CFSP Financial Management 2

Question 1

What does a break-even analysis determine for a foodservice operation?

Accepted Answer

The point at which total revenue equals total costs

Answer

Break-even analysis identifies the sales volume at which total revenue exactly covers all fixed and variable costs, resulting in zero profit or loss.

Question 2

In foodservice budgeting, what is a 'rolling budget'?

Accepted Answer

A budget that is updated monthly by adding a new period as the most recent one ends

Answer

A rolling (or continuous) budget continuously adds a new future period as the most recently completed period is dropped, keeping a consistent planning horizon.

Question 3

Which financial ratio measures how efficiently a restaurant uses its assets to generate revenue?

Accepted Answer

Asset turnover ratio

Answer

The asset turnover ratio (revenue divided by total assets) indicates how effectively a foodservice operation generates sales from its asset base.

Question 4

What is the purpose of a cash flow statement in foodservice financial management?

Accepted Answer

To show the inflows and outflows of cash over a specific period

Answer

A cash flow statement tracks actual cash receipts and disbursements, helping operators ensure sufficient liquidity to meet obligations.

Question 5

A foodservice operator has fixed costs of $20,000/month and a contribution margin ratio of 40%. What monthly sales are needed to break even?

Accepted Answer

$50,000

Answer

Break-even sales = Fixed Costs ÷ Contribution Margin Ratio = $20,000 ÷ 0.40 = $50,000.

(CFSP) Certified Foodservice Professional Practice Test

(CFSP) Certified Foodservice Professional Practice Test

CFSP Financial Management 2