The financial health of the selected two Hotels Soaltee Hotel Ltd.

& Oriental
Hotel Ltd. can be found out for the investments are as follow:

1. Return on assets: - It measures the profitability from a given level of

investment.

ROA= Net profit after tax/ total assets

Profit after tax Total assets ROA

Soaltee Hotel Ltd. 22840000 716580000 3.18

Oriental Hotel Ltd. 3650000 1154980000 0.32

2. Return on equity:- It measures the profitability on shareholders funds

ROE= Net profit after tax/total equity

Profit after tax Total equity ROE

Soaltee Hotel Ltd. 22840000 450000000 5.07

Oriental Hotel Ltd. 3650000 22500000 16.22

3. Earning per share:- It measures the earnings per equity share.

EPS= Net profit after tax/ no. of equity shares

Profit after tax Total no of equity shares Roe

Soaltee Hotel Ltd. 22840000 869700 26.26

Oriental Hotel Ltd. 3650000 4132548 167.37

4. Debt to equity:- It measures the relationship between borrowed capital to

own capital.

=\Total liabilities / shareholder’s equity

Total liabilities Total equity Debt to equity ratio

~ 1 ~
Soaltee Hotel Ltd. 716580000 450000000 1.59
Oriental Hotel Ltd. 1154980000 22500000 51.33
5. Interest coverage ratio:- It measure of protection to creditors for payment
of interest.

=Profit before interest and tax/ Interest expenses

Profit before Interest expenses Interest coverage

interest and tax ratio
Soaltee Hotel 22840000 19630000 1.16
Ltd.
Oriental Hotel 3650000 63840000 5.72
Ltd.

6. Price earning ratio:- Price earning ratio measures of the amount investors
are willing to play for a rupee of earnings.

=Market price per share/ Earning per share

Market price per Earning per share P/E Ratio

share
Soaltee Hotel 126 26.26 4.79
Ltd.
Oriental Hotel 86 7.37 11.67
Ltd.

7. Return on investment:- It measures the return made by bank with respect

to its investment.

= Net profit/ Investment

Net profit Investment Ratio

Soaltee Hotel 22840000 11970000 1.9%
Ltd.
Oriental Hotel 3650000 - -
Ltd.

~ 2 ~
Decision:-

I will invest my fund which is One third (1/3) of Rs.10 million in Oriental Hotel
Ltd. because when I go through the analysis part of the financial statement these
two Hotels, I found that Oriental Hotel will be appropriate choice for investing
money. Oriental Hotel has high earning per share ratio then Soaltee. Its total
assets are more than the Soaltee Hotel & most importantly interest coverage
ratio of Oriental is more than Soaltee Hotel. But, Investments in other sectors
are missing in both the Hotels. Other things to be consider for the investment,
the Debt to Equity, Return on Equity of Oriental Hotel is higher than Soaltee
Hotel. However through the analysis, I will prefer Oriental Hotel Ltd.

~ 3 ~