Ratios Flashcards
What is acid test ratio
Liquidity
1:1
Cash,short term investment, note and account receivable / current liabilities
What is working capital
Liquidity
Currency
Current asset - current liabilities
What is solvency ratio
Solvency
1:1
Total assets/ total liabilities
What is debt equity ratio
Solvency
1:1
Total liabilities / total equity owner
What is paid occupancy percentage
Activity
%
Paid rooms occupied/ available rooms
Available rooms = rooms available per day *365
What is profit margin
Profitability
%
Net income / total revenue
What is operating efficiency
Profitability
%
Gross operating profit/ total revenue
What is return on assets
Profitability
%
Net income / average total assets
Average asset= beginning asset + end asset/ 2
What is return on equity
Profitability
%
Net income / average total equity
Total equity = beginning equity + end equity / 2
What is sales mix
Operating
%
The percentage or amount each department has in a package deal or in the total sales
Average daily room rate ( ADR)
Operating
Currency
Rooms revenue / number of rooms sold
Revenue per available room
Operating
Currency
Rooms revenue / rooms available
Or
Paid occupancy percentage *ADR
What is revpac
Operating
Currency
Total revenue from hotel guests / total numbers of guests
What is food and beverage cost %
Operating
%
Cost of food (or beverage) / food ( or beverage) sales
In percentage!
What is the current ratio
Liquidity
1:1
Current assets/ current liabilities
What is gross operating profit
Total departmental income - total undistributed expenses
CVP - single product
Unit sold at break even
X = F / S - V
CVP - single product line
Fixed costs at break even
F= SX - VX
CVP - Single product line
Selling price at break even
S = F/X + V
CVP - Single product line
Variable cost per unit at break even
V = S -F/X
What is gross profit percentage
Profitability
Gross profit / sales
Cost of sales adjustment
Cost of food sales
Food inventory
Employee meals adjustment
Employee meals
Cost of food sales
Supplies used adjustment
Supplies expense
Supplies inventory
Prepaid insurance adjustment
Insurance expense
Prepaid insurance
Deprecation adjustment
Deprecation expense
Accumulated depreciation
Replacement of China, glass ware etc
Adjustment
China expense
China asset
What is operating leverage
It is the balance between fixed cost and variable cost in a business
High operating leverage = high amount of fixed costs and high risk
CVP assumptions
1 Fixed costs remains fixed during the period
2 Variable costs fluctuate with revenue in a linear fashion
3 Revenue fluctuate in a linear fashion with sales volume
4 Semi expenses should be divided into fixed and variable
5 all expenses can be assigned specific departments
6 The CVP model only considered quantitative factors
Purpose of ratio analysis
MANAGERS monitoring and evaluate performance
CREDITORS evaluate the solvency and ability to access the risk of future loans
INVESTORS and potential investors evaluate the performance of the business and ability to meet the goals
IN GENERAL they reveal important information that may be hidden in the financial statements
The shortcut of multiproduct line
CMRw = TS - TVC / TS
Total sales
Total variable cost
CMRw
CM = sales - v CMR = CM / S % CMR = CMR% * sales mix %
Cm
Cm = sales - v
CMR
Cm / s %
CMRw
CMR % * sales mix
