tailieunhanh - Lecture Managerial Accounting for the hospitality industry: Chapter 3 - Dopson, Hayes

Chapter 3 - The income statement. In this chapter you will learn why the income statement is so important to all those who will typically review and analyze it. You will also see why it is so critical for the manager who is actually operating the business to be able to read and correctly analyze and interpret the income statement. | Chapter 3 The Income Statement Chapter Outline The Purpose of the Income Statement Income Statement Preparation Income Statement Analysis Learning Outcomes State the purpose of regularly preparing an income statement for a hospitality business. Explain the way managers and accountants actually prepare an income statement. Analyze an income statement to improve the operation of your own business. The Purpose of the Income Statement When you manage a hospitality facility, you will receive Revenue, the term used to indicate the money you take in, and you will incur Expenses, the cost of the items required to operate the business. The dollars that remain after all expenses have been paid represent your profit. The Purpose of the Income Statement Many hospitality managers call each individual revenue generating segment within their business a profit center. The revenue-expense = profit formula holds even in what is not typically considered a for-profit segment of the hospitality industry. | Chapter 3 The Income Statement Chapter Outline The Purpose of the Income Statement Income Statement Preparation Income Statement Analysis Learning Outcomes State the purpose of regularly preparing an income statement for a hospitality business. Explain the way managers and accountants actually prepare an income statement. Analyze an income statement to improve the operation of your own business. The Purpose of the Income Statement When you manage a hospitality facility, you will receive Revenue, the term used to indicate the money you take in, and you will incur Expenses, the cost of the items required to operate the business. The dollars that remain after all expenses have been paid represent your profit. The Purpose of the Income Statement Many hospitality managers call each individual revenue generating segment within their business a profit center. The revenue-expense = profit formula holds even in what is not typically considered a for-profit segment of the hospitality industry. In many business dining situations, food is provided as a service to the company’s employees either as a no-cost (to the employee) benefit or at a greatly reduced price. Thus, it is common in many situations to operate a cost center that generates costs but no revenue. The Purpose of the Income Statement All stakeholders who are affected by a business’s profitability will care greatly about the effective operation of a hospitality business. Owners Investors Lenders Creditors Managers When an accurate income statement is used to provide information, the business’s owners, lenders, investors and managers can all make better decisions about how best to develop and operate it. Return on Investment Investors are particularly interested in return on investment (ROI), which measures the quality or strength of an investment. The income statement is the source of the information required to determine the numerator of the ROI calculation. ROI is computed as follows: Income Statement Preparation

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