Financial Management & Budgeting Flashcards

Which productivity metric is most commonly used to control housekeeping labor costs?

Answer: Labor minutes per occupied room

Minutes or hours per occupied room ties staffing directly to rooms-cleaned volume.

What makes a rolling forecast different from a traditional annual budget?

Answer: It is updated regularly so it always projects the same length of time ahead

A rolling forecast adds a new period as each one ends, so it always looks the same distance forward.

On the statement of cash flows (indirect method), how is depreciation expense treated?

Answer: Added back to net income in operating activities

Depreciation is a non-cash expense, so it is added back to net income to arrive at operating cash flow.

Which metric best shows how quickly a hotel collects its direct-billed group and corporate accounts?

Answer: Average collection period (days sales outstanding)

The average collection period measures the average number of days receivables stay outstanding before they are collected.

In a typical hotel management agreement, what is the operator's incentive fee usually based on?

Answer: Profitability, such as GOP or cash flow after owner's priority

The base fee is usually a percentage of revenue, while the incentive fee rewards profit performance.

A 300-room hotel budgets 70% occupancy and a $180 ADR for a 30-day month. What is the budgeted room revenue?

Answer: $1,134,000

300 x 30 x 0.70 = 6,300 rooms sold, and 6,300 x $180 = $1,134,000.

In food and beverage operations, what does 'prime cost' combine?

Answer: Cost of goods sold plus total labor cost

Prime cost is cost of goods sold plus all labor, usually the two largest controllable F&B costs.