Individual Corporate Performance Appraisal Assignment Sample

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Introduction Of Individual Corporate Performance Appraisal Assignment Sample

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Task 1: Corporate performance appraisal

The hotel group Royal Windsor Hotels plc has a great scope in managing the performance of the organization in the current year. In order to estimate accurate performance, the financial ratios are evaluated in which profitability, liquidity and solvency ratios are evaluated by the analyst. From the calculation, it can be stated that the hotel group may retrieve the average hotel position as a whole. The corporate principles that are followed in the organizations are mainly estimated by their owners by using effective strategies and financial measures (Barnett-Howell et al. 2021). RWH in liquidity and solvency ratios are matched with the ideal condition where the quick ratio is obtained at 0.6 whereas the ideal ratio is below 1.0. Therefore, the company must use more liquidity to pay off its debts and obligations to sustain in the market for a long period of time. As a hotel group, the organization must provide quality service to its users to gain the utmost value and goals.

 Benefits of performance Appraisal

(Source:educba.com, 2022)

Corporate performance appraisal shows the current phase of the organisation where they estimate all the policies that bring favourable outcomes in a short span of time. As per the view of Bati and Chase (2020), a regular view of the working individuals and their contribution to the company is also estimated with the help of this appraisal technique. A hike in their salaries and compensation totally depends on the results of these performance appraisals. Contributions of each working individual are solely determined and according to the outcomes the company growth, as well as individual growth, is measured. The calculation of ROCE is been evaluated by using the formula “ROCE = Profit margin x asset utilization”, where the values are multiplied as 14.6* 0.80= 11.68%. As per the author Chwi?kowska-Kubala et al. (2021), the obtained value is less than the ideal stated value which is 20%. Therefore, the owner or the managers need to accomplish more value about the declining range of RWH.

Task 2: Break-even analysis

The monthly financial review done by John Fairstow has show the recession period in the country Europe. The financial review is basically done by ascertaining the breakeven analysis.

  1. a) The sales must be fall by 50% more than the actual value which is 543; this is to get sales to fall before the group started running up losses. If the sales decrease to a great extent it can be stated that there are many implications that need to be valued at a constant rate. As narrated by Crouch and Pendley (2019), it is also stated that there are many alternatives that can determine the sales but breakeven point shows the actual values. It is mainly calculated by using the formula “Breakeven point= (Gross profit/sales) / fixed cost”. The values are represented as (297/543)/ 140= 76.57. Therefore, the sales must be around the obtained value or below that which will induce a loss.
  2. b) The sales must be around £691.7 which is obtained by calculating the initial values as (543/157*200). This level of sales does the firm needs to make the profit forecast that is announced at the company's press conference last week, estimated at £200 million. As it is announced in the last week, that to make a 200 million sales the company must follow the limit which is obtained above. As opined by Howard and Drábek (2022), this is because if the manager wants to increase the sales from the stated limit it can be induced that there are many vital components that can be reimbursed to gain more attainable competence. It is also stated that there are many forecasted values that can bring favourable outcomes to the firm but at the same time, it can reduce this vulnerability to gain more competence in managing all the issues. As mentioned by Høydal and Lysebo (2021), as it is a hotel group it can be stated that profits must be attainable if the sales are optimistically evaluated to gain mere competence. Therefore, the sales may be increased by 205 from the stated value. 
  3. c) In terms of occupancy rate these levels mean more beneficial outcomes to the firm in coming years. If the sales will increase then the profits will be also increased (Huber et al. 2018). This bilateral relation implies more growth and expansion for the firm. On average, the firm must use a nominal concept to manage the break-even point at an optimum level. Generally, occupancy rates are estimated to calculate the values in hotel, hospital and rental services. As stated by Jacobsen et al. (2021), occupancy rates refer to the “ratio of rented or used space to the total amount of available space”. In the context of the RWH hotel group, it can be stated that the occupancy rate is ideally evaluated between 75-95%. However, from the calculated value from the hotel group, it can be estimated that there are a few notable comments that need to be accomplished to get more turnover ratios in a single way. As opined by Kane and Gaskel (2019), the average stay period at the hotel premises is stated around 120 each. Hence there are many other elements which define the occupancy rate at around (180 x 105 x 365) = $6898500 per year. This revenue is also associated with the budgets and costs that are made in composition with the other manures. 

Task 3: Pricing special orders

  1. a) Current occupancy rate is obtained by “dividing the number of occupied rooms by the number of available rooms and multiplying by 100”. Therefore, the occupied rooms are 105, available rooms are 80. Hence the current occupancy is estimated at (105/80*100) which is equal to 131.25. This occupancy rate is estimated from the available information. Occupancy rate is the ratio of the used or rented space and it is the most vital indicator of business success which is calculated by dividing the total number of rooms occupied by the total number of rooms available by multiplying 100. A good occupancy rate in hotels depends on the number of rooms, location, guests target etc.
  2. b) If the current price structure is unchanged then the profit target of £600,000 can be fulfilled by increasing its sales and profit by 25%. If the profit is increased up to 500 and the sales increase up to the abovementioned results, then the estimated level must be reached by the firm.If the current price level will be unchanged then company profit will be increased in the revenue and the profit increased by 25% then the sales will be increased and the hotel manager will fulfil their sales target ( Yrigoy, 2021).
  3. c) In the context of marginal business, it can be stated that minimum charges must be applied for the rooms. The charges for the room must be around £120 which is estimated after deducting all the overheads. Minimum charge on the marginal business is the production of one extra product or service cost more than it did before as a result it is a less profit. Here the hotel manager charges the room rent around $ 120 where all the overheads like tax, rent were excluded.
  4. d) The main danger is that if it reduces the cost per room below 120 then they financially face a huge loss. They won't be able to pay the expenses in time, and this will lead to dues and obligations. It also directly affected the quality of services. Danger of pricing always affected the business growth and hotels profits. If the manager decreases the hotel charges below 120, they face a huge loss in their revenue and their business growth will also decrease. The company would not be able to pay the expenses of time and would not be able to provide the best quality service to the customers. AS a result, the company reputation will be decreased and profit also.
  5. e) If the extra rate is applied to the initial cost, then the cost of sales is applicable for £550. Concessionary rate is always attracted to a customer because it is a special rate which is less than the normal rate. Concessionary rates increase the company’s profit because a large number of people will book the hotel room for their concessionary price (He, 2019).

Task 4: Role of the budget & performance measurement

  1. Different role of budgeting

 Role of budgeting

(Source: whybudgeting.com, 2022)

Budgeting has the role of improvise business operation through allocating sufficient resources to achieve business goals. Playing by budgeting has improvised business operations by using minimum resources for maximum output. Additionally, budgeting focuses on the motivation of business operation by consideration of past performance (Lafortune et al. 2018). Hence, a motivational approach in budgeting helps to gain financial benefits by coordinating operational activities. Evaluation of budgeting helps to evaluate the business operation and project ultimate expected gain financial benefits.

Budgeting is an important process of making a plan to spend money; it balances the income and expenses. 

Targets set 

Budgets work as a prominent tool for monitoring and controlling targets, it brings pure guideline obeying to RWH hotel operators which should be run. Achieve revenue and cost the budget sets targets and which targets can be achieved by various ways. 

Strategy obviates funding

In formulating the capital expenditure plan of organisations, the budget plays a vital role. The first matter is availability of funding that’s sought for preparation of the budget. The accessible funding describes the type of capital expenditure plan which RWH hotel can opt.. Knowing this advance the organisations can decide on the strategies which can follow. Budgeting is greatly helpful through outline the availability of funding formulation of strategies (Polzer et al. 2021).

Brings profit margin 

The budgeting brings a profit margin that helps an organization. It processes contributions to pro forma financial statements. RWH hotel tracks profit throughdevelopment forecasted of financial statements. It will find the profit that runs the organisations operation for the future.

  1. Potential conflicts roles and practical suggestion

Conflict in budget planning has occurred through higher consumption of financial resources than expected result. It has improvised productivity and organizational issues to manage operational activities (Pererva et al. 2019). Additionally, reduce of financial resources led to a lack of productivity, and higher operational activity. The practical suggestion of the higher production crisis has been integrated within the study. Budgeting is an important part of the management control process which plays a crucial role in the company. Sometimes major conflicts may arise in the company and the crucial role conflict between the evaluation and motivation roles that involve the impact on motivation standard on the evaluation process. Impact on an unbalanced budget with many critics of the deficit standing on the ideological spectrum and the conflict arises between the evaluation and planning roles because a realistic assessment prospects for future needs would conflict with the need to eliminate the environmental variables (Nurhayati et al. 2020). The issue of budgeting arises because it can be time consuming to make a budget and it is completely dependent on the financial outcomes.

  1. A suitable performance measurement

Suitable performance measurement has explored the contribution of Royal Windsor Hotels plc has been organized through sales - variable cost approach, where 543.3 - (9.6+56.8) = 476.9 should be the contribution level. Profit before group overheads has been identified through profitability calculation. Profit after overhead and interest has been identified with the exception of a 40% profitability margin in this business operation. The hotel manager of RWH has adopted some measures to improve their business growth and increase their profit in revenue. These are operating cash flow, current ratio, and working capital and also focused on the rate of techniques, the total amount of profit and the rate of productivity.

Contribution

Increase hotel revenue the RWH hotel can follow the same ways such as early check in and late check out, offer to pre arrival upgrades room, prompt beverage opportunity by the stay and food, take help from upsell opportunity, excursion with partner of local business.

Profit before group overheads

Hotel managers of RWH have monitored the profit before group overheads by excluding expenditure or indirect costs like insurance, rent and utilities etc. Actually, it is a net profit or gross income of the business excluding expenditure. RWH hotel carefully analyses the present market to understand the trends of booking and its customer.

Profit after overheads and interest

 The hotel manager has taken another way to improve their business profit by calculating the profit after overheads. It is the gross income or profit of a business which is the summation of net profit, interest expenses and taxes. It provides raw data of the business and the manager can understand the total sales without total costs and hotel profits.

Task 5: Investment appraisal

Figure 3: Graphical presentation of cash flow

(Source: Created by leaner)

Particulars

Project plan

Year 0

-470000

Year 1

270000

Year 2

350000

Year 3

566000

Year 4

916000

Project plan

Cash flows (£Ms)

Cash Flows

CCF

DCF @10%

PV (@10%)

Year 0

-470000

-470000.00

1.00

-470000

Year 1

270000

-200000.00

0.91

-181818.1818

Year 2

350000

620000.00

0.83

512396.6942

Year 3

566000

916000.00

0.75

688204.3576

Year 4

916000

1482000.00

0.68

1012225.941

NPV =

2,031,008.81

Table 2: Calculation of NPV

(Source: Created by learner)

 Graphical presentations of NPV calculation

(Source: created by leaner)

  1. Considering discounting factors of 10% has improvised the net present value of this assuming the productivity of this organization. This NPV appraisal productivity of this method has made 2,031,008. Positive NPV has explored higher positive growth and higher productivity. It has been recommended to the company to adopt the new acquisition because as a result the NPV of the organisation is positive. The positive NPV explores higher productivity and high positive growth of the business (Bogataj et al. 2019). The positive NPV indicates the organisation can consider moving forward with investment and expect a high profit. This positive result of the firm can help to create wealth from investment. Positive NPV accounts for positive investment size.It apply to compute margin of investment to multibillion projects for new acquisition. According to the above benefit of high positive NPV it has been recommended that the new acquisition should be adopted by the organisation.

B.General management should permit this investment of this organization due to positive result calculation. The general manager's permission to do this investment activity would deliver positive results to this organization. NPV of an investment and project means its rate of return is above the discount rate. The general manager of the organisation mostly uses the NPV approach. If NPV is positive, the manager follows three steps to evaluate the investment of the business. The manager should entail cash flows distributed in some pattern.

  1. Factors that should be considered in the NPV appraisal method are discounting factor and disposal value. Based on NPV calculation has considered the cash flow of the invested value, helps to identify actual return through the invested project plan.

The factors which are considered when NPV is highly positive - costmaintenance, cash from sale of assets, payments of tax, working capital, depreciation etc. Rate of return and time period should be included inNPV. A lower rate of interest should be considered if the NPV is highly positive of an organisation. Depreciation affects NPV it must include in the cash flow of the company. Discount factor is most part to achieve highly positive NPV For an organisation and if should mention and considered by the Authority, it also helps to identify the actual return through the positive investment of an organisation (Ros?on et al. 2020).

Task 6: Financing expansion

  1. Additional financial requirement

Forcompilation of project planning, it helps to improvise the productivity of the invested projects. Based on the financial projects planning, additional requirements of financial resources for using more manpower in project development (Lewiecki et al. 2019). Furthermore, marketing activities related to operations need to improvise through using of financial resources.The additional finance required for the coming year to cater for this expansion is to acquire more human resources and extra finance that need to be assimilated into the expansion process. As stated by Lazzaro et al. (2021), it is also stated that there are many other functions that are deprived and internal provide support to each source of RWH. The other options that are required to fulfil requirements for these options are “own money, borrow from friends and family, use internally generated funds, approach equity investors or tap banks and other lenders”. All these options help the manager cater to all the issues in a smooth way. As per the view of Rabbitts and Ickinger (2019), additional finance is required for the growth aspects of any business concern, without the finance, a firm account runs its insights in a regular manner. However, there are other alternatives that are required to manage the additional finance. 

  1. based on the condition of RWH management forecasts growth additional finance for non-current assets has generated by £60m. 25% of the additional finance for non-current assets can be internally generated to get more returns from the stated assets. From the given financial statements, it can be noted that the assets are valued at 2303.3 and 1928.7 for the two years. In order to compensate for the other alternatives, the value of the assets must be increased by 25% as there are many vital sources that need to be communicated to show the other binaries. 
  2. Expected funding requirement for 17% profit before tax, sales volume would be £485m X 27% = £ 615.95. Based on this condition external funding would be improvised through higher sales volume growth, where the profitability of the operational activities could be possible by external financial resources. The given assumptions have shown the increased value of the assets by increasing the current sales up to 60 million. The sales quietly increased by 17% and the results show more value at £ 615.95. Therefore, from the assumptions, the company valuation must be concentrated up to the stated limit obtained in ROCE. 
  3. Cash need to be raised

Calculation of the cash to be raised through a rights issue 

Calculate the cash to be raised through a rights issue

particulars

amount

Market value of the shares already held by shareholder

 £ 40.00

cash balance

 £ 305.10

Add: Price to be paid for buying one share

 £ 22.00

Total shares 

 £ 367.10

Table 3: calculation of cash value 

(Source: self-created)

Based on the overdraft facilities of £40m and borrowings of £22m by long-term loans, where issuing of right issues shares to shareholders is £62m.

  1. Working capital of this organization needs to be adjusted by £62m at the begging of the financial year. Additional working capital increases the value more than the specified limit. As mentioned by Kathleen and Schipani (2019), it can be stated that the financial needs of the company that is ascertained by examining the ROCE values it can be restricted that there are many intuitional values that can bring overall changes to destructive regular changes. In the beginning of the next financial year, the aforementioned valuers must be generated through the additional financial venture. This is to gain more value to Demotte the facilities in a nominal way.

References

Barnett-Howell, Z., Watson, O.J. and Mobarak, A.M., 2021. The benefits and costs of social distancing in high-and low-income countries. Transactions of the Royal Society of Tropical Medicine and Hygiene, 115(7), pp.807-819.

Bati, A. and Chase, S., 2020. The cigar companion: the connoisseur's guide. Chartwell Books.

Bogataj, D. and Bogataj, M., 2019. NPV approach to material requirements planning theory–a 50-year review of these research achievements. International Journal of Production Research, 57(15-16), pp.5137-5153.

Chwi?kowska-Kubala, A., Cyfert, S., Malewska, K., Mierzejewska, K. and Szumowski, W., 2021. The Relationships among Social, Environmental, Economic CSR Practices and Digitalization in Polish Energy Companies. Energies14(22), p.7666.

Crouch, R. and Pendley, B., 2019. Royal Bargemasters: 800 Years at the Prow of Royal History. The History Press.

He, P., Qiu, Y., Wang, Y.D., Cobanoglu, C., Ciftci, O. and Liu, Z., 2019. Loss of profit in the hotel industry of the United States due to climate change. Environmental Research Letters, 14(8), p.084022.

Howard, P. and Drábek, P., 2022. The Art of Making Theatre: An Arsenal of Dreams in 12 Scenes. Bloomsbury Publishing.

Høydal, H.H. and Lysebo, C., 2021. Quantifying attention: utilizing Google searches to forecast stock performance of business-to-consumer companies (Master's thesis, NTNU).

Huber, R.A., Anderson, B. and Bernauer, T., 2018. Can social norm interventions promote voluntary pro environmental action?.Environmental science & policy, 89, pp.231-246.

Jacobsen, H., Bird, R. and Jackson, M., 2021. Jean-Henri Riesener: Cabinetmaker to Louis XVI and Marie Antoinette. Bloomsbury Publishing.

Kane, C. and Gaskell, A., 2019. Corporate occupiers strengthen place making initiative in London’s White City: The BBC’s and Imperial College’s role in adding value. Corporate Real Estate Journal8(3), pp.235-252.

Kathleen, S. and Schipani, A., 2019. UNIVERSITY OFPENNSYLVANIA JOURNAL OF BUSINESS LAW. JOURNAL OF BUSINESS LAW22(1).

Lafortune, J., Riutort, J. and Tessada, J., 2018. Role models or individual consulting: The impact of personalizing micro-entrepreneurship training. American Economic Journal: Applied Economics, 10(4), pp.222-45.

Lazzaro, E., Moureau, N. and Turpin, A. eds., 2021. Researching Art Markets: Past, Present and Tools for the Future. Routledge.

Lewiecki, E.M., Ortendahl, J.D., Vanderpuye?Orgle, J., Grauer, A., Arellano, J., Lemay, J., Harmon, A.L., Broder, M.S. and Singer, A.J., 2019. Healthcare policy changes in osteoporosis can improve outcomes and reduce costs in the United States. JBMR plus, 3(9), p.e10192.

Nurhayati, N., Pratiwi, A., Muniarty, P. and Kamaluddin, K., 2020, August. Opportunism and Internal Conflict of the Executive and Legislative in Planning and Budgeting. In 1st Annual Yrigoy, I., 2021. Strengthening the political economy of tourism: Profits, rents and finance. Tourism Geographies, pp.1-20.

Pererva, P., Besprozvannykh, O., Tiutlikova, V., Kovalova, V., Kudina, O. and Dorokhov, O., 2019. Improvement of the Method for Selecting Innovation Projects on the Platform of Innovative Supermarket. TEM Journal, 8(2), p.454.

Polzer, T., Nolte, I.M. and Seiwald, J., 2021. Gender budgeting in public financial management: a literature review and research agenda. International Review of Administrative Sciences, p.00208523211031796.

Rabbitts, P. and Ickinger, R., 2019. Windsor & Eton in 50 Buildings. Amberley Publishing Limited.

Ros?on, J., Ksi??ek-Nowak, M. and Nowak, P., 2020. Schedules optimization with the use of value engineering and NPV maximization. Sustainability, 12(18), p.7454.

Website

educba.com (2022). Benefits of Performance Appraisal Available at:https://www.educba.com/benefits-of-performance-appraisal/ [Accessed on 14/09/2022]

whybudgeting.com (2022). Why Is Budgeting Important? Available at: https://whybudgeting.com/why-is-budgeting-important/ [Accessed on 14/09/2022]

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