LU6+ LU7 - Ratio Analysis Read: Schmidgall, 8th Ed: only references as given on LU7 detail, page 26 of this syllabus
14 important questions on LU6+ LU7 - Ratio Analysis Read: Schmidgall, 8th Ed: only references as given on LU7 detail, page 26 of this syllabus
3 sections of USALI Income Statement Format are...?
- Operated departments - revenue-generating departments
- Undistributed operating expenses- The support departments and functions
- Management fees, fixed charges gain or loss on sale of property, income tax
USALI Income Statment Formate formula to caluate net income:
-Direct Operating Expenses
Departmental Operating Income
-Overhead Expenses (Undistributed & fixed)
Net Income
Undistributed Operating Expenses (Ex.)
- Administrative and General
- Human Resources
- Information Systems
- Security
- Marketing
- Franchise Fees
- Transportation
- Property Operation and Maintenance
- Utility Cost
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What is one of the key ratios which managers use in each department?
Lodging operations: occupancy percentage
Which shows management's overall effectiveness as measured by returns on sales and investment?
a. activity ratios
b. profitability ratios
c. liquidity ratios
d. solvency ratios
e. all of the above
Which types of ratios reveal the ability of hospitality businesses to meet their short-term goals?
a. Activity ratios
b. profitability ratios
c. liquidity ratios
d. solvency ratios
e. none of the above
During the first quarter of the previous year, the current ratio at the Blue Hotel was 1.25 to 1. Three months into the new year, the current ratio is 2 to 1. For every Euro of current liabilities, the hotel now has two dollars of current assets.
Which of the following groups is most likely to be pleased by this increase in the hotel’s current ratio?
a. owners
b. creditors
c. managers
d. investors
e. all of the above
Given the information below, the current ratio is:
Current Asset € 200.000
Investments € 50.000
Current Liabilities € 100.000
Long-Term Debt € 600.000
Owners’ Equity € 400.000
Given the information below, the solvency ratio is:
Current Assets € 300.000
Investments € 50.000
Total Assets € 1000.000
Current Liabilities € 100.000
Long-Term Debt € 400.000
Total Liabilities € 500.000
What is the paid occupancy percentage?
Rooms Available for Sale 100.000
Paid Rooms Occupied 60.000
Paid Guests 80.000
Rooms Occupied by 2 or More Guests 10.000
Rooms Available for Sale: Paid Rooms Occupied x 100
Which of the following profitability ratios is calculated by dividing net income by total revenue?
a. return on assets
b. return on owners’ equity
c. profit margin
d. earnings per share e. gross profit percentage
Net income: total revenue = Profit Margin
Which of the following ratios is the best overall measure of management’s performance?
a. acid-test ratio
b. profit margin
c. operating efficiency ratio
d. paid occupancy percentage
e. all of the above
As part of a loan agreement, creditors may require hospitality businesses to...?
Calculate Formula for Revenue Per Available Room
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