CHIA Financial Analysis & Hotel Accounting Flashcards

Cost of Goods Sold (COGS) in a hotel's food and beverage operation refers to:

Answer: Direct cost of food and beverage ingredients consumed

F&B COGS represents the actual ingredient cost of items sold, and the COGS percentage is a key benchmark for outlet profitability.

A hotel's Debt Service Coverage Ratio (DSCR) indicates:

Answer: The hotel's ability to cover its debt obligations from operating income

DSCR = NOI ÷ total debt service; a ratio above 1.0 means the hotel generates enough income to cover its loan payments.

Departmental profit on a hotel P&L is calculated as:

Answer: Department revenue minus that department's direct expenses

Departmental profit isolates each revenue center's performance by deducting only the direct expenses attributable to that department.

Capital expenditures (CapEx) in hotel accounting typically include:

Answer: Major renovations, furniture, fixtures, and equipment

CapEx covers long-term asset investments like FF&E replacements and property renovations, which are capitalized and depreciated rather than expensed immediately.

What does 'average check' measure in hotel food and beverage analytics?

Answer: Average revenue per dining cover or transaction

Average check = total F&B revenue ÷ number of covers (transactions), and is a primary KPI for outlet revenue performance.

Which of the following best describes 'zero-based budgeting' in a hotel context?

Answer: Building the budget from zero each period by justifying every expense, rather than using the prior year as a baseline

Zero-based budgeting requires every department to justify all expenditures from scratch each cycle, improving cost discipline.