HFT 3431
Exam 2 Review
Chapter 5
• Problems – Ratio analysis
– Current ratio
– ADR
– Occupancy percentage
– Profit margin
– A/R Turnover
– REVPAR
– Food or beverage turnover
Chapter 5 Terminology
• Classes of ratios
• Definition of each & which categories ratio
fall into
– Liquidity
– Solvency
– Activity
– Profitability
– Operating
Chapter 6 Problems
• Calculate indifference point (fixed versus
variable lease)
– VC % x R = FC
Chapter 6 Terminology
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Identify types of costs
– Variable
– Fixed
– Mixed
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Relevant range
Differential costs
Controllable versus non-controllable costs
Sunk costs
Step costs
Avoidable costs
Incremental costs
Prime costs
Unit costs
Capacity costs
Overhead costs
Chapter 7 Problems
• Breakeven problems
– 0 = SX-VX-F
– X = F / (S-V)
– F = SX – VX
– S = (F/X) +V
– V = S – (F/X)
Chapter 7 Terminology
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Leverage
Margin of safety
Cost Volume Profit Analysis
Contribution Margin (and calculation)
Contribution Margin Ratio
Sensitivity Analysis
Chapter 8
• Price Elasticity of Demand
– ((Q2-Q1)Q1) / ((P2-P1)/P1)
– Elastic or Inelastic ( -1 to 1)
– Sensitive or Insensitive
• Suggested Price Multiplier
• Alternative to Multiplier
• Single & Double Room Rate Calculation
Other
• Scantron (brown form 2052 required)
• 50 Multiple Choice Questions
• Bring your own calculator. No sharing or
cell phones
• Formula sheet provided