Ratios

Question 1

What is acid test ratio

Answer 1

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

Question 2

What is working capital

Answer 2

Liquidity
Currency
Current asset - current liabilities

Question 3

What is solvency ratio

Answer 3

Solvency
1:1
Total assets/ total liabilities

Question 4

What is debt equity ratio

Answer 4

Solvency
1:1
Total liabilities / total equity owner

Question 5

What is paid occupancy percentage

Answer 5

Activity
%
Paid rooms occupied/ available rooms

Available rooms = rooms available per day *365

Question 6

What is profit margin

Answer 6

Profitability
%
Net income / total revenue

Question 7

What is operating efficiency

Answer 7

Profitability
%
Gross operating profit/ total revenue

Question 8

What is return on assets

Answer 8

Profitability
%
Net income / average total assets

Average asset= beginning asset + end asset/ 2

Question 9

What is return on equity

Answer 9

Profitability
%
Net income / average total equity

Total equity = beginning equity + end equity / 2

Question 10

What is sales mix

Answer 10

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

Question 11

Average daily room rate ( ADR)

Answer 11

Operating
Currency
Rooms revenue / number of rooms sold

Question 12

Revenue per available room

Answer 12

Operating
Currency
Rooms revenue / rooms available

Or

Paid occupancy percentage *ADR

Question 13

What is revpac

Answer 13

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

Question 14

What is food and beverage cost %

Answer 14

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

In percentage!

Question 15

What is the current ratio

Answer 15

Liquidity
1:1

Current assets/ current liabilities

Question 16

What is gross operating profit

Answer 16

Total departmental income - total undistributed expenses

Question 17

CVP - single product

Unit sold at break even

Answer 17

X = F / S - V

Question 18

CVP - single product line

Fixed costs at break even

Answer 18

F= SX - VX

Question 19

CVP - Single product line

Selling price at break even

Answer 19

S = F/X + V

Question 20

CVP - Single product line

Variable cost per unit at break even

Answer 20

V = S -F/X

Question 21

What is gross profit percentage

Answer 21

Profitability

Gross profit / sales

Question 22

Cost of sales adjustment

Answer 22

Cost of food sales

Food inventory

Question 23

Employee meals adjustment

Answer 23

Employee meals

Cost of food sales

Question 24

Supplies used adjustment

Answer 24

Supplies expense

Supplies inventory

Question 25

Prepaid insurance adjustment

Answer 25

Insurance expense | Prepaid insurance

Question 26

Deprecation adjustment

Answer 26

Deprecation expense | Accumulated depreciation

Question 27

Replacement of China, glass ware etc | Adjustment

Answer 27

China expense | China asset

Question 28

What is operating leverage

Answer 28

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

Question 29

CVP assumptions

Answer 29

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

Question 30

Purpose of ratio analysis

Answer 30

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

Question 31

The shortcut of multiproduct line

Answer 31

CMRw = TS - TVC / TS Total sales Total variable cost

Question 32

CMRw

Answer 32

``` CM = sales - v CMR = CM / S % CMR = CMR% * sales mix % ```

Question 33

Cm

Answer 33

Cm = sales - v

Question 34

CMR

Answer 34

Cm / s %

Question 35

CMRw

Answer 35

CMR % * sales mix