Accounting Analysis

Accounting Analysis

1.0 Introduction3

2.0 Discussion3

2.1 Reasons for Consolidated Accounts3

2.1.1 Qualitative Characteristics of Financial Information3

2.1.2 Major Investors4

2.1.3 Analysis on InterContinental Consolidated Statement of Comprehensive Income4

2.1.4 Revenues4

3.0 Consolidated Statement of Financial Position5

3.1 Current Ratio5

3.2 Financial Assets and Liabilities5

3.2.1 Intangible Assets5

3.2.2 Supplies payment Ratio5

3.2.3 Debt to Equity Ratio5

4.0 Consolidated Statement of Changes in Equity6

4.1 Equity Investment6

4.1.1 Retained Earnings6

5.0 Consolidated Statement of Cash Flows7

5.1 Operating Activities and Taxes7

5.1.1 Working Capital Management7

5.1.2 Investment Activities7

6.0 Corporate Governance8

6.1 Good Corporate Governance8

6.1.1 Poor Corporate Governance by InterContinental8

6.1.2 Issues on the Audit Report8

7.0 Conclusion8

References9

Accounting Analysis

1.0 Introduction

InterContinental Hotels franchises and manage hotels for the contracts of 10- 30 years. It has attractively high return on invested capital, with 99% of the hotels being franchised. It is one of the largest hotel companies in approx 100 countries around the world. InterContinental operates in nine hotel names, Crowne Plaza, InterContinental, Hotel Indigo, Holiday Inn Express, holiday Inn, Candlewood Suites, Staybridge Suites, EVEN Hotels and HUALUXE Hotels. Financial Statements highlighted below are essential for the “Investors” which are the major Shareholder of this company. These statements are also beneficial for the financial institutions if they are providing loans to the company.

InterContinental Hotels, listed on London Stock exchange is performing above the market performance compared to the S&P 500 index. It shows an increasing trend from 2008 till date except of the dip in 2008 due to world crises (Bloomberg).

2.0 Discussion

The Consolidated Statements and financial information is important for “Investors” as they go through these statements to make cruicial decisions. This financial information is quite handy for mergers and acquisitions and also for expanision of business and companys financial image.

2.1 Reasons for Consolidated Accounts

In preparing financial statements, companies have to make a decision on which information to include in the financial statements, when to include it and how to present the information in a way that is useful to users. Most national accounting bodies and particularly the International Accounting Standards Board(IASB) have come up with a generally accepted set of principles based on which financial statements that aim to give a true and fair view ought to adhere.

2.1.1 Qualitative Characteristics of Financial Information

The principles cover almost every aspect of financial reporting however this report is aimed at the qualitative characteristics of financial reporting.This report takes a critical look at the consolidated financial statements of Intercontinental hotel ltd. , a hotel company for the year and how the information presented in the statements conform to or digress from the qualitative benchmarks of consolidated financial statements that aim to give a true and fair view.

2.1.2 Major Investors

InterContinental operates in nine hotel names, Crowne Plaza, InterContinental, Hotel Indigo, Holiday Inn Express, holiday Inn, Candlewood Suites, Staybridge Suites, EVEN Hotels and HUALUXE Hotels. The switching costs along with the strong brand name and network provides economic moat as the company continued to sell owned properties.

2.1.3 Analysis on InterContinental Consolidated Statement of Comprehensive Income

The net consequence of it speaks to the cash that is accessible for board to re-establish, update or raise new group holdings or to ...