity position employees that company is in capacity to pay of the current liability without any issue. Further, with help of the data collection period it is clear that it has increased as compared to the previous year. This is not good for the company and now they will receive the money much later as compared to the previous year. Similarly the gearing ratio has reduced which means that the company has other reduce that or has increased the equity within the capital structure of the company.

Preparation of the detailed report of company performance

By evaluating the performance of Marriott in Limited it is clear that the performance of the companies not too good. Thus, it is very necessary for the company that they effectively analyse financial position so that they can identify the areas where the company is lacking and the performance can be improved. With help of the analysis of liquidity position of the company it is clear that the liquidity of the company has improved. This is good for the company as they are having enough amounts to pay of the current liabilities (Kaiser and et.al., 2022). The current ratio is 1.31 where as the acid test ratios 1.07. Both the ratios have increased in comparison to the previous year and it is good for the company. It is good for the company because the company is in position to pay of the current liability with the current asset balances present with the company.

With help of the profitability ratio it is clear that see returns on capital employed has reduced for the company in the current year this is particularly because of the reason that due to the customers were not coming to the place and as a result of this the overall return provided to the investors has reduce. Along with this the net profit margin of the company has also reduced and it is not good for the company. This is particularly because of the reason that it employees that the expenses of the company are two and because of it the net profit margin has reduced (Schroeder, Clark and Cathey, 2022). Furthermore, the efficiency ratio outlines that the data collection period is higher which is not good for the company. The reason underlying the fact is that 102 days employees that customer will take 102 days to make the payment to the company. This simply means that now the receivables will be clear within the time frame of 102 days which was earlier less. In addition to this the current years labour cost percentage is 25.5%. Similarly the operation cost of the company as increased and it is 118.8.

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The cost for the company is very high and because of this the profitability of the company has reduced. Similarly the room maintenance cost has also increased in comparison to the along with this administrative cost has also being increased (Haroon and Rizvi, 2020). The comparison between the industries standards and the company it was clear that the return of capital has reduced. Further the Asset turnover and net profit margin has also reduced to a great extent. In the similar case liquidity of the company has improved which is good. It is good for the company because the company can clear off all their current liabilities with help of the current asset. Moreover, with help of the labour cost as percentage of sales it was clear that the cost is very high for the company in the current year. The industry standard is 18.10% where as the companies currently having 25.5% which is far more. With help of this it is it clear that the expenses of the company have increased and as a result of this the net profit margin has reduced.

Conclusion

With the help of the above evaluation it is clear that the financial information need to be considered effectively while making financial statements. This is particularly because in case any aspect is missed then it will be affecting the whole working of the company and its profitability will be affected. Moreover, the above study highlighted that evaluating the financial performance with help of the ratio is very necessary. This is particularly essential because it provide a base to the company for deciding which material will be better for which person. At last the above study highlighted that there is requirement of evaluating the financial performance so that corrective actions can be taken by the company to improve performance.

References

Books and Journals

• Al-Ahdal, W.M., Alsamhi, M.H., Tabash, M.I. and Farhan, N.H., 2020. The impact of corporate governance on financial performance of Indian and GCC listed firms: An empirical investigation. Research in International Business and Finance. 51. p.101083.
• Araci, D., 2019. Finbert: Financial sentiment analysis with pre-trained language models. arXiv preprint arXiv:1908.10063.
• Ayu, M., Lindrianasari, , Gamayuni, R.R. and Urba?ski, M., 2020. The impact of environmental and social costs disclosure on financial performance mediating by earning management. Polish Journal of Management Studies. 21(2). pp.74-86.
• Haroon, O. and Rizvi, S.A.R., 2020. COVID-19: Media coverage and financial markets behavior—A sectoral inquiry. Journal of behavioral and experimental finance. 27. p.100343.
• Jackson, G., Bartosch, J., Avetisyan, E., Kinderman, D. and Knudsen, J.S., 2020. Mandatory non-financial disclosure and its influence on CSR: An international comparison. Journal of Business Ethics. 162. pp.323-342.
• Kaiser, T., Lusardi, A., Menkhoff, L. and Urban, C., 2022. Financial education affects financial knowledge and downstream behaviors. Journal of Financial Economics. 145(2). pp.255-272.
• Maturana, G. and Nickerson, J., 2019. Teachers teaching teachers: The role of workplace peer effects in financial decisions. The Review of Financial Studies. 32(10). pp.3920-3957.
• Schroeder, R.G., Clark, M.W. and Cathey, J.M., 2022. Financial accounting theory and analysis: text and cases. John Wiley & Sons.
• Xie, J., Nozawa, W., Yagi, M., Fujii, H. and Managi, S., 2019. Do environmental, social, and governance activities improve corporate financial performance?. Business Strategy and the Environment. 28(2). pp.286-300.

Online

• Qualitative Characteristics of Financial Reports. 2021. [Online]. Available through: <https://accounting.binus.ac.id/2021/10/01/qualitative-characteristics-of-financial-reports/>