Finance Bytes

Basic Understanding the P&L Statement

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Objectives

Today we will cover:

• The basic structure of a Profit and Loss

Statement
• Revenue and sources of revenue in a hotel
• Costs and different costs in a hotel
• GOP or Gross Operating Profit

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 What is
A Profit and Loss Statement?

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Profit and Loss Statement

What is it ?

• A Report
• Over a period of time
• Records revenue earned and costs incurred
• Records a profit or a loss

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 Why do we need
A Profit and Loss Statement?

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 Why do we need a
Profit & Loss Statement?

• To measure business performance

• To compare periods

• To assist decision-making

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 Who uses
A Profit and Loss Statement?

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 Who uses
Profit & Loss Statement?

• Stakeholders
• Managers
• Owners / Shareholders
• Investors
• Head Office

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 What information would
you find in
A Profit and Loss Statement?

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 A Simple Profit & Loss Statement

Cost of Sales
Departmental
Revenue less Payroll
= Profit or Loss
Direct Expenses

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 Any Questions?

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From where is Revenue generated?

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Revenue

• Rooms Revenue
• Food & Beverage Revenue
• Banquet Revenue
• Telephone Revenue
• Laundry Revenue
• Gift Shop Revenue
• Massage Revenue
• Other Revenue (transportation,RGR tours,
business centre, etc)

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 What is Cost of Sales?

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 Cost of Sales Examples

• Meat for Steaks

• Oranges for juice
• Telephone lines for calls

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 Cost of Sales Exercise

COST OF NOT COST

SALES OF SALES

Telephone lines
Vegetables for kitchen
Canned juices in the store
Apples for the guest room
Cleaning supplies for rooms
Toilet paper
Stationary for guests
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Payroll & Related Expenses

What is included in Payroll

and Related expenses?

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Payroll & Related Expenses Examples

• Salaries
• Staff Canteen
• Accommodation
• Overtime
• Vacation
• Health & Social Insurance
• Medical
• Training

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 Direct Expenses Examples

• Guest Room Amenities

• Toilet Amenities
• Rooms Linen Laundry
• Napkins
• Table Linen Laundry
• Staff Uniform Replacement
• Operating Equipment Replacement

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 REVENUE
– cos
– payroll & related exp
– direct expenses
=
? Departmental Profit
or Loss

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Overheads

What are Overheads?

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Undistributed Operating Expenses
(Overheads) Examples

• Sales and Marketing

• Administration and General (GM’s office, Accounting, HR,
Security)
• Property, Operation and Maintenance
• Utility Costs

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 Exercise

Cost of Sales Direct Expenses Overheads

Light bulbs Eggs Paper supplies Staff meals

Staff training
Detergent Sugar Recrutiment fees
Lunch with client
tomatoes
Pest control of kitchen Printing menus

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 DEPARTMENTAL PROFIT
– overheads
=
?

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Gross Operating Profit

DEPARTMENTAL PROFIT
Less Overheads
= GROSS OPERATING PROFIT (GOP)

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The P&L Statement
Rooms F&B Other Dept
revenue revenue
revenue

cos cos
Direct exp
Direct exp
Direct exp
Pay&rel
Pay&rel
Pay&rel

Rooms Rooms
Rooms
Departmental Departmental
Departmental
profit profit
profit

Hotel departmental profit

OVERHEADS

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Profit & Loss Statement
A Simple Example
Rooms revenue 1000
F&B revenue 500
Other dept revenue 250
TOTAL REVENUE 1750
Cost of sales 200
Payroll and related expense 200
Direct expenses 175
DEPARTMENTAL PROFIT 1175
Sales and Marketing 150
Administration & General 150
Maintenance 100
Heat, light, gas 125
GOP (PBFC) 650
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 Build your Profit & Loss Statement

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 Fixed Costs

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 Net Income

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 Questions

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Finance Bytes

Thank You

Basic Understanding the P&L Statement

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