Chapter5-6fall

Chapter5-6fall - Chapter 5-6 Financing and Legal Matters...

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Chapter 5-6 Financing and Legal Matters
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SUFFICIENT  CAPITAL Lack of finance and working  capital is a close second to lack of  management when it comes to  reasons for restaurant failure
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3 IMPORTANT FINANCIAL  QUESTIONS TO ASK  YOURSELF 1. How much money do you have? 2. How much money will you need to get  the restaurant up and running? 3. How much money will it take to stay in  business?
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PROJECTING SALES  AND OPERATIONAL  COSTS 7 basic categories are used  Sales Cost of sales Gross profit Budgeted costs Labor costs Operating costs Fixed costs
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INCOME STATEMENT Provides information to management and ownership about  the financial performance of the restaurant over a given  period of time Allows for analysis and comparison of sales and costs Shows income after expenses have been deducted (net  income or loss)
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SAMPLE  INCOME  STATEMENT Sales Food Beverage Other Total Sales Cost of Sales Food Beverage Others Total Cost of Sales Gross Profit Other Income Total Income Controllable Expenses Salaries and Wages Operating Expenses, etc Total Controllable Expenses Rent, interest, depreciation, etc Net Income Before Taxes Income Taxes Net Income
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BUDGETING  COSTS Two main cost categories Variable Change proportionately according to sales Food and beverage costs Fixed Unaffected by changes in sales volume Real estate taxes, depreciation, insurance premiums
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GROSS PROFIT Money left from sales after  subtracting the cost of sales Must provide for all other operating  costs and still leave enough dollars  for a satisfactory profit If insufficient enough to cover  costs, sales and cost mix must be  replanned
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BALANCE SHEET Used to determine a sole proprietor’s or company’s  worth Lists all assets and liabilities Must always balance Assets= liabilities + net worth Photo of the restaurant financial standing at a given  moment in time Usually at the end of a financial period or fiscal year
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This note was uploaded on 10/08/2011 for the course HTM 557 taught by Professor Staff during the Spring '11 term at S.F. State.

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Chapter5-6fall - Chapter 5-6 Financing and Legal Matters...

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