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Accounting > Ratios > Flashcards

Ratios Flashcards

1
Q

What is acid test ratio

A

Liquidity
1:1
Cash,short term investment, note and account receivable / current liabilities

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2
Q

What is working capital

A

Liquidity
Currency
Current asset - current liabilities

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3
Q

What is solvency ratio

A

Solvency
1:1
Total assets/ total liabilities

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4
Q

What is debt equity ratio

A

Solvency
1:1
Total liabilities / total equity owner

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5
Q

What is paid occupancy percentage

A

Activity
%
Paid rooms occupied/ available rooms

Available rooms = rooms available per day *365

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6
Q

What is profit margin

A

Profitability
%
Net income / total revenue

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7
Q

What is operating efficiency

A

Profitability
%
Gross operating profit/ total revenue

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8
Q

What is return on assets

A

Profitability
%
Net income / average total assets

Average asset= beginning asset + end asset/ 2

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9
Q

What is return on equity

A

Profitability
%
Net income / average total equity

Total equity = beginning equity + end equity / 2

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10
Q

What is sales mix

A

Operating
%
The percentage or amount each department has in a package deal or in the total sales

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11
Q

Average daily room rate ( ADR)

A

Operating
Currency
Rooms revenue / number of rooms sold

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12
Q

Revenue per available room

A

Operating
Currency
Rooms revenue / rooms available

Or

Paid occupancy percentage *ADR

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13
Q

What is revpac

A

Operating
Currency
Total revenue from hotel guests / total numbers of guests

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14
Q

What is food and beverage cost %

A

Operating
%
Cost of food (or beverage) / food ( or beverage) sales

In percentage!

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15
Q

What is the current ratio

A

Liquidity
1:1

Current assets/ current liabilities

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16
Q

What is gross operating profit

A

Total departmental income - total undistributed expenses

17
Q

CVP - single product

Unit sold at break even

A

X = F / S - V

18
Q

CVP - single product line

Fixed costs at break even

A

F= SX - VX

19
Q

CVP - Single product line

Selling price at break even

A

S = F/X + V

20
Q

CVP - Single product line

Variable cost per unit at break even

A

V = S -F/X

21
Q

What is gross profit percentage

A

Profitability

Gross profit / sales

22
Q

Cost of sales adjustment

A

Cost of food sales

Food inventory

23
Q

Employee meals adjustment

A

Employee meals

Cost of food sales

24
Q

Supplies used adjustment

A

Supplies expense

Supplies inventory

25
Q

Prepaid insurance adjustment

A

Insurance expense

Prepaid insurance

26
Q

Deprecation adjustment

A

Deprecation expense

Accumulated depreciation

27
Q

Replacement of China, glass ware etc

Adjustment

A

China expense

China asset

28
Q

What is operating leverage

A

It is the balance between fixed cost and variable cost in a business
High operating leverage = high amount of fixed costs and high risk

29
Q

CVP assumptions

A

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

30
Q

Purpose of ratio analysis

A

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

31
Q

The shortcut of multiproduct line

A

CMRw = TS - TVC / TS

Total sales
Total variable cost

32
Q

CMRw

A 
CM = sales - v
CMR = CM / S %
CMR = CMR% * sales mix %
33
Q

Cm

A

Cm = sales - v

34
Q

CMR

A

Cm / s %

35
Q

CMRw

A

CMR % * sales mix

Accounting (5 decks)

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