TABLE OF CONTENTS This chapter presents some of the fundamental accounting concepts and methods of financial analysis that will be used throughout the book and also throughout the career of any hospitality manager. These are not only fundamental accounting concepts but important management tools used to operate a business on a daily basis.
The concepts and terms are explained in a direct and fundamental way. The typical detailed and complicated accounting explanations are missing because they will do no good if they are not understood. The information in this chapter will form a solid financial foundation, one that will enable students to expand in terms of knowledge and application as they work through problems and deal with business situations. It will focus on hospitality industry operations, but the methods of financial analysis presented are useful and applicable to any business operation.
Analyzing financial reports and statements requires a fundamental understanding of where numbers come from, how they are organized and presented, what they mean, what they measure, and how they are used. This section discusses two concepts of working with numbers to analyze financial statements.
First, we will talk about two important ways numbers are used in business. They are used to measure financial performance and to provide a management tool to use in operating the business.
Numbers provide a way to determine how a business is performing. Measuring financial performance is historical in nature and uses the actual numbers or results...
