Hotel Financial Statements

Document Sample
Hotel Financial Statements Powered By Docstoc
					Hotel Financial
Statements
Uniform System of Accounts
   1925 by Hotel Association of New York city
   10th version revised in 2006.
   Special format for income statement and
    balance sheet for hospitality businesses
   Nature of the operations and organization of the
    hotels influences this format
   Revenue centers vs. support centers
   Direct expenses vs. indirect expenses
   Departmental income statements
   Responsibility accounting
Nature of Operations
                        Hotel

   Revenue Centers               Support Centers
    Rooms                        Administrative and General
    Food and Beverage            Data Processing
    Telephone                    Human Resources
    Gift Shop                    Maintenance
    Rentals and Other            Marketind and Sales


Departmental Income Statements        Expense Schedules
Departmental Income Statements

   Three major operating areas:
     Rooms
     Food
     Beverage
 Other significant revenue producing
  departments: Minor revenue centers
 Food and beverage usually reported
  together
Departmental Income Statements

   Includes revenues and expenses of that
    department only (direct expenses)
               Revenues
               -Allowances
    General
               =Net Revenue
    Format     -Cost of Sales
               =Gross Profit
               -Payroll and Related Expenses
               -Other Direct Expense
               =Departmental Income
                (Contributory Income)
F&B Income Statements
   Special feature of F&B Departmental
    Income Statements
     Calculation   of cost of food and beverage sold
        Cost of food used
        Transfers from/to beverage department

        Cost of food sold

        Employee meals and cost of promotion meals

        Sale of scrap = reduction from cost of sales
Cost of Food Sold – Pr. 2.2

  Beginning Inventory         2.428
  + Purchases                 8.907
  Total Available                     11.335
  - Ending Inventory          1.611
  Cost of Food Used                    9.724
  - Cost of Employee Meals     209
  - Cost of Promotion Meals    278
  Cost of Food Sold                    9.237
Cost of Food Sold – Pr. 2.3
   Beginning Inventory         14.753
   + Purchases                 48.798
   + Transfers from bar            48
   - Transfers from kitchen       107
   Total Available                      63.492
   - Ending Inventory          12.811
   Cost of Food Used                    50.681
   - Cost of Employee Meals     1.208
   - Cost of Promotion Meals      410
   Cost of Food Sold                    49.063
             Revenues:
                    Grill Room          153.100
                    Cofee Garden         78.900
Food                Banquets            298.400
Department          Other Income            600
Income       Total Revenue                        531.000

Statement    Cost of Sales:
                    Cost of Food Used   228.900
Pr. 2.1             - Employee Meals     17.200
             Net Food Cost                        211.700
             Gross Margin                         319.300

             Departmental Expenses:
                    Salaries and Wage. 191.600
                    China, glassware     14.600
                    Laundry and linen    13.000
                    Licences              1.900
                    Printing, stationary  4.900
                    Various other         6.200
             Total Departmental Expenses          232.200
             Departmental Income                   87.100
Use of Income Statement
   Reveals important information
     Sales volumes
     Sales level and cost relations
     Sales by departments
     Operational effectiveness
     Contributory income percentages
     Budgets and comparisons of actual and
      budgets
 Hotel Income Statement
Rooms Dept. I+S       Food Dept. I+S    Beverage Dept. I+S


                  Total Departmental Income
                                              Support
   - Undistributed Operating Expenses         Centers

   = Income before Fixed Charges
                                        Ownership
                  - Fixed Charges       Expenses

     = Income before Taxes –Taxes = Net Income
Major Categories of Hotel I+S
   Operated Departments
       Rooms                          Revenue
       Food and Beverage              Centers
       Minor Operated Departments
   Undistributed Operating Expense
       Administrative and General
       Data Processing                          Support
       Human Resources                          Centers
       Marketing
       Property Operation and Maintenance
       Energy Costs
   Fixed Charges                                    Ownership
       Rent, Property Taxes, Property Insurance      Related
       Interest Expense                             Expenses
       Depreciaiton and Amortization
               Departmental Incomes:
                      Food Department        87.100
                      Rooms                 482.700
Hotel Income          Beverage              143.600
Statement –           Telephone             -25.100
                      Other Income           40.300
Summary        Total Departmental Income              728.600
Form           - Undistributed Operating Expenses
                      Admin. & Genaral      174.300
                      Marketing              83.600
                      Property, mainten.     74.900
                      Energy                 62.000
               Total Undist. Expenses                 394.800
               Income Before Fixed Charges            333.800
               - Fixed Charges
                      Insurance               5.200
                      Property tax           43.100
                      Interest               65.000
                      Depreciation          125.700
               Total Fixed Charges                    239.000
               Income Before Tax                       94.800
               Tax - %50                               47.400
               Net Income                              47.400
Inventory Valuation – Cost of Sales

   Different inventory valuation methods
     Specific  item cost
     First-in-first-out
     Last-in-first-out
     Weighted average cost
   Specific Item Cost
          June      Received     Issued      Units    Cost($)
            1                                  2        18
            2          6                       8        20
            8                      3           5
           12                      3           2
           15         10                      12          22
           20                      3           9
           24                      3           6
           28          6                      12          19
           30                      2          10
Ending Inventory
    2          20          40             Beg. Inv.              36
    4          22          88             Puchases              454
    4          19          76             End.Inv.              204
                           204            Cost of Sales         286
 First-in First-Out
FIFO
                     Received               Issued                    Balance
June          Unit       Cost        Unit       Cost        Unit     Cost      Total
         1                                                         2        18        36
         2             6        20                                 2        18        36
                                                                   6        20       120
         8                                   2         18
                                             1         20           5      20       100
         12                                  3         20           2      20        40
         15           10        22                                  2      20        40
                                                                   10      22       220
         20                                  2         20
                                             1         22          9       22       198
         24                                  3         22          6       22       132
         28            6        19                                 6       22       132
                                                                   6       19       114
         30                                  2         22          4       22        88
                                                                   6       19       114
Ending                 454                   288                                    202
Last-in First-Out
LIFO
                     Received               Issued                       Balance
June          Unit       Cost        Unit       Cost        Unit        Cost      Total
         1                                                          2          18        36
         2             6        20                                  2          18        36
                                                                    6          20       120
         8                                   3         20           2          18        36
                                                                    3          20        60
         12                                  3         20           2          18        36
         15           10        22                                  2          18        36
                                                                   10          22       220
         20                                  3         22           2          18        36
                                                                    7          22       154
         24                                  3         22           2          18        36
                                                                    4          22        88
         28            6        19                                  2          18        36
                                                                    4          22        88
                                                                    6          19       114
         30                                  2         19           2          18        36
                                                                    4          22        88
                                                                    4          19        76
Ending                 454                   290                                        200
  Weighed Average Cost
WAC
                     Received               Issued                          Balance
June          Unit       Cost        Unit       Cost           Unit        Cost       Total       WAC
         1                                                             2           18          36
         2             6        20                                     2           18          36
                                                                       6           20         120     19,5
          8                                  3          19,5           5         19,5        97,5
         12                                  3          19,5           2         19,5          39
         15           10        22                                     2         19,5          39
                                                                      10           22         220    21,58
         20                                  3         21,58           9        21,58    194,25
         24                                  3         21,58           6        21,58       129,5
         28            6        19                                     6        21,58       129,5
                                                                       6           19         114    20,29
         30                                  2     20,29              10        20,29 202,9167
Ending                 454                  287,08                                     202,9167



                                                          Do Problem 2.4
Restaurant Departmental Contributory Income
Statement- Without allocation of Indirect Expenses
   Departmental Incomes
                       Dining     Banquet Beverage Total
   Sales                 202.000 108.000     90.000 400.000
   Cost of Sales           81.000    41.000  28.000 150.000
   Wages&Salaries          64.455    34.795  12.000 111.250
   Other Direct Costs      18.640     8.960   1.600   29.200
   Contributory Income     37.905    23.245  48.400 109.550
   Indirect Expenses
   Adm&General                                        13.000
   Marketing                                            9.000
   Utilites                                             6.000
   Prop.Op.&Maint.                                    12.000
   Depreciation                                       14.000
   Insurance                                            2.000
   Total                                              56.000
   Net Income                                         53.550
Allocation of Indirect Expenses
   Based on an allocation key
   Artificial
   In this example: assume
     Administrative & General and Marketing expenses to
      be allocated on the basis of sales volume
           Dining: 202,000/400,000 = 50.5%
           Banquet: 108,000/400,00 =27.0%
           Beverage: 90,000/400,000 = 22.5%
     All   others to be allocated on square foot basis
           Dining room – 2400 sq.ft.
           Banquet – 3000 sq.ft.
           Service bar – 600 sq.ft.
Restaurant Income Statement-
Allocation of Indirect Expenses
  Departmental Incomes
                      Dining     Banquet Beverage Total
  Sales                 202.000 108.000     90.000 400.000
  Cost of Sales           81.000    41.000  28.000 150.000
  Wages&Salaries          64.455    34.795  12.000 111.250
  Other Direct Costs      18.640     8.960   1.600   29.200
  Contributory Income     37.905    23.245  48.400 109.550
  Cont.Income %           18,8%     21,5%   53,8%     27,4%
  Indirect Expenses
  Adm&General              6.565     3.510   2.925   13.000
  Marketing                4.545     2.430   2.025     9.000
  Utilites                 2.400     3.000     600     6.000
  Prop.Op.&Maint.          4.800     6.000   1.200   12.000
  Depreciation             5.600     7.000   1.400   14.000
  Insurance                  800     1.000     200     2.000
  Total                   24.710    22.940   8.350   56.000
  Net Income              13.195       305  40.050   53.550
Revenue Mix Effect –
Shift of $16,000 revenue from banquet to dining room.
  Sales               218000    92000     90000   400000
  Cost of sales        87416    34926     28000   150342
  Wages                69560    29640     12000   111201
  Other Department.    18640     8960      1600    29200
  Contribu.Income      42384    18474     48400   109258

  Allocated Exp.
  Adm&Gen               7085     2990      2925    13000
  Marketing             4905     2070      2025     9000
  Utilities             2400     3000       600     6000
  Prop Maint            4800     6000      1200    12000
  Depreciation          5600     7000      1400    14000
  Insurance              800     1000       200     2000
                       25590    22060      8350    56000
  Net Income           16794    -3586     40050    53258
Balance Sheet - Assets
   Current Assets
     Cash  on Hand
     Cash in Bank
     Marketable Securities
     Credit Card Receivables
     Accounts Receivable
     Inventories
         Food and beverages, supplies
     Prepaid   Expenses
Balance Sheet - Assets
   Fixed Assets
     Land, Building, Furniture and Equipment
      -Accumulated Depreciation
     China, Glass, Silver, Linen and Uniforms
     Other Assets
       Deposits
       Investments

       Leasehold costs and leasehold improvements

       Deferred Expenses
Balance Sheet - Liabilities
   Current Liabilities
     Accounts payable
     Accrued Expenses
     Income Tax  Payable
     Unearned Income – Deposits and credit balances
     Current Postion of Long Term Mortgage
     Dividends Payable

   Long Term Liabilities
Balance Sheet - Equity
 Capital Stock
 Capital Surplus – Paid-in-Capital in
  Excess of Par Value
 Retained Earnings



           Review Exhibit 2.8 and 2.9
                Do Problem 2.7
Balance Sheet Limitations
   Historical cost: does not show market value
   Some qualitative aspects totally ignored- such
    as goodwill
   Human resources not treated as assets
   Subjective matters such as depreciation
   Shows result only for a moment – window
    dressing