Summary of the Mid-Term Exam! Perfect for studying and for bringing to the exam. Gives a step for step guide to do certain exercises, such as making a Cash Flow. Includes a summary and explanation of every Ratio that you will need for the exam!
Making
Financial
Decisions
Mid Term Exam
Joris Wechsler
2020
,LU 1: Recap of CBV and Operating Results Analysis
USALI = Uniform System of Accounts for the Lodging Industry
Balance Sheet
= Financial statement reflecting the financial position of the operation, at a given point in
time. Shows a firm’s assets, and claims to it’s assets (liabilities and owner’s equity).
ASSETS = LIABILITIES + EQUITY
Assets
Current Assets = can be converted to cash or used in operations within one year.
Cash
Accounts Receivable
Inventories
Operating Equipment (linen, china, glassware, silver, uniforms), a current asset if the
useful life is less than one year, otherwise specified under “other assets”
Prepaid expenses
Marketable securities (short term investments such as T-bills)
Non-current Assts = Long-term investments where the full value cannot be realized within
one year
Investments
Property
Land
Equipment
Trademarks
Goodwill
Liabilities
Current Liabilites = Obligations that must be paid within one year, usually by current assets
{ Accounts Payable
{ Advance Received (e.g. Advance deposits)
{ Current Maturities of long-term debt
{ Dividends payable
{ Income taxes payable
Long-term liabilities = Oblications that can be paid beyond the next 12 months
{ Notes payable
{ Mortgages payable
{ Bonds payable
, Owner’s Equity
Reflects the owner’s interest in the operation’s assets
Ë Common Stock
Ë Additional paid-in Capital
Ë Retained Earnings
Ë Treasury Stock
The Income Statement
= Report the success of a company’s operations over a period of time
U Shows revenues and expenses, with a subsequent profit/loss
U The profit/loss is then transferred to the owners equity (owner pays for what is
lost/won)
Basic Format of Income Statement
Revenue Operated Departments
- Cost of Sales
= Gross Profit
- Operating Expenses
= Income before fixed charges
- Fixed Charges
= Income before taxes
- Corporate Income Taxes
= NET INCOME
EBITDA = Earnings before interest, taxes, depreciation and amortization, shows the
effectiveness & efficiency of an operation (ITDA are fixed and out of control of operation)
Net. Book Value = Acquisition Cost – Accumulated Depreciation
Gain/loss on sale of assets = Selling price – Net book value
Cost of Sales Formula
Beginning Food Inventory
+ Food inventory purchases
= Food available for sale
- Ending Food Inventory
= Cost of Food Sales
- Staff Meals
= Cost of Food Sold
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