Derby Enterprises Ltd: Profitability Trends

Assignment 1

Preparation of Journal Entries

The following table demonstrates the journal entries from April 2016 to December 2016.

Preparation of Ledger Accounts

The following tables demonstrate the ledger accounts of the above journal entries.

Preparation of Trial Balance

The following table demonstrates the trial balance as of 31st December 2016.

Calculation of Ratios

a. Operating Profit Margin

b. Return on Capital Employed (ROCE)

c. Current Ratio

d. Day’s Trade Receivables

Sales Revenue to Capital Employed

Comments on the results

From the analysis, it can be observed that the operating margin ratio of Derby Enterprises Ltd 9.63% in 2014 which has become 9.16% in 2015. This is an important profitability ratio which evaluates the proportion of revenue made up by the operating income. The value indicates that of every £100 revenue, only £9.16 remains after paying the operational expenses, or in other words, only 9.16% of revenue is left to cover the nonoperational expenses of the business. Therefore, it can be stated that the company’s operational controls are weak and its effectiveness for managing operational expenditures has reduced (Fernandes, 2014). The ROCE of Derby Enterprises Ltd is observed as 8.28% in the year 2014, which has reduced to 7.47% in the year 2015. It is another important profitability ratio which evaluates how efficiently an organization can earn profit from the capital. The value indicates that with every £100 invested in capital, the company earns operating profit of about £7.47. This is quite unfavorable for the company as not much profits are generated by each pound of capital employed. Besides, the decreased trend of ROCE also signifies that the company’s efficiency in utilizing the capital has reduced (Banerjee, 2009). The current ratio of Derby Enterprises Ltd was 3.26 in the year 2014, which has become 1.49 in the year 2015. It is a liquidity ratio which evaluates organizational capability to pay the short run dues through using the current assets. Therefore, it can be stated that the company has 1.49 times more current assets in comparison with current liabilities. In other words, it has sufficient current assets to pay off all the current liabilities and hence will not require to sell the fixed assets. This indicates that the company is highly liquid. However, its current ratio has decreased in recent time, indicating that the liquidity of the company has reduced. It can be the result of losing more money for purchasing noncurrent assets, which is beneficial for the company for future operations (Banerjee, 2009). The days’ trade receivables of Derby Enterprises were about 97.77 days in 2014 which has increased to 137.46 days in 2015. This is also termed as average collection period of a company. The amount specifies that the company requires about 137 days to collect the receivables. Furthermore, the increasing trend of trade receivable days indicates that it is taking more time for the company. In other words, the effectiveness of the company for extending credit had reduced. This can result in a cash flow issue for the company and also reduces the liquidity (Fernandes, 2014).

Finally, the sales revenue to capital employed ratio of the company was observed as 85.94% in 2014, which has reduced to 81.51% in 2015. This indicates that with £100 of capital employed by the company, it earns revenue of about £81.51. Therefore, it can be stated that the assets of the company are being used effectively. However, the decreasing trend of sales revenue to capital employed ratio implies a reduction in productivity and revenue generation.

Assignment 2

Introduction

In this following assignment, the main focus is on developing, managing and improving the annual performance process in the Derby Enterprise. It is a well-known company, which is famous among the hospitality sectors (Grayson and Hodges, 2017). The assignment will discuss the ways of managing the HR lifecycle. Along with this, the potential impact of ethical and legal considerations will also be mentioned in addition to the importance of coordinating and integrating the functions of the departments. It will also state about the role of HR in growing, supporting and retaining talent wherever provided for the development of the organization. Recommendations will also be provided according to the requirements.

LO2. Assess How to Manage the Human Resources Life Cycle within the Context of HR Strategy

P4. Review the Different Stages of the HR Life Cycle Applied To A Specific Hospitality Job Role and Their Importance for Retaining and Development Talent

The assistant business development manager along with the HR tries to look forward to the employees with the help of the process of recruitment and onboarding. In this, it is the role of the HR to assist the development manager to perform its roles. In other words, such recruitment roles are known as hiring support (Bailey et al., 2018). Apart from this, with the onboarding process, the organization gets to see an efficient and successful applicant in this workplace. In the next stage, the orientation method is seen useful for the new members for understanding their job responsibilities and for creating good relationships with the other members. Apart from this, career planning is also done for working out the goals of the company, which in turn will be beneficial for its development. In the Derby Enterprises, career development opportunities are also provided to the employees for determining their long-term goals and objectives. This, in turn, helps the employees’ in their professional growth and training process (Krishnan and Scullion, 2017). In this last stage, the role of the HR is to bring about the transition by providing efficient policies and procedures. In this way, the assistant business development manager gets some help from the HR in the process of providing development.

P5. Develop a Performance Management Plan for a Specific Hospitality Job Role Applying Techniques to Resolve Both Negative Behaviour and Overcome Issues of Staff Retention

Derby Enterprises is getting a prestigious position in the world market because of its efficient working of the management. In the process of providing employment, the company goes through different negative behavior and issues related to staff retention (Lussier and Hendon, 2017). The HR and the assistant business development manager need to work together for overcoming such issues in the working environment. A performance management plan is implemented in which, different methods and techniques are used for the betterment of the organization. The new members are provided with job analysis methods. After that, the employees need to go through different procedures such as recruitment and onboarding, reward and recognition, performance appraisals, disciplinary processes, learning and development methods and succession planning (Rothwell, Hohne and King, 2018). In this way, the HR and the assistant business development manager get to know about the qualities and talents of the new candidates. After analyzing their performance and behavior, the company tries to select efficient members who would be perfect for the respective job position. Along with this, the company will also be able to overcome the issues of staff retention and the chances of negative behavior. In this manner, the organization will get its progress with the help of HR and assistant business development manager.

LO3. Illustrate the Potential Impact of Legal and Ethical Considerations on a Hospitality Business

P6. Identify Specific Legislation That a Hospitality Organization Has To Comply and Adhere to

There are many legislative laws that the hospitality organization like Derby Enterprises should maintain, comply and adhere. The company should try to provide useful and efficient services and products to the customers. On the other hand, it is the responsibility of the assistant business development manager to look after such issues. It also must gain some knowledge about the customers’ perceptions (Simons, Vermeulen and Knoben, 2016). This, in turn, will help in the process of development. Apart from this, protection of reputation is also one of the specific legislation the company Derby Enterprises should follow. It can be observed that for maintaining the business reputation, the company should have some knowledge about the hospitality regulations. Thus, for proceeding with this, the staff members need to be trained to make them aware about the legal obligations. On the other hand, honoring agreements and fair marketing should be continued, which in turn will provide a positive impact on the customers (Bohle et al., 2017). The laws should be preserved as it can be valuable for future use. Derby Enterprises should maintain the employment agreements and payroll taxes. Accurate records should be kept in an organization so that it can be useful in different processes of governmental agencies or taxes.

P7. Using Specific Examples Illustrate How Company, Employment, and Contract Law Has a Potential Impact upon Business Decision-Making in the Hospitality

In many recent studies, it can be observed that the business or company law can provide a great effect on the process of decision-making in business. The companies are getting affected by the taxation policy as well as with the increase in corporate taxes (Ferrell and Fraedrich, 2015). The government deals with the VAT, which in turn affects the working management. The relationship between employees was also seen getting affected by such government regulations. Apart from this, the company laws are also seen impacting the companies by providing governmental rules and regulations of codes of ethics and safety of the consumers. Such tactics are also influencing the Derby Enterprises’ decision-making process. In the case of employment and contract law, the companies get to know about the employees’ rights and benefits (Grayson and Hodges, 2017). It is important for the organization to work according to the laws of employment. Thus, this in turn, potentially impacts the business. Contract laws are also seen maintained in the organization. Along with this, job security, social justice, and equity are also maintained in this organization. Thus, these all laws deliver a great impact on the business organization.

LO4. Explain the Importance of Coordinating and Integrating Various Functions of Departments within the Hospitality Sector

P8. Explore How Different Functional Roles within the Hospitality Sector Interrelate

In the Derby Enterprise, there is an engineering department, accounting department, human resource department and many more. It is the responsibility of the assistant business development manager, and the HR tries to train them according to their job responsibilities. In the engineering department, they try to maintain their working process. The main role of the engineering department is to repairing and maintaining valuable things (Nieves and Segarra-Ciprés, 2015). On the other hand, the accounting department is also seen efficient in performing and recording certain tasks. In this process, the company mainly invoices the customers, reconciliation of the account, monitoring and collection of accounts, budgeting, periodic financial reporting, and financial analysis. Along with this, the accounting department tries to handle and deal with external audits and financing. In some areas, it can be observed that the taxes are handled by the accounting department whereas, in different places, it is basically worked out with the help of tax accountants (Rothwell, Hohne and King, 2018). HR plays a great role in this company, Derby Enterprises Ltd. It tries to provide openness and transparency in the establishment of organizational communication. Therefore, these all departments interrelate with each other for the betterment of the organization.

P9. Explain the Different Methods of Communication, Coordination, and Monitoring Applied Within a Specific Department of a Hospitality Organization to Strengthen the Value Chain

In the Department of Human Resources, the company has mainly focused on its practices and policies with the help of which, the company will be able to gain advancement. For strengthening the value chain, the company needs to stress on certain factors such as product life-cycles, product proliferation, ongoing outsourcing and the process of marketing to supply base and markets (Bowie et al., 2016). These are also said to be the challenges of human resource management in the settings of the supply chain or value chain production. For maintaining such tactics, Derby Enterprises need to communicate, monitor and coordinate with its HR department. This, in turn, will help the organization in strengthening their value chain. The practices of HR are basically seen encouraging the partners of supply chain management for developing the relationship between the valuable companies (Bailey et al., 2018). Apart from this, it can also be said that HR helps the company to create a routine of the process of knowledge sharing. In this way, the HR department will help to increase the company’s growth and development.

Conclusion

The following assignment states about the different HR life cycle of Derby Enterprise. It states about the process of recruitment and employment. A performance management plan is also implemented for bringing out some solutions for the negative behavior and the issues of staff retention. Some of the laws such as taxation policy, employment law, contract law, and company law are used, which have impacted the company’s growth and development. Different departments’ different roles were mentioned where the most important one is the human resource department. This department has provided a great influence along with the assistance of assistant business development manager.

Recommendations

The HR life cycle can be improved with the help of the policies of HR. It is the responsibility of the human resource department to look after the matters of recruitment, learning and development and the process of onboarding and orientation. It can be recommended that such life cycle can be improved only if valuable information is provided. Along with this, the company should assist and avoid biases in these processes (Rothwell, Hohne and King, 2018). On the other hand, it can be suggested that the company should try to increase their working management in other important and valuable departments. This, in turn, will help in the development and growth of Derby Enterprises Ltd.

References

Bailey, C., Mankin, D., Kelliher, C. and Garavan, T., 2018. Strategic human resource management. Oxford University Press.

Bohle, P., Knox, A., Noone, J., Mc Namara, M., Rafalski, J. and Quinlan, M., 2017. Work organisation, bullying and intention to leave in the hospitality industry. Employee Relations, 39(4), pp.446-458.

Fernandes, N., 2014. Finance For Executives: A Practical Guide For Managers. NPV Publishing.

Grayson, D. and Hodges, A., 2017. Corporate social opportunity!: Seven steps to make corporate social responsibility work for your business. Routledge.

Lussier, R.N. and Hendon, J.R., 2017. Human resource management: Functions, applications, and skill development. Sage publications.

Nieves, J. and Segarra-Ciprés, M., 2015. Management innovation in the hotel industry. Tourism Management, 46, pp.51-58.

Simons, T., Vermeulen, P.A. and Knoben, J., 2016. There’s No Beer without a Smoke: Community Cohesion and Neighboring Communities’ Effects on Organizational Resistance to Antismoking Regulations in the Dutch Hospitality Industry. Academy of Management Journal, 59(2), pp.545-578.