Accounting and Operating Ratios
DOI link for Accounting and Operating Ratios
Accounting and Operating Ratios book
When planning a new hotel or restaurant, or subsequently measuring its performance, certain essential relationships between various quantities are to be expected. Thus we expect a certain relationship between capital employed and net profit; between net sales and net profit; between rooms available and rooms occupied, etc. All such relationships may be expressed by means of ratios. Where a hotel has 200 employees and 100 rooms the ratio of employees to rooms is 2: 1. Where food sales are £ 1,000 and the resulting gross profit is £ 600, there is a gross profit ratio of 10:6 or 60 per cent.