Welcome to your CMA Case Study : Dec 21 Mock Exam

You need to answer all questions below based on the pre seen and un seen information provided. your answer should follow the report format

Unseen

The Sri Lankan government is keen to proote tourism and tourism related products mainly forcusing on developing inbound tourism leveraging the attractions in the country and the global recognition for Sri Lank’s tourism and tourist attractions. The government is inviting tourists from Western Europe, USA, China, India and Russia to visit Sri Lanka and committed to provide facilities to promote tourism in Sri Lanka including MICE tourism.

The shareholders based on their earlier decision to handover the reins of the business to the next generation are keen for Bandula to take charge of the business from 2022. Bandula will be assisted by the Consultant who now has started working in the company. The Consultant has analyzed various aspects of the business and areas relating to the strategy and carried out a detailed internal and external environmental factor affecting the business, so that he will be capable of advising Bandula when he takes over in 2022. Since, Bandula has been away from the business, this exercise will be crucial for both the business and Bandula to grasp the ground reality and challenges facing the business.

The bank is highly concerned about the recoverability of the loan facilities provided and hence is requesting the company to provide a realistic cash flow forecast for the next 7 years with suitable assumptions to support the growth and restructuring of the loans. The bank has indicated that the interest rate for the restructured facility would be 11% and they would consider granting a restructuring provided the company provides a realistic plan incorporating the growth forecasts. The loan capital is to be settled over equal monthly installments spanning 7 years

01. Comment on the company’s financial status with special focus on financial leverage and operating leverage
         a). What are the main financial concerns
         b). What strategies would you recommend to improve the financial status

(20 Marks)

02. The company has been approached by a larger hotel for an acquisition. Estimate, what would be a suitable value on going concern basis for this company with reasonable assumptions
      a). If the company is against the acquisition, explain the strategies available for the company to resist the takeover
(20 marks)
03. Identify 5 non financial weaknesses in the company and recommend suitable strategies to overcome those weaknesses(20 Marks)
04. Explain the opportunities and threats available for tourism operators and specially for a company such as GSH taking into account the latest developments in the market


        a). In your view is the company has strengths to make use of the opportunities, specially in Eco tourism, sustainable tourism and MICE tourism
        b). Is the company facing a high risk of threats given its current position? 

(20 Marks)

05. In your view, is the external environment affecting the tourism industry is favorable or unfavorable?a).  Justify your answer using appropriate models (20 Marks)