Financial Management Flashcards

A hotel's net profit margin is 8% on $2,000,000 in revenue. What is the net profit?

Answer: $160,000

$2,000,000 × 0.08 = $160,000 net profit.

In the context of hotel financial statements, EBITDA stands for:

Answer: Earnings Before Interest, Taxes, Depreciation, and Amortization

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a measure of core operating profitability excluding financing and accounting adjustments.

A food and beverage manager wants to increase the menu contribution margin. Which strategy directly achieves this?

Answer: Increasing selling price or reducing food cost per item

Contribution margin per item = selling price minus variable cost, so raising price or lowering food cost directly increases it.

Which document provides a snapshot of a hotel's assets, liabilities, and owner's equity at a specific point in time?

Answer: Balance sheet

The balance sheet (statement of financial position) shows what a business owns, owes, and the residual equity of owners at a specific date.

An operator is considering adding a spa service that requires $80,000 in equipment with a 10-year useful life and no salvage value. Annual net cash inflow is projected at $15,000. What is the simple payback period?

Answer: 5.3 years

$80,000 ÷ $15,000 = approximately 5.3 years payback period.

Which of the following BEST describes the purpose of conducting a 'three-way match' in accounts payable?

Answer: Matching the purchase order, receiving report, and vendor invoice before approving payment

A three-way match verifies that the purchase order, goods receipt, and vendor invoice all agree before authorizing payment, preventing fraud and billing errors.

A hotel's total revenue is $3,000,000 and total assets are $5,000,000. What is the asset turnover ratio?

Answer: 0.6

Asset turnover = total revenue ÷ total assets = $3,000,000 ÷ $5,000,000 = 0.6, indicating how efficiently assets generate revenue.