2. Analyzing an Income & Cash Flow Statement Oğuz Benice Bilkent University School of Tourism & Hotel Management

3. Definition ANALYZING AN INCOME & CASH FLOW STATEMENT To control cost, managers need to be able to calculate the net profit, or loss. The Income & cash flow statement is the financial document showing a company's income, expenses and cash balance over a given period.

4. Food Sales Include revenue from food, coffee, tea, milk, juices and other non- alcoholic items typically part of a meal. If there is no alcoholic beverage service, soft drinks would also be included in this category.

5. Beverage Sales Beverage Sales includes wine, liquor, beer and soft drinks.

6. Food Cost Food Cost includes food, coffee, tea, milk and soft drink expenses associated with the service of meals. (generally between 25% & 35% of food sales).

7. Beverage Cost Beverage Cost includes beverage expenditures associated with the sale of all wines, liquors and beers. (generally between 15% & 25% of beverage sales).

8. Other Income Other Income includes cover charges, banquet room rental, sundry sales, vending sales, telephone commissions, salvage sales and other miscellaneous revenue items.

9. Employee Wages Employee wages includes all positions including categories such as, host, server bus person, cook, dishwasher, storeroom clerk and bartender’s wages except restaurant managers.

10. Management Salaries Management salaries includes restaurant manager’ salary.

11. Employee Benefits Employee Benefits include social security taxes, unemployment taxes and state health insurance tax. It also includes insurance (such as worker's compensation and health coverage), employee meals and other benefits.

12. Direct Operating Exp. Direct Operating Expense includes uniforms, laundry, tableware and linen, utensils, kitchen fuel, supplies, menus, contract cleaning, flowers and decorations, auto expense, licenses and permits and other expenses.

13. Music & Entertainment Music and Entertainment Expense includes musicians, entertainers, royalties and other costs. In a dining situation, the entertainment should complement the overall atmosphere. In some type of facilities, the entertainment may be a major reason why people come in. The cost of entertainment must produce a revenue increase greater than the cost. (see graph)

14. Marketing Marketing Expense includes selling and promotion costs, advertising, public relations, franchise fees and other expenses incurred to make the public aware of the restaurant. (should be around 3% from total F&B sales, and 6% for the first year).

15. Utilities Utilities Expense includes electricity, gas, water and sewer services. It excludes fuel used to operate the kitchen.

16. Repairs & Maintenance Repairs and Maintenance Expense includes supplies, materials and contracted work associated with maintaining the building and grounds.

17. Administrative Administrative Expense includes overhead items required to run the business, but not directly related to the service of the customer. Items included are office supplies, postage, computers and software, telephone, travel, general insurance, credit card commissions, collection fees, cash shortages, and other administrative costs.

18. Rent Rent is the amount paid for the use of a premises. (should not exceed 5% to 8% of total F&B sales).

19. Interest Interest Expense is the periodic charge for the use of funds loaned by a bank or other lender.

20. KDV KDV is the Turkish Tax based on total food & beverage sales plus other income.

21. Refund Refund is the periodic back payment of funds loaned by a bank or other lender.

22. Exercise A1

23. Exercise A1 (& result)

25. Exercise A2

26. Exercise A2 (& result)

28. Break-even Point ANALYZING AN INCOME & CASH FLOW STATEMENT To control cost, managers need to be able to calculate the breakeven point. The simple definition of a breakeven point is the volume of sales or guest needed daily for a business to generate zero profit. Formula:

29. Exercise A1 (& result)

30. Break-even Point ANALYZING AN INCOME & CASH FLOW STATEMENT Calculate the breakeven for the exercice A2

31. Exercise A2 (& result)

32. Exercise A3

33. Exercise A4

34. Forecasting Yearly Sales ANALYZING AN INCOME & CASH FLOW STATEMENT

35. Forecasting Monthly Sales ANALYZING AN INCOME & CASH FLOW STATEMENT

36. Exercise D1 ANALYZING AN INCOME & CASH FLOW STATEMENT

37. Exercise D1 (result) ANALYZING AN INCOME & CASH FLOW STATEMENT

38. Exercise E1 ANALYZING AN INCOME & CASH FLOW STATEMENT

39. Exercise E1 (result) ANALYZING AN INCOME & CASH FLOW STATEMENT

40. Exercise D2 ANALYZING AN INCOME & CASH FLOW STATEMENT

41. Exercise D2 (result) ANALYZING AN INCOME & CASH FLOW STATEMENT

42. Exercise E2 ANALYZING AN INCOME & CASH FLOW STATEMENT

43. Exercise E2 (result) ANALYZING AN INCOME & CASH FLOW STATEMENT

44. Exercise F2 ANALYZING AN INCOME & CASH FLOW STATEMENT

45. Exercise F2 (result) ANALYZING AN INCOME & CASH FLOW STATEMENT

46. Exercise F2 (result) ANALYZING AN INCOME & CASH FLOW STATEMENT

47. Exercise F2 (result) ANALYZING AN INCOME & CASH FLOW STATEMENT

48. Exercise E1 ANALYZING AN INCOME & CASH FLOW STATEMENT The cost of entertainment must produce a revenue increase greater than the cost. Consider the following sample:

49. Mid Term 2005 Spring - A ANALYZING AN INCOME & CASH FLOW STATEMENT

50. Mid Term 2005 Spring - B ANALYZING AN INCOME & CASH FLOW STATEMENT

51. Mid Term 2005 Spring - C ANALYZING AN INCOME & CASH FLOW STATEMENT

52. Mid Term 2005 Spring - D ANALYZING AN INCOME & CASH FLOW STATEMENT

53. Mid Term 2005 Spring – A

54. Mid Term 2005 Spring – B

55. Mid Term 2005 Spring – C

56. Mid Term 2005 Spring – D