Financial analysis of listed hotel and tourism Companies in Nepal

Abstract

This paper will seek to examine the financial position of the listed star hotel companies in Nepal, in particular, the influence of liquidity on the profitability. As a causal research study design, the study will look at three major financial ratios, including the returns on asset (ROA), returns on equity (ROE), and earnings per-share (EPS). Three quoted star hotels were sampled using judgmental sampling, and data of the last five years were evaluated. Meanings of these financial ratios were compared and regression analysis was done through the application of SPSS to identify the effect of liquidity. The results show that liquidity does not have a significant influence on the financial ratios at 5 percent level of significance. In opposition to most studies that propose that liquidity enhances the financial performance, this study determined that debt, asset utilization, and liquidity had a positive effect on the financial performance and share holders value of Nepalese hotel companies. Further research is advised to examine the impact of investment in other sectors in the economy to provide a comparable effect with the hotel and tourism sector. This would give a wider scope of what various investment strategies have on the financial performance of different industries.