Financial Management Flashcards

A hotel's GOP (Gross Operating Profit) is calculated by subtracting which expenses from total revenue?

Answer: Departmental expenses plus undistributed operating expenses

GOP is derived by subtracting both departmental expenses and undistributed operating expenses (administrative, sales, maintenance, utilities) from total revenue.

Which financial ratio best measures a hotel's ability to pay short-term obligations?

Answer: Current ratio

The current ratio (current assets ÷ current liabilities) measures short-term liquidity and the ability to meet near-term financial obligations.

A restaurant forecasts $50,000 in food sales and a 32% food cost. What is the projected food cost in dollars?

Answer: $16,000

$50,000 × 0.32 = $16,000 projected food cost.

In hospitality accounting, 'RevPAR' stands for:

Answer: Revenue Per Available Room

RevPAR (Revenue Per Available Room) equals occupancy percentage multiplied by average daily rate, measuring overall room revenue performance.

A hotel purchases $8,000 in supplies but only $5,500 worth is used during the accounting period. What is recorded as an expense?

Answer: $5,500

Only the $5,500 of supplies consumed is recognized as an expense; the remaining $2,500 stays on the balance sheet as a prepaid asset.

Which budgeting approach requires managers to justify every expense from zero each period rather than using prior-year figures as a baseline?

Answer: Zero-based budgeting

Zero-based budgeting starts from a 'zero base' each cycle, requiring justification for all expenditures regardless of historical spending.

What does the term 'yield management' primarily aim to maximize in a hotel?

Answer: Revenue from available room inventory

Yield management (revenue management) uses demand forecasting and variable pricing to maximize revenue generated from a fixed number of available rooms.