Business Entities and the Efficiency of an Accounting Accountant - Coursework Example

March 5, Accounting_ work Task Efficiency Efficiency describes how well the employee performed the assigned job. For example, two employees were hired to do the same job. Mr. George, a neophyte or greenhorn employee finished the same assigned task within eight hours. On the other hand, a newly hired expert, Mr. William, was able to do the same job within five hours. Consequently, Mr. William efficiently did the same job within a favourably shorter time period (Chapman, 2011). Another example occurs when one task uses the lowest expense amount. Effectiveness Effectiveness indicates the successful accomplishment of the assigned employee’s assigned tasks, responsibilities, or goals. Mr. Joseph, store sales personnel, generated £ 10,000 revenue for February, 2015. On the other hand, Ms. Gina, another sales personnel assigned to another city branch of the same company, generate £ 50,000 revenue during the same time period. If the company’s sales benchmark for each store sales employee is £ 40,000 per month, Mr. Joseph’s sales strategies did not effectively meet the required monthly revenue benchmark. On the other hand, Ms. Gina’s sales strategies effectively met the monthly required revenue benchmark (Chapman, 2011). Task 2 1. Business entities strive to generate higher efficiency and effectiveness levels to increase revenues (Chapman, 2011). By performing the same task within lesser time period, the company can sell more products. Taking lesser time to serve each customer’s store needs allows the same sales personnel to serve more customers. Serving more customers will normally lead to more revenues. By reducing work time to the least possible length, the store’s overall revenues will surely increase. 2. Business entities strive to generate higher efficiency and effectiveness levels to maximize expenses (Chapman, 2011). By using lesser salary expense, electricity expense, water, expense, repair expense, marketing expense, and other related business expenses, the company is able to save money. The saved money reduces the loan amount needed by the company for business expansions to other cities or nations. 3. Business entities strive to generate higher efficiency and effectiveness levels to increase net income figures (Chapman, 2011). With lesser time used and with lesser expense amounts, the financial statements of the companies will show that the company’s net income is favouraby higher than when money is unnecessarily wasted on unnecessary electricity, wage, and other production and possibly marketing expenses. Task A. Table1 Total Assets_Turnover The above table 1 evidently indicates United Kingdom’s Marriot Hotel more efficiently and more effectively maximized its total asset amounts to generate the above revenues during 2014 than the prior accounting period, 2013 (Marriott Hotel, 2014). As proof, Marriott Hotel’s 2014 year asset turnover_ratio is 1.99. On the other hand, Marriott’s 2013 performance only produced the unfavorably lower 1.947 output. The total assets account includes the current asset amounts (Chapman, 2011). Further, United Kingdom’s Dorchester Hotel had more efficiently and more effectively maximized its total asset amounts to produce the above revenues during 2014 compared to the previous accounting period, 2013 (Chapman, 2011). The above table 1 shows Dorchester Hotel’s 2014 year asset turnover_ratio is 0.16. On the other hand, Dorchester Hotel’s 2013 performance unfavorably produced the lower 0.14 figure (Dorchester Hotel, 2014). B. The next table 2 evidently indicates United Kingdom’s Marriot Hotel more adequately maximized its fixed asset amounts to produce the 2014 annual period’s 2.76 fixed assets_turnover ratio, compared to the company’s previous 2013 output. Marriott’s 2013 fixed assets_turnover ratio was unfavourably lower at only 2.622 (Chapman, 2011). Table 2 Fixed Assets_Turnover Ratio In the same manner, the same table 2 affirms United Kingdom’s Dorchester hotel had more adequately maximized its fixed asset amounts to turn out the 2014 annual period’s 0.168 fixed assets_turnover ratio,when comparing the 2014 performance to the company’s previous 2013 output. The above table indicates Marriott’s 2013 fixed assets_turnover ratio was unfavourably lower at the lesser 0.149 output. The fixed assets figure does not include all current asset amounts (Chapman, 2011). C. Table 3 Revenue to Working_Capital Ratio £ Billions : £ Thousands The above table 3 shows Marriott Hotel more efficiently used its working capital to produced the year’s £13.6 million revenue during 2014, compared its financial performance during 2013. The 2014 period generated the higher (11.93) revenue to working_capital ratio. During 2013 Marriott Hotel’s accounting period only generated the unfavorably lower (16.38) revenue to working_capital ratio (Chapman, 2011). Similarly, the same table 3 shows Marriott Hotel more efficiently used its working capital to produced the year’s £ 4,608 thousand revenue during 2013, compared its financial performance during the next accounting period, 2014. The 2014 period generated the lower (15.35) revenue to working_capital ratio. During 2013 Marriott Hotel’s accounting period showed the company favourably turned out 3.17 revenue to working_capital ratio (Chapman, 2011). D. Table 4 Operating_Expense Ratio Billions : £ Thousands The above table 4 illustrates Marriott Hotel more efficiently used expense amounts to generate the revenue during 2014 compared to the prior 2013 accounting period to produce the 2014 year’s £13.6 million revenue. The 2014 period expense amount was 48.46 percent of the total revenue. On the other hand, the 2013 total expense amount was unfavourably higher than the 2013 ratio, generating the 55.40 operating expense to working_capital ratio (Chapman, 2011). Further, the same table 4 affirms Dorchester Hotel more efficiently used expense amounts to produce the same 2014 year’s revenue, when compared to the prior 2013 accounting period, in the production of its 2014 year’s £4608 million revenue. The 2014 period total operating expense amount was 107 percent of the same year’s total revenue. On the other hand, the 2013 total expense amount was favourably lesser than the 2014 ratio, turning out the 105 percent operating expense to working_capital ratio (Chapman, 2011). E. Table 5 Return_on Investment £ Billions : £ Thousands The above table 5 shows Marriott Hotel more efficiently used its total assets to generate the same 2014 year’s net profit financial picture. The company’s 2014 performance generated 158.66 investment return ratio, which was higher than the 2013 year’s performance. The company’s previous 2013 performance generated 132.11 investment return ratio (Chapman, 2011). Further, the same table 5 shows Dorchester Hotel more efficiently maximized its total assets to produce the same 2013 year’s net profit financial picture. The company’s 2013 performance generated 1 percent investment return ratio, which was significantly higher than the 2014 year’s performance. The company’s previous 2014 business performance produced the unfavourably lower -1 percent investment return ratio (Chapman, 2011). Task 4 The financial ratios have significant drawbacks. First, the financial ratios do not perfectly predict the next accounting period’s performance. For example, the financial ratio indicating that the net profit ratio for 2012 to 2014 is pegged at 15 percent is not a guarantee that the 2015 year will end with a similar 15 percent net profit ratio, especially when natural calamities, including hurricanes, strike. Second, different components of the ratios may generate different ratios. For example, one company may use the First-in, First-out inventory process while another company uses the Last-in, First-out or average inventory costing. Consequently, the different financial ratio inputs will confusingly produce different inventory turnover ratios. Third, conflicting financial ratios may create a confusing image on the financial report readers. For example, one company’s net profit ratio is 10 percent, indicating a favourable financial picture. However same company’s -2 percent total_asset turnover_ratio will create a negative financial picture of the same company (Chapman, 2011). Task 5 1. Growth & Learning Perspective. The perspective on hiring, training, and expertise of the employees. Some employees are fast learners while others are slow learners. Entities train employees to ensure high quality service is delivered to the customers. Fast learners are often promoted to supervisory and other more responsible positions. After the training, employees can expertly delivery quality service to the current and future business customers (Kaplan & Norton, 2013). 2. Internal_Process Perspective. The perspective focuses on how well all departments of the company contribute to the attainment of organization goals and objectives. For example, additional new employees and adding new production equipments will increase production and revenues (Kaplan & Norton, 2013). 3. Customer Perspective. The perspective focuses on how well the employees serve customers’ needs. The company’s marketing strategy includes determining the current and future business customers’ changing needs or wants. Consequently, the company’s research and development department will introduce the new products that will fill the diverse needs of the awaiting prospective customers (Kaplan & Norton, 2013). Task 6 Based on the above tables, the overall performances of both Marriott Hotel and Dorchester Hotel during 2013 and 2014 are significantly favourable. Both competitors generated favourably positive total_assets turnover_ratios, fixed_assets turnover_ratio, and the revenue to operating_expense ratio. Marriott Hotel performed efficiently better than Dorchester Hotel based on the investment return (Chapman, 2011) ratio and return to working_capital ratio. In terms of balance scorecard, both companies performed favourably well. Both companies’ hotel services satisfied the customer’s needs. The internal process of both companies ensured quality hotel service pampered the customers. Both companies train their employees to better serve the hotel needs of the customers (Kaplan & Norton, 2013). References: Chapman, C. 2011. Handbook of Management Acounting. London: Elsevier Press. Dorchester Hotel. 2014.. Financial Statements. London: Dorchester Hotel. Hotel, M. 2014. Financial Report. London: Marriott Hotel. Kaplan, R, Norton, D. 2013. Alignment: Using the Balanced Scorecard to Create Corporate Synergies. Harvard: Harvard Business Press. Abstract: Dorchester Hotel Income Statement Dorchester Hotel Balance Sheet Marriot Hotel Income Statement Marriot Hotel Balance Sheet Read More