Financial Ratios From Income Statements Assessment

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Financial Ratios From Income Statements:

Accounting in hospitality management is carried out to identify and document financial issues and produce information regarding an organization's assets, liabilities, and investments. Through this process, the management of a hospitality establishment understands and interprets financial ratios, which are crucial for basic control of operations in the establishments. Some of the most important financial ratios in hospitality accounting include average daily rate, occupancy percentage, room sales to total sales, cost of food sold percentage, profit margins for rooms and F&B, housekeeping cost per occupied room, and cost of beverage sold percentage. These financial ratios can be determined or worked out from a company's income statements or operational data (Casado, 2006, p.103).

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For the 310-room hotel in Costa Mesa, California, the Occupancy percentage is 7,755: 310 = 25.02%

Cost of labor percentage for rooms is 103,202: 437,433 = 23% for F&B is 113,349: 302,188 = 37.5%

Cost of food sold percentage is 220,728: 85,840 = 38.9%

Cost of beverage sold percentage is 70, 578: 16, 177 = 23%

Average daily rate is 473, 979: 7, 755 = $61

Profit margin for rooms is 370, 777: 473, 979 = 78% for F&B is 66, 656: 302, 188 = 22%

Total revenue change from budget for rooms is 473, 979 -- 541, 800 = -$67, 821.....

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