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Revenue Expenses = Profit

Assets = Liabilities + Owners Equity

Assets = Liabilities + Owners Equity

Variations of The Accounting Formula

Assets = Liabilities + Owners Equity

Assets - Liabilities = Owners Equity

Assets - Owners Equity = Liabilities

Assets = Liabilities

+ Permanent Owners Equity (Stocks + Retained Earnings)

+ Temporary Owners Equity (Revenue - Expenses)

Revenue Expenses = Profit

Money Earned on Funds Invested

Funds Invested

= ROI

Total Revenue

Food Costs

Food Sales

Net Income

Total Sales

= Profit Margin

Sales This Year Sales Last Year =Variance

(Sales This Year Sales Last Year)/Sales Last Year = Percentage Variance

Variance/Sales Last Year = Percentage Variance

(Sales This Year/Sales Last Year) 1 = Percentage Variance

Actual Expense Budgeted Expense =Variance

(Actual Expense Budgeted Expense)/Budgeted Expense = Percentage Variance

Variance/Budgeted Expense = Percentage Variance

(Actual Expense/Budgeted Expense) 1 = Percentage Variance

Net Income This Year Net Income Last Year = Variance

(Net Income This Year Net Income Last Year)/Net Income Last Year = Percentage

Variance

Variance/Net Income Last Year = Percentage Variance

(Net Income This Year/Net Income Last Year) 1 = Percentage Variance

Assets = Liabilities + Owners Equity

Money Earned on Funds Invested

Funds Invested

= ROI

(Cash This Year Cash Last Year)/Cash Last Year = Percentage Variance

Variance/Cash Last Year = Percentage Variance

(Cash This Year/Cash Last Year) 1 = Percentage Variance

Investing Activities This Year Investing Activities Last Year =Variance

(Investing Activities This Year Investing Activities Last Year)/Investing Activities Last

Year = Percentage Variance

Variance/Investing Activities Last Year = Percentage Variance

Less

Equals

Cash Used to Acquire Property and Equipment

Free Cash Flow

Two Cups of Water: One Cup of White Rice

Four Cups of Water: One Cup of Wild Rice

One Server: Ten Served Guests

One Server: Twenty Self-Serve Guests

Part = Percent

Whole

Current Assets

Current Liabilities

= Current Ratio

Current Liabilities

Current Liabilities

Operating Cash Flows = Operating Cash Flows to Current Liabilities Ratio

Current Liabilities

Current Assets Current Liabilities = Working Capital

Total Assets

Total Liabilities

= Solvency Ratio

Total Liabilities

Total Owners Equity

Total Liabilities

Total Assets

Total Liabilities

Earnings Before Interest and Taxes (EBIT) = Times Interest Earned Ratio

Interest Expense

Cost of Food Consumed

= Food Inventory Turnover Ratio

Average Food Inventory*

*(Beginning Food Inventory + Ending Food Inventory)/2

= Beverage Inventory Turnover Ratio

Cost of Beverage Consumed

Average Beverage Inventory*

*(Beginning Beverage Inventory + Ending Beverage Inventory)/2

Total Revenue

__= Property and Equipment (Fixed Asset) Turnover Ratio

Net Property and Equipment

Total Revenue

Total Assets

Net Income

Total Revenue

= Profit Margin

Gross Operating Profit = Gross Operating Profit Margin (Operating Efficiency Ratio)

Total Revenue

Net Income

Total Assets

Net Income

Total Owners Equity

Net Income

Total Number of Common Shares Outstanding

Market Price per Share = Price/Earnings (P/E) Ratio

Earnings per Share

Earnings per Share

Market Price per Share

Rooms Sold

Rooms Available for Sale

= Occupancy %

Total Number of Rooms Sold

Total Rooms Revenue

Rooms Available for Sale

Total Number of Guests

= RevPAC

Rooms Occupied

Beginning Inventory

+ Purchases

= Food Available for Sale

- Ending Inventory

= Cost of Food Consumed

- Employee Meals

= Cost of Food Sold

Beginning Inventory

+ Purchases

= Food Available for Sale

- Ending Inventory

= Cost of Food Consumed

- Value of Transfers Out

+ Value of Transfers In

- Employee Meals

= Cost of Food Sold

Beginning Inventory

+ Purchases

= Beverage Available for Sale

- Ending Inventory

= Cost of Beverage Sold

Beginning Inventory

+ Purchases

= Beverage Available for Sale

- Ending Inventory

- Value of Transfers Out

+ Value of Transfers In

= Cost of Beverage Sold

Cost of Food Sold

Food Sales

= Food Cost %

Beverage Sales

Cost of Labor

Total Sales

= Beverage Cost %

= Labor Cost %

Total Sales

Number of Guests Served

Covers Served

Number of Seats X Number of Operating Days in Period

Revenue - Expense = Profit

Price x Number Sold = Total Revenue

Current Number Sold X Current Price = Current Revenue

Current Revenue = Number that must be Sold

New Price

Cost of Food Sold

Food Sales

= Food Cost %

= Seat Turnover

Selling Price

Item Food Cost %

= Selling Price

1.00

Desired Item Food Cost %

= Pricing Factor

Selling Price Item Food Cost = Item Contribution Margin

Item Food Cost + Desired Item Contribution Margin = Selling Price

# Sold x Item Food Cost = Total Food Cost

# Sold x Item Contribution Margin = Total Contribution Margin

Total Sales

Number of Menu Items

Average # Sold

Number of Menu Items

Average # Sold

Total Contribution Margin

Number of Menu Items

Total # Sold

Number of Menu Items

= Average # Sold

Average Total Sales

Average Total Contribution Margin = Weighted Average Item Contribution Margin

Average # Sold

A B C D = Goal Value

where

A = 1.00 Food Cost %

B = Item Popularity (Number Sold)

C = Selling Price

D = 1.00 (Variable Cost % + Food Cost %)

(1.00 Food Cost %) x Number Sold x Selling Price x [1.00 (Variable Cost % + Food

Cost %)] = Goal Value

A=

GV

BxCxD

B=

GV

AxCxD

C=

GV

AxBxD

D=

GV

AxBxC

Normal Format for the Income Statement

+

=

Operated Departments Income (Excluding Rooms)

Undistributed Operating Expenses

Non-Operating Expenses

Taxes

Net Income

+

+

+

=

Net Income

Taxes

Non-Operating Expenses

Undistributed Operating Expenses

Operated Departments Income (Excluding Rooms)

Operated Department Income (Rooms)

1.00 Tax Rate

Rent, Property Taxes, and Insurance

+ Depreciation and Amortization

+ Interest Expense

= Total Non-Operating Expenses

+

+

+

+

+

+

+

+

=

Information Systems

Human Resources

Security

Franchise Fees

Transportation

Marketing

Property Operations and Maintenance

Utility Costs

Total Undistributed Operating Expenses

+

+

+

+

=

Food

Beverage

Telecommunications

Other Operated Departments

Rentals and Other Income

Total Operated Departments Income Excluding Rooms

+

+

+

=

Total Non-Operating Expenses

Total Undistributed Operating Expenses

Total Operated Departments Income Excluding Rooms

Operated Department Income for Rooms

to be Sold in the Year

Number of Rooms to be Sold in the Year x Expense per Room = Estimated Room

Expenses

Operated Department Income for Rooms

+ Estimated Rooms Expenses

= Estimated Rooms Department Revenues

Estimated Rooms Department Revenues = Hotels Required ADR

Estimated Number of Rooms to be Sold

Purchase Price

Number of Rooms

$1,000

Total Realized Revenue = Yield

Total Potential Revenue

ADR x Occupancy % = RevPAR

Rooms Sold

Total Rooms in Hotel

= Occupancy %

Total Rooms in Hotel

= Occupancy %

Rooms Sold

Total Rooms in Hotel OOO Rooms

Rooms Sold

Total Rooms in Hotel On-Change Rooms

Total Rooms Revenue

Total Number of Rooms Sold

= Occupancy %

= ADR

Total Number of Rooms Occupied

= ADR

Room Rate Paid

Total Revenues This Year Total Revenues Last Year

Gross Operating Profit

Total Rooms Available to Be Sold

= GOP-PAR

Revenue Expenses = Profit

Revenue = Profits + Costs

10

= Flow-Through

Variable Cost per Guest (VC/Guest) x Number of Guests = Total Variable Cost

Total Variable Cost

Number of Guests

= VC/Guest

Fixed Cost + (Variable Cost per Guest x Number of Guests) = Total Mixed Cost

High Cost Low Cost

High # of Guests Low # of Guests

Fixed Costs + Variable Costs = Total Costs

Fixed Costs + (Variable Cost per Guest x Number of Guests) = Total Costs

y = a + bx

Total Overhead

Number of Profit Centers

SP/guest VC/guest = CM/guest

SP% VC% = CM%

Fixed Costs

Contribution Margin %

Fixed Costs

Contribution Margin per Guest

Fixed Costs + Before-Tax Profit = Sales Dollars to Achieve Desired After-Tax Profit

Contribution Margin %

After-Tax Profit = Before-Tax Profit

1 Tax Rate

Fixed Costs + Before-Tax Profit = Sales Dollars to Achieve Desired After-Tax Profit

Contribution Margin %

11

Contribution Margin per Guest

After-Tax Profit

Projected Sales Breakeven Sales = Margin of Safety

Minimum Labor Cost

1 Minimum Operating Cost

= MSP

1 (Food Cost % + Variable Cost %)

= MSP

Total Sales

Number of Guests Served

Variance

Sales Last Year

= Percentage Variance

Sales Last Year

1 = Percentage Variance

Sales Last Year + (Sales Last Year x % Increase Estimate) = Sales Forecast

Sales Last Year x (1 + % Increase Estimate) = Sales Forecast

Guest Count Last Year + (Guest Count Last Year x % Increase Estimate) = Guest Count

Forecast

Guest Count Last Year x (1.00 + % Increase Estimate) = Guest Count Forecast

Last Years Average Sales per Guest + Estimated Increase in Sales per Guest = Sales per

Guest Forecast

Sales Forecast

Guest Count Forecast

Rooms Sold

Rooms Available for Sale

= Actual Occupancy %

12

Rooms Available for Sale

Out-of-Order Rooms

Net Availability

Stayovers

+ Reservations (Arrivals)

Rooms Sold or Reserved

Rooms Sold or Reserved

- No-Shows

- Early Departures

+ Overstays

Total Forecast Sold or Reserved after Adjustments

Total Forecast after Adjustments = Occupancy Forecast

Net Availability

Budgeted Revenue Budgeted Expense = Budgeted Profit

Sales Last Year x (1 + % Increase Estimate) = Sales Forecast

Selling Price Last Year x (1 + % Increase Estimate) = Selling Price Forecast (Check

Average)

Sales Forecast x Targeted Cost % = Forecasted Cost

Cost per Cover Last Year x (1 + % Increase Estimate) = Cost per Cover Forecast

Cost per Cover Forecast x Forecasted Number of Covers = Forecasted Costs

Sales Forecast x Labor Cost % Standard = Forecasted Labor Cost

Forecasted Labor Cost x Payroll Allocation % = Budgeted Payroll Allocation

Forecasted Labor Cost Budgeted Payroll Allocation = Budgeted Payroll

Budgeted Payroll Salaries and Fixed Wages = Budgeted Hourly Payroll

13

Variance

Budgeted Expense

= Percentage Variance

Actual Expense

Budgeted Expense

- 1 = Percentage Variance

Initial Investment + Return on Investment = Total Investment Value

Future Value = Investment Amount x (1 + Investment Earnings %)n

FVn = PV x (1+i)n

Present Value =

Future Value

(1 + Investment Earnings %)n

PV = FVn

(1 + i)n

Money Earned on Funds Invested

Funds Invested

Annual Savings

Capital Investment

= ROI

Capital Investment

Annual Income (or Savings)

= Payback Period

Investment Amount

= Cap Rate %

Property Value

= Cap Rate %

Cap Rate %

Interest Payment

14

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