Financial Management

Question 1

Cash flow budget

Answer 1

projects revenues and expenses, showing inflow and output of cash

purpose is to determine if funds will be available when needed

Question 2

Capital budget

Answer 2

plant facilities, equipment, cost of improvements, and repairs (service, maintenance contracts), expansions, replacements, long term

includes expenditures whose returns are expected to last beyond one year

Question 3

Edible portion vs. As purchased prices

Answer 3

you purchased an 18 lb ready to cook turkey at $0.68/lb. the AP price is $12.24. After cooking and slicing, edible portion is just 9.9 lbs. To determine the EP cost per pound, divide the purchase cost by the edible weight.

Question 4

Financial statement: balance sheet

Answer 4

shows financial condition as of a particular date (static)

• lists assets (goods and products owned)- cash, inventory, accounts receivable (amounts owed to you)
• lists liabilities - amounts owed to others
• assets = liabilities + capital (equity, owner’s interest)
• analyzes operational effectiveness

Question 5

Financial analysis: inventory turnover rate

Answer 5

cost of sales (food cost for COGS) / average inventory cost

COGS: cost of goods sold
food cost for June $37380
Average inventory cost $17500

37380/17500- 2.136 The inventory turned over 2.1 times that month

Question 6

Profit margin: cost of sales

Answer 6

cost of the raw food and beverage sold

Question 7

Profit margin: gross profit

Answer 7

profit shown after deducting raw food and beverage (cost of sales) from sales (revenue)

Question 8

Profit margin: net profit

Answer 8

profit shown after ALL expenses have been deducted from sales