Mannerism
Mannerism
RATIO ANALYSIS OF INCOME STATEMENT AND BALANCE SHEET
? These are
tools for analyzing (i.e.: calculating percentages and ratios) and interpreting (i.e.: comparing percentages and ratios to determine the meaning and significance of the analysis) the financial soundness of a hospitality company.
? For ratios to be meaningful, they shall be compared against:
Prior-period percentages and ratios
Industry and trade association percentages and ratios
Budgeted percentages and ratios
Ratio Analysis of the Income Statement:
Profit Margin Ratio:
The Profit Margin Ratio is used as a Measure of Profitability. Moreover, it can be computed for revenue generators as well as the hotel in general
Profit Margin Ratio = Hotel (or Departmental) Income / Net Sales
Rooms Division Department: (692,261 / 897,500) * 100 = 77.13 %
Food & Beverage Department: (87,377 / 518,170) * 100 = 16.86 %
Telephone Department: (-27,623 / 51,140) * 100 = – 54.01 %
Hotel Doro: (60,544 / 1,597,493) * 100 = 3.79 %
Labor Cost Percentage:
The Labor Cost Percentage is used as a measure of Operating Efficiency. Moreover, it can be computed for each department or for the hotel in General
Labor Cost Percentage = Total Payroll and Related Expenses / Net Sales
Rooms Division Department: (143,100 / 897,500) * 100 = 15.94 %
Food & Beverage Department: (204,180 / 518,170) * 100 = 39.40 %
Telephone Department: (17,132 / 51,140) * 100 = – 33.50 %
Hotel Doro: (568,102 / 1,597,493) * 100 = 35.56 %
Food (or Beverage) Cost Percentage:
Food (or Beverage) Cost Percentage = Cost of Food (or Beverage) Sold / Net Food (or Beverage Sold)
Food Cost Percentage: (135,200 / 358,300) * 100 = 37.73 %
Beverage Cost Percentage: (40,510 / 159,870) * 100 = 25.34 %
Food & Beverage Cost Percentage: (175,710 / 518,170) * 100 = 33.91 %
Prime Cost Percentage:
Refers to the Total Labor and Materials used in the Production or Selling Process
Prime Cost Percentage = Total Cost of Sales + Total Payroll and Related Expenses / Net Sales
Rooms Division Department: ((0 + 143,140) / (897,500)) * 100 = 15.94 %
Telephone Department: ((60,044 + 17,132) / 51,140) * 100 = 150.91 %
Hotel Doro: ((248,701 + 568,102) / 1,597,493) * 100 = 51.13 %
Average Food (or Beverage) Check:
Represents the Average Sales per cover
Average Food (or Beverage Check) = Net Food (or Beverage) Sales / Covers
Average Food Check* = 358,300 / 14,332 = $ 25.00
Average Beverage Check** = 159,870 / 4,000 = $ 39.97
Avergae Food & Beverage Check = 518,170 / (14,332 + 4,000) = $ 28.27
(*): Assume total Food Covers is 14,332
(**): Assume total Beverage Covers is 4,000
Return On Equity Ratio:
The Return On Equity Ration measures the Profits after Taxes of the Hospitality Company relative to the Equity of its Owners (I.e. Shareholders)
Return On Equity Ratio = Net Income / Average Equity
Where Average Equity = (Equity at the Beginning of the Year + Equity at the End of the Year) / 2
Hotel Doro (19X2) : (60,544 /