Ratio Forms- Usali (Uniform System American Lodging Industry
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pa 11 Fi nanci aI Analysis
I.
Section 9
Financial Statement Formats
The formats of the Summary Statement of Income and departmental statements can of coursebe designed to provide only ODeamount column to record figures für the time period covered by the statement. While the primary purpose of any of these statements is to present the revenue and expenses für the most recent accounting period, the true significance of such amounts can only be fully understood when compared with budgets and/or the corresponding amounts für preceding periods. Accordingly, individual properties should modify the format of these statements to meet their needs ~nd requirements. For example, properties may find it useful to expand this ~asic format by adding columns to provide: . . A comparative analysis of the current period results with the amounts budgeted for the period A comparative analysis of the current period results with those of the same period fot the preceding year Cumulative year-to-date information Percentage relationships between revenue and expenses
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Comparisons can be made by either horizontal or vertical analyses. Horizontal analysisindicates the absolute (dollar) and relative (percentage) differences betweeDthe two amounts of the same Iine items. The absolute differences Me simply the dollar differences between the figures (tbis year and last year or actual and budget). The relative differenceSare percentage differences, and are calculated by dividing the absolute differentes by the prior year or budget amounts. Vertical analysis uses flet revenue as a common denominator and reduces the amount of each line on the respective income statements to a percentage. This analysis producescommon-size statementsthai permit reasonable comparisons of two or more periods with different levels of activity. The introduction of the microcomputer and the development of spreadsheet pro grams have greatly facilitated the generation of more complex interne
)
pa 11 Fi nanci aI Analysis
I.
Section 9
Financial Statement Formats
The formats of the Summary Statement of Income and departmental statements can of coursebe designed to provide only ODeamount column to record figures für the time period covered by the statement. While the primary purpose of any of these statements is to present the revenue and expenses für the most recent accounting period, the true significance of such amounts can only be fully understood when compared with budgets and/or the corresponding amounts für preceding periods. Accordingly, individual properties should modify the format of these statements to meet their needs ~nd requirements. For example, properties may find it useful to expand this ~asic format by adding columns to provide: . . A comparative analysis of the current period results with the amounts budgeted for the period A comparative analysis of the current period results with those of the same period fot the preceding year Cumulative year-to-date information Percentage relationships between revenue and expenses
)
. .
Comparisons can be made by either horizontal or vertical analyses. Horizontal analysisindicates the absolute (dollar) and relative (percentage) differences betweeDthe two amounts of the same Iine items. The absolute differences Me simply the dollar differences between the figures (tbis year and last year or actual and budget). The relative differenceSare percentage differences, and are calculated by dividing the absolute differentes by the prior year or budget amounts. Vertical analysis uses flet revenue as a common denominator and reduces the amount of each line on the respective income statements to a percentage. This analysis producescommon-size statementsthai permit reasonable comparisons of two or more periods with different levels of activity. The introduction of the microcomputer and the development of spreadsheet pro grams have greatly facilitated the generation of more complex interne