My feeling is that if you do not know generally what something should be then you cannot tell if there is a problem
Coral Gables, FL. (PRWEB) July 7, 2009
Usually, when revenues increase, profit goes up. The opposite is also the norm. Revenues decrease and profit goes down. But how much should profit go up and how much should it go down? This calculation is most often called Flow-Through analysis.
In his first article in a series on Hospitality Operations Finance, Eric C. Hertha, Principal at Hospitality Financial Consulting Group LLC (http://www.hfcgllc.com) and Publisher of Hospitality Business News (http://www.hospitalitybusinessnews.com), discusses the steps needed to implement a system in your hotel or restaurant.
"My feeling is that if you do not know generally what something should be then you cannot tell if there is a problem" states Mr. Hertha. He went on to say that "you may have a GOP percentage one month of 25% versus your budget of 30%. In this situation one might think that there is a big problem, and there very well could be, but the variance could simply be the result of a change in the revenue mix from high profit departments to lower profit ones. If you have not analyzed the change in the sales mix and projected what the outcome at GOP should be you will not know if your performance is good or bad. You will not know where the problems are."
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At Hospitality Financial Consulting Group, LLC we will help you with your finance and accounting needs so that you can run your business better and have confidence in the financial information that is being produced. We offer you over 20 years of straight forward finance and accounting expertise.
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