Practice Test Geeks(CFSP) Certified Foodservice Professional Practice Test
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Financial Management Flashcards

7 cards from real CFSP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Financial Management flashcards as text

  1. What does 'working capital' measure in a foodservice business?

    Answer: Current assets minus current liabilities, reflecting short-term financial health

    Working capital (current assets minus current liabilities) indicates whether a business has enough short-term assets to cover its immediate obligations.

  2. In foodservice menu engineering, what characterizes a 'plow horse' menu item?

    Answer: High popularity but low profit margin

    Plow horses are menu bestsellers that generate high sales volume but offer below-average contribution margins, making them candidates for price increases or cost reduction.

  3. What is the 'quick ratio' and what does it indicate about a restaurant's liquidity?

    Answer: (Current assets minus inventory) divided by current liabilities; measures ability to meet short-term obligations without selling inventory

    The quick ratio excludes inventory from current assets because inventory may not be quickly convertible to cash, providing a more conservative view of short-term liquidity.

  4. What is 'cost of goods sold' (COGS) in a foodservice context?

    Answer: The direct cost of food and beverage products used to generate sales revenue

    COGS in foodservice represents the actual cost of food and beverage ingredients consumed in producing the menu items sold during a period.

  5. When conducting a cost-benefit analysis for a new POS system, which factor represents an 'intangible benefit'?

    Answer: Improved customer satisfaction from faster order processing

    Intangible benefits like improved customer satisfaction are real but difficult to quantify in dollar terms, unlike concrete savings in labor or supply costs.

  6. What is 'occupancy cost' in foodservice financial reporting?

    Answer: Expenses related to the physical space, including rent, property taxes, and insurance

    Occupancy costs encompass all expenses tied to securing and maintaining the physical location, such as rent, property taxes, insurance, and common area maintenance fees.

  7. A restaurant reports net income of $18,000 on total revenues of $150,000. What is the net profit margin?

    Answer: 12%

    Net profit margin = Net Income ÷ Total Revenue × 100 = $18,000 ÷ $150,000 × 100 = 12%.