Financial Reports: Profit & Loss and Balance Sheet Analysis for Hospitality Managers, Slides of Business

Download Financial Reports: Profit & Loss and Balance Sheet Analysis for Hospitality Managers and more Slides Business in PDF only on Docsity! 2 Understanding management reports „ Profit & Loss report „ Performance analysis „ The Balance Sheet „ Adjustments to accounts Essential Financial Techniques for Hospitality Managers20 Introduction In this chapter we’ll look at the main type of report that you will need to help you manage your area better – the profit and loss report. For different departments you’ll see reports that include not only monetary figures but also percentages for the actual amounts, the amounts that were budgeted, and the difference between them. Later in the chapter we’ll see how to use these. There are also statements used by the general manager – a summary profit and loss (P&L) and then the balance sheet which is important when managing stocks, cash and debtors as well as showing the total value and stability of the business. In order to know how all these accounts are put together we will also examine the activities that need to take place at the end of each month. So by the end of this chapter you should be able to: „ Identify different items that appear in a profit and loss report „ Calculate profits for a simple business „ Calculate variances and percentages „ Assemble a balance sheet „ Calculate accruals, prepayments and depreciation. Financial reports Some of this may seem a bit ‘dry’ but you do need to understand the basics of accounts before you can use the information to help you. So please per- severe with the ‘theory’ and then the next chapter will have more practical applications which will seem more relevant to your job, either now or in the future. Before we look at the P&L we need to clarify what is meant by ‘financial reports’. There are two types produced for a commercial business – gener- ally classified as ‘financial accounts’ and ‘management accounts’. Financial accounts are produced yearly (and half-yearly) and are formal, official records that have to be submitted for legal reasons to tax and company authorities. For a large company they may also be known as ‘published accounts’. There are a lot of rules as to how these are presented and some of these will be covered further in Chapter 10 of this book. Management accounts are used within the business by the managers to help them be more effective – so they should be designed to suit the manager’s needs. They are usually produced every month (or period)