The financial performance and position of Nathan Hotel

are presented in the tables to the right. Assume 40% of

sales are made on credit. In the table below, complete the
profitability and financial stability ratios for the years 20X1
and 20X2.

ROA - DuPont Decomposition

20X2 20X1
Return on Assets (ROA) 31.40% 23.89%
Operating Profit Margin 31.90% 25.52%
Total Asset Turnover (TATO) 0.98 0.94
PROFITABILITY
F&B Departmental Profit Margin 41.72% 46.56%
Rooms Departmental Profit Margin 73.25% 70.48%
Total Departmental Profit Margin 58.55% 58.34%
Operating Profit (EBIT) Margin 31.90% 25.52%
Net Profit Margin 25.17% 19.86%
TURNOVER (TO)
Accounts Receivable Turnover 13.76 13.87
AR Settlement period (in days) 26.53 26.31
Inventory Turnover 41.77 43.53
Inventory shelving time (in days) 8.74 8.39
Fixed Asset Turnover 1.93 1.80
SHORT-TERM FINANCIAL STABILITY
Working Capital $ 5,170 $ 4,565
Current Asset Ratio 3.96 4.35
Acid Test Ratio 3.93 4.32
LONG-TERM FINANCIAL STABILITY
Debt/Asset Ratio 26.74% 21.24%
Equity/Asset Ratio 73.26% 78.76%
Debt /Equity Ratio 0.36 0.27
Times interest earned 60.59 51.09
Financial Performance: Nathan Hotel, year ended 31st Dec. (in
'000s)

20X2 20X1

$ $
Revenue
Rooms 6,894 5,423
F&B 6,021 5,589
Total Revenue 12,915 11,012
Departmental Expenses
Rooms (wages) 1055 901
Rooms (misc.) 789 700
F&B (wages) 1546 1333
F&B (cost of sales) 1,963 1,654
Total Department Expenses 5,353 4,588
Total Departmental Profit 7,562 6,424
Admin & General 447 545
Sales & Marketing 900 905
Property Operations & Maintenance 432 996
Utilities 556 412
Property Taxes & Insurance 250 150
Bank Charges 7 6
Depreciation 850 600
Total Undistributed Expenses 3,442 3,614
Total Expenses 8,795 8,202
Operating Profit (EBIT) 4,120 2,810
Interest 68 55
Income Tax 801 568
Net Profit 3,251 2,187
 Financial Position: Nathan Hotel, year ended 31st Dec. (in
'000s)

20X2 20X1 20X0

$ $ $
Current Assets
Cash at Bank 6,444 5,555 5,001
Accounts Receivable 418 333 302
Inventories 53 41 35
Total Current Assets 6,915 5,929 5,338
Property & Equipment 7,346 6,050 6,210
TOTAL ASSETS 14,261 11,979 11,548
Current Liabilities
Accounts Payable 707 708 722
Income Tax Payable 801 568 555
Current Maturity of Long-term Debt 237 88 88
Total Current Liabilites 1,745 1,364 1,365
Long-term Debt 2,068 1,180 1,233
TOTAL LIABILITIES 3,813 2,544 2,598
Owner's Equity
Share Capital 7,450 7,450 8,350
Retained Earnings 2,998 1,985 600
Owner's Equity 10,448 9,435 8,950
TOTAL LIABILIITES & OWNER'S EQUITY 14,261 11,979 11,548
 The financial performance and position of Southbank Hotel
are presented in the tables to the right. Assume 50% of sales
are made on credit. In the table below, complete the
profitability and financial stability ratios for the years 20X1
and 20X2.

ROA - DuPont Decomposition

20X2 20X1
Return on Assets (ROA) 25.10% 12.79%
Operating Profit Margin 29.79% 14.58%
Total Asset Turnover (TATO) 0.84 0.88
PROFITABILITY
F&B Departmental Profit Margin 43.27% 42.99%
Rooms Departmental Profit Margin 71.96% 68.58%
Total Departmental Profit Margin 64.71% 63.11%
Operating Profit (EBIT) Margin 29.79% 14.58%
Net Profit Margin 24.08% 10.85%
TURNOVER (TO)
Accounts Receivable Turnover 16.79 25.47
AR Settlement period (in days) 21.74 14.33
Inventory Turnover 15.03 15.59
Inventory shelving time (in days) 24.28 23.42
Fixed Asset Turnover 1.57 1.53
SHORT-TERM FINANCIAL STABILITY
Working Capital $ 4,275 $ 2,809
Current Asset Ratio 4.77 5.20
Acid Test Ratio 4.72 5.14
LONG-TERM FINANCIAL STABILITY
Debt/Asset Ratio 29.70% 21.72%
Equity/Asset Ratio 70.30% 78.28%
Debt /Equity Ratio 0.42 0.28
Times interest earned 32.01 19.27
Financial Performance: Southbank Hotel, year ended 31st Dec.
(in '000s)

20X2 20X1

$ $
Revenue
Rooms 6,023 4,987
F&B 2,036 1,356
Total Revenue 8,059 6,343
Departmental Expenses
Rooms (wages) 987 901
Rooms (misc.) 702 666
F&B (wages) 501 321
F&B (cost of sales) 654 452
Total Department Expenses 2,844 2,340
Total Departmental Profit 5,215 4,003
Admin & General 450 440
Sales & Marketing 809 698
Property Operations & Maintenance 336 875
Utilities 400 410
Property Taxes & Insurance 120 100
Bank Charges 12 10
Depreciation 687 545
Total Undistributed Expenses 2,814 3,078
Total Expenses 5,658 5,418
Operating Profit (EBIT) 2,401 925
Interest 75 48
Income Tax 385 189
Net Profit 1,941 688
Financial Position: Southbank Hotel, year ended 31st Dec.
(in '000s)

20X2 20X1 20X0

$ $ $
Current Assets
Cash at Bank 5,032 3,289 2,564
Accounts Receivable 330 150 99
Inventories 48 39 19
Total Current Assets 5,410 3,478 2,682
Property & Equipment 6,044 4,203 4,102
TOTAL ASSETS 11,454 7,681 6,784
Current Liabilities
Accounts Payable 555 413 388
Income Tax Payable 385 189 0
Current Maturity of Long-term Debt 195 67 67
Total Current Liabilites 1,135 669 455
Long-term Debt 2,267 999 1,059
TOTAL LIABILITIES 3,402 1,668 1,514
Owner's Equity
Share Capital 6,490 5,590 5,270
Retained Earnings 1,562 423 0
Owner's Equity 8,052 6,013 5,270
TOTAL LIABILIITES & OWNER'S EQUITY 11,454 7,681 6,784
Imagine you are the Director of Rooms at the 20X3
GroovyGrapes Resort, a 100-room hotel in the Average Room Rate $ 175.00
Barossa Valley, South Australia. Demand for hotel
rooms is significantly affected by the season leading Average Occupancy Rate 92%
up to grape harvest, when the sight of the vinyards Revenue per available room $ 161.00
are covered in grapes increases the popularity of the
region.
In 20X2, you achieved 88% occupancy on average Percentage change in the room rate -2.78%
throughout the grape season, and you were able to Percentage change in demand 4.55%
charge $180 per room per night.
In 20X3, you decreased the rate to $175 per night,
and the average occupancy rate increased to 92%.

Does this decision to decrease the room rate make

sense from the perspective of RevPAR?
To answer this question, demonstrate the impact on
RevPAR in the table to the right.
 20X2
$ 180.00
88%
$ 158.40
Imagine you are the Revenue Manager at the 20X3
BellaVista Resort, a 320-room hotel on the Gold Average Room Rate $ 215.00
Coast, Australia. Demand for hotel rooms is
significantly affected by the summer season, when Average Occupancy Rate 88%
the tropical climate and the local beaches are at their Revenue per available room $ 189.20
peak in popularity.
In 20X2, you achieved 85% occupancy on average
throughout the summer season, and you were able Percentage change in the room rate -4.44%
to charge $225 per room per night. Percentage change in demand 3.53%
In 20X3, you decreased the rate to $215 per night,
and the average occupancy rate increased to 88%.

Does this decision to decrease the room rate make

sense from the perspective of RevPAR? To answer this
question, demonstrate the impact on RevPAR in the
table to the right.
 20X2
$ 225.00
85%
$ 191.25
The manager of a 150-seat restaurant in Auckland is
interested in comparing the sales performance of the two Total Revenue
most recent years.
- In 20X1, the restaurant achieved an average lunch spend Lunch Revenue
per head of $18 and a lunchtime seat turnover ratio of 1.5. Dinner Revenue
Also in this year, its dinner average spend per head was $42 Lunch Covers
with a dinnertime seat turnover of 0.9.
Dinner Covers
- In 20X2, the restaurant was open for 305 days and Lunch Seat Turnover
generated lunch revenue of $1,250,000 and dinner revenue
of $1,700,000, with 72,500 lunch covers served, and 44,400 Dinner Seat Turnover
dinner covers served. Lunch Average Spend
Dinner Average Spend
The manager has requested you provide them with a an
analysis comparing the relative sales performance over the Lunch Revenue Yield Per Seat
two years. To do this, complete the table to the right.Note Dinner Revenue Yield Per Seat
that you do not have calculate the cells shaded in black - as
you do not have information on how many days the
restaurant was open in 20X1. Additional Input Variables
Days operated
For dinner sales, did seat turnover and average spend
increase or decrease across the 2-year period? What was the Lunch Revenue
overall effect of the changes in dinner seat turnover and Dinner Revenue
average check on revenue yield per seat? Covers served for lunch
Covers served for dinner
Available seats
 20X2 20X1
$ 2,950,000.00
$ 1,250,000.00
$ 1,700,000.00
72,500
44,400
1.58 1.5
0.97 0.9
$ 17.24 $ 18.00
$ 38.29 $ 42.00
$ 27.32 $ 27.00
$ 37.16 $ 37.80

nal Input Variables

305
$ 1,250,000.00
$ 1,700,000.00
72,500
44,400
150
The manager of an 80-seat restaurant overlooking the
Sydney Harbour Bridge is interested in comparing the sales Total Revenue
performance of the two most recent years.
- In 20X1, the restaurant achieved an average lunch spend Lunch Revenue
per head of $26 and a lunchtime seat turnover ratio of 1.8. Dinner Revenue
Also in this year, its dinner average spend per head was $48 Lunch Covers
with a dinnertime seat turnover of 1.2.
- In 20X2, the restaurant was open for 364 days and Dinner Covers
generated lunch revenue of $1,282,000 and dinner revenue Lunch Seat Turnover
of $1,700,000, with 55,500 lunch covers served, and 33,000
dinner covers served. Dinner Seat Turnover
Lunch Average Spend
The manager has requested you provide them with a an Dinner Average Spend
analysis comparing the relative sales performance over the
two years. To do this, complete the table to the right.Note Lunch Revenue Yield Per Seat
that you do not have calculate the cells shaded in black - as Dinner Revenue Yield Per Seat
you do not have information on how many days the
restaurant was open in 20X1.
Additional Input Variables
For lunch sales, did seat turnover and average spend Days operated
increase or decrease across the 2-year period? What was the
overall effect of the changes in dinner seat turnover and Lunch Revenue
average check on revenue yield per seat? Dinner Revenue
Covers served for lunch
Covers served for dinner
Available seats
 20X2 20X1
$ 2,982,000.00
$ 1,282,000.00
$ 1,700,000.00
55,500
33,000
1.91 1.7
1.13 1.2
$ 23.10 $ 26.00
$ 51.52 $ 48.00
$ 44.02 $ 44.20
$ 58.38 $ 57.60

nal Input Variables

364
$ 1,282,000
$ 1,700,000
55,500
33,000
80