Discuss why an understanding of ratios and their fluctuations is essential for Hotel management in analysing the information seen in their financial statements.

Analysis of the Financial Statements (85% of total marks overall)

Hilton Hotels and Resorts is a global brand with a range of resorts and flagship hotels. The chain has a number of hotels within the United Kingdom and Northern Ireland. As the Company Accountant for the UK branch, you have been tasked to produce a report for the Chief Executive addressing the following:

a) Calculate suitable ratios for 2018 and 2019 to aid the analysis of the financial information included within the attached financial statements. You should discuss the trends seen in these ratios in detail, and draw appropriate conclusions about the profitability, liquidity and gearing of the hotel chain.

b) Discuss why an understanding of ratios and their fluctuations is essential for Hotel management in analysing the information seen in their financial statements.

c) Discuss the benefits and limitations of using ratio analysis to aid decision making within the hotel and tourism industry.
(2000 words)

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