Hospitality & Business Accounting Formulas
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33 Terms
Balance Sheet Accounting Equation
Assets = Liabilities + Owner Equity
Basic Revenue Equation
Revenue = Average Rate × Volume
Volume Formula (Revenue)
Volume = Revenue / Rate
Rate Formula (Revenue)
Rate = Revenue / Volume
Basic Profit Equation
Profit = Revenues - Expenses
Retention (Flow-Through)
Change in Profit Dollars / Change in Revenue Dollars
Net House Profit
House Profit (Gross Operating Profit) - Fixed Expenses
General Cost Percentage
(Expense Dollars / Corresponding Revenue Dollars) × 100
Wage Cost Percentage
(Wage Expenses / Corresponding Revenues) × 100
Labor Cost Percentage
[(Fixed Labor + Variable Labor) / Total Sales] × 100
Profit Margin Percentage
(Total Profit Dollars / Total Sales Dollars) × 100
Sales Mix Percentage
(Item or Department Sales Dollars / Total Sales Dollars) × 100
Percentage Change Formula
[(New Value - Old Value) / Old Value] × 100
Occupancy Rate Percentage
(Rooms Occupied / Total Rooms Available) × 100
Average Daily Rate (ADR)
Room Revenue / Rooms Sold
RevPAR (Direct Revenue Method)
Total Room Revenue / Total Available Rooms
RevPAR (Yield Method)
ADR × Occupancy Rate
Covers per Hour
Total Covers / Operating Hours
Covers per Labor Hour
Total Covers / Total Labor Hours Paid
Covers per Day
Total Covers / Operating Days
Covers per Server
Total Covers / Total Servers
Seat Turnover Rate
Total Covers / Number of Seats Available
Cost of Goods Sold (COGS)
Beginning Inventory + Inventory Purchases - Ending Inventory
COGS Ratio Percentage
(COGS / Total Sales) × 100
Average Inventory
(Beginning Inventory + Ending Inventory) / 2
Inventory Turnover Rate (ITR)
Cost of Inventory Sold (COGS) / Average Inventory
Average Days on Hand
365 / Inventory Turnover Rate
Breakeven Point (Units/Rooms)
Fixed Costs / (Sales Price per Unit - Variable Cost per Unit)
Debt Ratio Percentage
(Total Liabilities / Total Assets) × 100
Return on Equity (ROE)
(Net Profit / Total Equity) × 100
Yearly Increase Percentage (YoY)
(Current Year - Last Year) / Last Year
Average Growth Rate
Sum of YoY Percentage Increases / Number of Intervals
Forecasted Value (Trend Analysis)
Most Recent Year Value × (1 + Average Increase)